Month: August 2021

Fed Chairman Addresses Inflation Tapering and Employment at Jackson Hole Summit

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The High Points of Fed Chairman Powell’s Presentation are Worth Understanding

 

Each August, the main event is always the U.S. Federal Reserve Bank Chairman at the Jackson Hole Economic Policy Symposium. This year it was especially true as events of the past several months have allowed more policy leeway than usual for the Fed to conduct monetary policy. Some of the most impactful policy moves have had a dramatic lifting effect on markets and sectors of the economy. However, these policies that include quantitative easing, near-zero bank lending rates, securities purchases, and yield-curve control are seen by many as unsustainable and worth unwinding before the “medicine” harms the “patient.”

The challenge the Fed always faces after they have been using their arsenal to attack a faltering economy is withdrawing from the fight in measured steps and at a pace that is neither too late and ignites another problem, nor too soon allowing problems to resurface.

Federal Reserve Chairman Jay Powell was again the main event at the Jackson Hole Summit titled, “Macroeconomic Policy in an Uneven Economy.” The market has been waiting for weeks to measure his words to determine what the Fed’s actions may be, and then, how it impacts their portfolio, or what shift in strategy they may wish to make.

A briefing of the Fed Chairman’s comments at this event on Friday, August 27th is below.

 

Opening Remarks

The chairman discussed in his opening remarks how an aggressive policy has allowed for a vigorous economic recovery. He pointed out the economy during the downturn was atypical; personal income rose, spending shifted from service sectors to manufacturing, and the demand for goods has lead to bottlenecks and shortages.

On the subject of prices, Powell’s opening remarks included,”…the result has been elevated inflation in durable goods—a sector that has experienced an annual inflation rate well below zero over the past quarter-century.”  He sees labor markets improving but says the unknowns of the pandemic’s path create turbulence and risks to the improvement.

 

The Recession and Recovery

Powell pointed out the decline in output in the second quarter of 2020 was twice the full decline during the Great Recession of 2007–09. He reminded that the pace of output has not passed previous highs but exceeded the Fed’s expectations. He mentioned recovery in employment has lagged output but is also running above what was expected.

Data was given during the presentation to demonstrate the unevenness of the recovery and sector spending shifts to goods, “particularly durable goods such as appliances, furniture, and cars—and away from services, particularly in-person services in areas such as travel and leisure.” Powell reminded.

 

 

Providing more detail, Powell said, “As the pandemic struck, restaurant meals fell 45 percent, air travel 95 percent, and dentist visits 65 percent.” He pointed out that even today, with overall gross domestic product and consumption spending more than fully recovered, spending in the service sector remains about 7 percent below the expected level.  He continued, “Total employment is now 6 million below its February 2020 level, and 5 million of that shortfall is in the still-depressed service sector.”  Powell contrasted that with spending on durable goods, which he says is still running about 20% above pre-pandemic levels.

The inflation component he pointed shows demand outstripping pandemic-reduced supply, and rising durables prices that are a big factor in why inflation is running ahead of its 2% target.

The Path Ahead: Maximum Employment

The labor market was described as “brightening considerably.”  And, “The pace of total hiring is faster than at any time in the recorded data before the pandemic.” He then added that “openings and quits” are also at record highs and that employers are reporting they “cannot fill jobs fast enough to meet returning demand.”

Powell expects these conditions for job seekers should help the economy cover the remaining ground to reach maximum employment. He said that although unemployment is at a post-pandemic low, he considers it too high. Part of what he sees as the problem is that “Long-term unemployment remains elevated, and the recovery in labor force participation has lagged well behind the rest of the labor market, as it has in past recoveries.”

 

 

“With vaccinations rising, schools reopening, and enhanced unemployment benefits ending, some factors that may be holding back job seekers are likely fading. While the Delta variant presents a near-term risk, the prospects are good for continued progress toward maximum employment,” Powell said.

The Path Ahead: Inflation

Speaking specifically on the subject of inflation, the Fed chairman addressed different perspectives, including the absence of broad-based pressures, higher-inflation items, wages, long-term expectations, broke it down into five segments, broad-based and global forces.

The spike in inflation, he believes, is not broad-based. Instead, he described it as being “largely the product of a relatively narrow group of goods and services that have been directly affected by the pandemic and the reopening of the economy.” He said that durable goods contributed 1% to the most recent YOY measure — energy prices, another 0.8 percentage point to headline inflation. He pointed to history to explain why the Fed believes the increases are transitory.

We would be more concerned if inflationary pressures were spreading more broadly through the economy; this was the overall point he made.

 

 

Items that we saw experience higher inflation, he said are moderating. “Used car prices, for example, appear to have stabilized; indeed, some price indicators are beginning to fall. If that continues, as many analysts predict, then used car prices will soon be pulling measured inflation down, as they did for much of the past decade.” Powell said.

He believes the same dynamic, where falling prices may pull down the price index includes, durable goods. Chairman Powell explained, “As supply problems have begun to resolve, inflation in durable goods other than autos has now slowed and may be starting to fall. It seems unlikely that durables inflation will continue to contribute importantly over time to overall inflation.”  

 

 

Wage increases, another important driver of consumer price increases, were also addressed. He described them as a welcome development driving an increased standard of living. Later the Fed chairman set expectations by saying, “But if wage increases were to move materially and persistently above the levels of productivity gains and inflation, businesses would likely pass those increases on to customers, a process that could become the sort of “wage–price spiral” seen at times in the past.10 Today we see little evidence of wage increases that might threaten excessive inflation.”  He believes that broad-based measures of wage changes that adjust for the change in the composition of the labor force are better measures. He points to the employment cost index and the Atlanta Wage Growth Tracker as evidence that inflation is more consistent with 2% inflation growth.

 

 

Policymaker’s longer-term inflation expectations remain anchored, according to Powell. He believes, policy should look through temporary swings. He indicated that most measures of inflation are “noisy.” As a result, they focus across many different measures. Powell said, “One approach to summarizing these patterns is the Board staff’s index of common inflation expectations (CIE), which combines information from a broad range of survey and market-based measures. This index captures a general move down in expectations starting around 2014, a time when inflation was running persistently below 2 percent. More recently, the index shows a welcome reversal of that decline and is now at levels more consistent with our 2 percent objective.” As a result, longer-term inflation expectations have moved much less than actual or near-term expectations. Although he said they are keeping a close eye on the gauges, the indication is that they are transitory. 

Powell also noted that, since the 1990s, inflation in many advanced economies had run somewhat below 2 percent even during good times. He attributes this to disinflationary mechanisms such as technology, shipping, demographics, and stronger commitment by central banks to price stability.

 

 

The financial and real estate markets got what they wanted with Powell’s wrap-up on inflation when he said, “To sum up, the baseline outlook is for continued progress toward maximum employment, with inflation returning to levels consistent with our goal of inflation averaging 2 percent over time.” In other words, the economy is growing but not so fast that we will have excessive inflation.

 

Implications for Monetary Policy>

Powell spoke about the history of central banks and that they can not take for granted that when the causes of inflation are transitory, that inflation won’t take on a life of its own beyond the initial impetus. His explanation was public expectations. He said, “The 1970s saw two periods in which there were large increases in energy and food prices, raising headline inflation for a time. But when the direct effects on headline inflation eased, core inflation continued to run persistently higher than before. One likely contributing factor was that the public had come to generally expect higher inflation.” He added that they now monitor expectations, as expectations can be a cause of continued rising prices.

He conceded that central; banks have been prone to calling inflation wrong. If this appears to become the case, he said, “[the]Federal Open Market Committee would certainly respond and use our tools to assure that inflation runs at levels that are consistent with our goal.”

He assured the FOMC was committed to staying in the fight for as long as it takes to support full economic recovery. He believes the changes made last year to the Statement on Longer-Run Goals and Monetary Policy
Strategy is well suited to address today’s challenges.

On the subject of the pace of asset purchases Powell asserted, “We have said that we would continue our asset purchases at the current pace until we see substantial further progress toward our maximum employment and price stability goals, measured since last December when we first articulated this guidance.”

He believes the Fed’s elevated holding of longer-dated fixed income securities supports an accommodative stance. He is also of the view that they have met the previously spoken about “substantial further progress” test for inflation. He also noted that the progress toward maximum employment has been positive.  Then Powell suggested tapering by saying, “At the FOMC’s recent July meeting, I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year. The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the Delta variant. We will be carefully assessing incoming data and the evolving risks.”   This can be taken to mean that even without further asset purchases, those currently supporting the economy are expected to be sufficient.

Interest Rates

On the subject of interest rates, the Fed Chairman noted that a reduction in asset purchases is not necessarily a change in interest rate policy. “The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” Powell said.

Take-Away

This year’s economic policy symposium was held virtually. The title was “Monetary Policy in an Uneven Economy,” the discussion by Federal Reserve Chairman Powell reflected the title quite well. The Fed sees the economy growing, inflation abating, and their objectives being met. With each statement, he made clear that they are closely monitoring the situation since the economy is uneven, and pandemic concerns continue to vary. Powell reaffirmed the central bank’s emerging plan to begin reversing its easy-money policies later this year while explaining in greater detail why he expects a recent surge in inflation to fade over time.

Paul Hoffman

Managing Editor, Channelchek

 

Suggested Reading:



No-Cost Brokers Like Robinhood May be the Big Winners with Rising Rates

What Metals Prices Can Tell Us About the Economy





The Limits of Government Economic Tinkering



The SECs Prioritizing ESG Investment Products May Uncover a Supply Problem

 

Source:

https://www.federalreserve.gov/newsevents/speech/powell20210827a.htm

 

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The Choppy Road to Tomorrow’s Energy Solutions

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	Image Credit: The Pop Culture Geek Network (Flickr)

How Troubling Energy Shortages Could Be Handled in a Few Short Years

 

Last week we reported that five
gas-powered generating plants would be added to California’s electric grid. During the prior week, the headlines read the White House called on OPEC to pump
more oil to help reduce gasoline prices.  Both of these were met by many with shock, or at a minimum, confusion. After all, California had been aggressively reducing its reliance on fossil fuels for power generation, and the U.S. had become more-or-less energy independent four or five years ago. Strangely, if supply was a problem last year, it was because there was a massive glut of oil — so large that there was essentially no place to store the commodity.

 

Change of Path?

There was a good reason for each of these diversions from the stated plan. There aren’t too many things that move in a straight line, there will always be bumps along the way. Think about the last stock you held that did well over a long period of time, were there down days?  Sure. Did this mean a change of overall direction? No.

What it does mean in the above cases is that there is some trial and error and unforeseen factors that will come up that aren’t counted on. In the case of California, an exceedingly dry summer has left many of the dams unable to create power via hydroelectric generators. As for the plea for OPEC to help us with our rising gasoline prices, the demand has been so uneven, due to pandemic-related economic gyrations, that it should come as little surprise that there are large imbalances.

Just in Time Solutions

As the current energy initiatives, new technology, and proposed “greener” solutions unfold, there will be new ways, even better solutions to quickly overcome unexpected shortfalls of energy.

One that may soon be a reality is the “nuclear battery.” The nuclear battery or microreactor is a proposed system that could have more quickly assisted California with its problem. The natural gas-powered generating ability that is now being installed will take just over a month to be up and running. However, we were told this is a temporary solution. The microreactor as envisioned, could install in the same or fewer days then run unattended for five or ten years. Similarly, these shipping container-sized, uranium-powered, generators could reduce oil consumption from electric generation allowing imbalances in petroleum demand to be corrected for without calling upon foreign nations.

The flexibility in power that the future holds will be necessary. As demonstrated in California (and last year’s Texas freeze), relying on nature is a risky proposition; having acceptable, just-in-time solutions available reduces this risk.

Take-Away

New power generating designs and technology rely on many non-fossil fuel solutions. Part of the growing need is flexibility, another is the consistency of nuclear generation and the flexibility being designed in new options.

The number of ways the future may include uranium as a power source is increasing.  Add microreactors to the list — they could be well suited to provide for the needs of industry and many other sectors of the economy by producing a steady, dependable source of carbon-free electricity.

 

Noble Capital Markets Uranium Power Players Investor Forum – August 31, 2021 Starting at 9am EDT

The Noble Uranium Power Players Investor Forum is a virtual conference bringing together leading companies involved in the exploration and production of uranium.

Registration is fast and free.

 

Sources:

Nuclear
Powers New Paradigm Includes Microreactors

Traditional
Energy Resources Have Been Shrinking

Contango
and the Unknown Risks to ETFs

California
to Add Five Natural Gas Power Plants

 

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Gevo Files for Environmental Permits in South Dakota for the Net-Zero 1 Project

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Gevo Files for Environmental Permits in South Dakota for the Net-Zero 1 Project

 

ENGLEWOOD, Colo., Aug. 26, 2021 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) is pleased to announce that the air quality and wastewater permit applications for the company’s Net-Zero 1 project have been filed with the South Dakota Department of Agriculture & Natural Resources.

“These permit applications are on schedule and represent the first of the permits necessary for the construction of Net-Zero 1,” commented Dr. Chris Ryan, Gevo’s President and Chief Operating Officer. “We are happy to work closely with Pinnacle Engineering, a world-class engineering firm known for specializing in environmental permitting, to draft our permits. These combined efforts are focused on minimizing environmental impact and establishing the lowest CI (Carbon Intensity) score possible,” continued Dr. Ryan.

“It’s a pleasure to work with the Gevo team and we look forward to our continued collaborations on this exciting project,” stated Steve Schleicher, Pinnacle Engineering, Partner and Vice President, Industrial Services.

About Gevo

Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low-carbon products such as gasoline components, jet fuel and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that the Argonne National Laboratory GREET model is the best available standard of scientific-based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to a variety of matters such as, without limitation, statements regarding Pinnacle Engineering; the Net-Zero 1 project, including the permits necessary for the Net-Zero 1 project, whether Gevo will receive the permits, Gevo’s ability to produce products with a “net-zero” greenhouse gas footprint; Gevo’s plans and strategy and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2020, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

Investor and Media Contact

+1 720-647-9605

IR@gevo.com

Golden Predator Mining (NTGSF)(GPY:CA) – Shareholders Approve Business Combination with Arizona Gold Corp

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Thursday, August 26, 2021

Golden Predator Mining (NTGSF)(GPY:CA)
Shareholders Approve Business Combination with Arizona Gold Corp.

Golden Predator Mining Corp is a Canada based exploration stage company engaged in the business of acquiring and exploring mineral properties. It owns properties primarily in Yukon, Canada. Some of the company’s projects located in Yukon are the 3 Aces, Sprogge, Reef, Brewery Creek, Marg, Sonora Gulch, Grew Creek, Upper Hyland and others.

Mark Reichman, Senior Research Analyst of Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

    Business combination approved. Golden Predator Mining and Arizona Gold Corp. (TSX: AZG, OTCQB: AGAUF) shareholders overwhelmingly approved the proposed acquisition by Arizona Gold of all the outstanding common shares of Golden Predator by way of a proposed plan of arrangement. Shareholders of Golden Predator will receive 1.65 common shares of Arizona Gold Corp. in exchange for each share of Golden Predator. Upon closing, Golden Predator shareholders will own approximately 45% of the combined company shares.

    Merger expected to close on September 2.  Completion of the business combination is contingent on satisfaction or waiver of remaining conditions to the arrangement, including final approval by the Supreme Court of British Columbia …



This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Ceapro Inc. Reports 2021 Second Quarter and Six-Month Financial Results and Operational Highlights

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Ceapro Inc. Reports 2021 Second Quarter and Six-Month Financial Results and Operational Highlights

 

– Company continues to increase R&D activities to advance clinical and preclinical programs –

– Second quarter sales of $4,409,000 compared to $4,666,000 for second quarter 2020 –

– Cash generated from operations of $2,128,000 in Q2 2021 compared to $2,195,000 in Q2 2020 –

– Maintained production operations during COVID-19 pandemic, providing customers with essential products while ensuring the health and safety of our employees –

EDMONTON, Alberta, Aug. 26, 2021 (GLOBE NEWSWIRE) — Ceapro Inc. (TSX-V: CZO; OTCQX: CRPOF) (“Ceapro” or the “Company”), a growth-stage biotechnology company focused on the development and commercialization of active ingredients for healthcare and cosmetic industries, today announced financial results and operational highlights for the second quarter and six months ended June 30, 2021.

“Progress continues on all fronts from production operations to research and development, allowing us to advance our pipeline while expanding our business model. With our newly formed network of highly renowned experts from University of Alberta, McMaster University, the Montreal Heart Institute, and the Angiogenesis Foundation, we have implemented a comprehensive strategic research plan that we believe enables us to address immune/inflammation-based and lifestyle diseases at various stages and from all angles. Additionally, with upcoming results expected in the fourth quarter of this year for Ceapro’s very first clinical trial, I believe we are well positioned for the next steps in becoming a premier life sciences company. The Company has exciting things on the horizon and we are committed to building on momentum,” stated Gilles Gagnon, M.Sc., MBA, President and CEO.

Corporate and Operational Highlights

Pipeline Development:

  • Announced successful completion of collaborative research and development program with University of Alberta. The program developed several new chemical complexes as potential delivery systems and demonstrated the possibility of drying peptides using Pressurized Gas eXpanded (PGX) Technology.
  • Initiated bioavailability studies with University of Alberta for new chemical complexes yeast beta glucan-CoQ10 and alginate-CoQ10.
  • Resumed research activities with McMaster University to develop an inhalable therapeutic for COVID-19 using yeast beta glucan.
  • Completed patient enrollment in clinical study evaluating beta glucan as a cholesterol-lowering agent. Last patient last visit is expected by end of September 2021, followed by locking of data base, unblinding of the study and topline results expected in Q4 2021.

Technology:

  • Pursued technical upgrades of PGX demo plant in Edmonton including initiation of commercial scale up of impregnation unit to produce chemical complexes.
  • Initiated engineering design for PGX commercial scale unit. Final decision on the type and location of future commercial scale PGX unit to be announced during Q4 2021.

Production Operations:

  • Successfully passed thorough audits conducted by two major customers for the Edmonton facility, which is now housing all production operations for the Company.

Corporate:

  • Pursued out-licensing discussions for PGX-processed new chemical complexes.

Subsequent to Quarter:

  • Announced research agreement with Montreal Heart Institute for a Phase 1 clinical trial assessing safety and tolerability of pharmaceutical grade avenanthramides.
  • Announced research agreement with Boston-based Angiogenesis Foundation to assess in vivo bioefficacy of oat beta glucan and avenanthramides in angiogenesis, blood vessel repairs, wound healing and tissue regeneration in various inflammation-based diseases and conditions like COVID-19 presenting damages of the lung blood vessels.

Financial Highlights for the Second Quarter and the Six-Month Period Ended June 30, 2021

  • Total sales of $4,409,000 for the second quarter of 2021 and $9,110,000 for the first six months of 2021 compared to $4,666,000 and $8,939,000 for the comparative periods in 2020.

    Sales being made in USA dollars and then reported in CDN dollars, it is noteworthy to look at the impact of the exchange rate (USD/CDN) from year to year. In fact, the Company has recorded respective sales in USD of $3.6M and USD $7.3M for the second quarter and the first six months of 2021 as compared to USD $3.4M and USD $6.5M for the comparative periods of 2020, representing a year-to-date effective increase of 12% in 2021.
  • Net profit of $676,000 for the second quarter of 2021 and $1,191,000 for the first six months of 2021 compared to a net profit of $1,077,000 and $2,203,000 for the comparative periods in 2020.

  • Cash flows generated from operations of $2,433,000 for the first six months of 2021 vs $2,727,000 in 2020.

  • Positive working capital balance of $9,303,000 as of June 30, 2021.

“The ability of our business to successfully navigate through the challenging second quarter business environment is a testament to the commitment and hard work of our dedicated employees, and a measurable indication of the operational improvements generated by our strategic investments of the past few years,” continued Mr. Gagnon. “Looking ahead, while considering the ongoing potential economic impact related to the new surge of COVID-19, we believe Ceapro is well-positioned to once again deliver solid growth in 2021. With a strong and very clean balance sheet, a group of dedicated people, and a solid base business coupled with the innovative technologies and products that we have developed to enable us to expand, Ceapro is poised to emerge as a successful life science company.”

CEAPRO INC.    
Consolidated Balance Sheets    
Unaudited    
     
  June 30, December 31,
  2021 2020
  $ $
     
ASSETS    
Current Assets    
Cash and cash equivalents 7,269,428 5,369,029
Trade receivables 1,801,568 2,019,723
Other receivables 45,913 102,224
Inventories (note 3) 1,168,163 1,210,079
Prepaid expenses and deposits 236,932 348,845
     
  10,522,004 9,049,900
Non-Current Assets    
Investment tax credits receivable 607,700 607,700
Deposits 82,124 82,124
Licences (note 4) 17,032 18,514
Property and equipment (note 5) 18,029,316 18,591,189
Deferred tax assets 874,304 874,304
     
  19,610,476 20,173,831
     
TOTAL ASSETS 30,132,480 29,223,731
     
LIABILITIES AND EQUITY    
Current Liabilities    
Accounts payable and accrued liabilities 857,731 1,067,622
Current portion of lease liabilities (note 6) 283,204 250,658
Current portion of CAAP loan (note 8) 77,855 72,263
     
  1,218,790 1,390,543
Non-Current Liabilities    
Long-term lease liabilities (note 6) 2,505,623 2,648,917
Deferred tax liabilities 874,304 874,304
     
  3,379,927 3,523,221
     
TOTAL LIABILITIES 4,598,717 4,913,764
     
Equity    
Share capital (note 7 (b)) 16,555,619 16,511,067
Contributed surplus (note 7 (e)) 4,670,289 4,682,393
Retained earnings 4,307,855 3,116,507
     
  25,533,763 24,309,967
     
TOTAL LIABILITIES AND EQUITY 30,132,480 29,223,731
     


CEAPRO INC.        
Consolidated Statements of Net Income and Comprehensive Income
Unaudited        
     
     
  Quarters Ended June 30,   Six Months Ended June 30,
  2021   2020   2021   2020
  $   $   $   $
         
Revenue (note 14) 4,408,631   4,665,971   9,110,374   8,939,345
Cost of goods sold 1,770,153   2,079,270   4,213,953   3,980,493
         
Gross margin 2,638,478   2,586,701   4,896,421   4,958,852
         
Research and product development 830,511   399,797   1,647,358   902,339
General and administration 952,847   838,263   1,665,054   1,703,297
Sales and marketing 16,362   29,207   29,600   77,435
Finance costs (note 11) 38,344   44,583   132,254   146,192
         
Income from operations 800,414   1,274,851   1,422,155   2,129,589
         
Other (expenses) income (note 10) (123,942 ) (197,812 ) (230,807 ) 73,505
         
Income before tax 676,472   1,077,039   1,191,348   2,203,094
         
Income taxes –   –   –   –
         
Total comprehensive income for the period 676,472   1,077,039   1,191,348   2,203,094
         
Net income per common share (note 17):        
Basic 0.01   0.01   0.02   0.03
Diluted 0.01   0.01   0.02   0.03
         
Weighted average number of common shares outstanding (note 17):        
Basic 77,673,832   77,608,341   77,662,495   77,573,327
Diluted 78,684,303   77,980,876   78,684,344   77,930,529
         


CEAPRO INC.    
Consolidated Statements of Cash Flows    
Unaudited    
     
     
  2021   2020  
Six Months Ended June 30, $   $  
OPERATING ACTIVITIES    
Net income for the period 1,191,348   2,203,094  
Adjustments for items not involving cash    
Finance costs 71,662   79,674  
Transaction costs –   1,108  
Depreciation and amortization 937,356   920,521  
Accretion 5,592   10,410  
Share-based payments 6,828   108,147  
Net income for the period adjusted for non-cash items 2,212,786   3,322,954  
CHANGES IN NON-CASH WORKING CAPITAL ITEMS    
Trade receivables 218,155   600,990  
Other receivables 56,311   (43,599 )
Inventories 41,916   (592,489 )
Prepaid expenses and deposits 51,179   (33,088 )
Accounts payable and accrued liabilities relating to operating activities (75,337 ) (448,200 )
Total changes in non-cash working capital items 292,224   (516,386 )
         
Net income for the period adjusted for non-cash and working capital items 2,505,010   2,806,568  
Interest paid (71,662 ) (79,674 )
CASH GENERATED FROM OPERATIONS 2,433,348   2,726,894  
INVESTING ACTIVITIES    
Purchase of property and equipment (277,062 ) (38,230 )
Purchase of leasehold improvements (19,472 ) –  
Deposits relating to investment in equipment (16,733 ) (50,203 )
Accounts payable and accrued liabilities relating to investing activities (134,554 ) –  
CASH USED IN INVESTING ACTIVITIES (447,821 ) (88,433 )
FINANCING ACTIVITIES    
Stock options exercised 25,620   –  
Repayment of long-term debt –   (97,507 )
Repayment of lease liabilities (110,748 ) (130,829 )
CASH USED IN FINANCING ACTIVITIES (85,128 ) (228,336 )
Increase in cash and cash equivalents 1,900,399   2,410,125  
     
Cash and cash equivalents at beginning of the period 5,369,029   1,857,195  
     
Cash and cash equivalents at end of the period 7,269,428   4,267,320  
     

The complete financial statements are available for review on SEDAR at https://sedar.com/Ceapro and on the Company’s website at www.ceapro.com.

About Ceapro Inc.

Ceapro Inc. is a Canadian biotechnology company involved in the development of proprietary extraction technology and the application of this technology to the production of extracts and “active ingredients” from oats and other renewable plant resources. Ceapro adds further value to its extracts by supporting their use in cosmeceutical, nutraceutical, and therapeutics products for humans and animals. The Company has a broad range of expertise in natural product chemistry, microbiology, biochemistry, immunology and process engineering. These skills merge in the fields of active ingredients, biopharmaceuticals and drug-delivery solutions. For more information on Ceapro, please visit the Company’s website at www.ceapro.com.

For more information contact:

Jenene Thomas
JTC Team, LLC
Investor Relations and Corporate Communications Advisor
T (US): +1 (833) 475-8247
E: czo@jtcir.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Source: Ceapro Inc.

The Choppy Road to Tomorrows Energy Solutions

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	Image Credit: The Pop Culture Geek Network (Flickr)

How Troubling Energy Shortages Could Be Handled in a Few Short Years

 

Last week we reported that five
gas-powered generating plants would be added to California’s electric grid. During the prior week, the headlines read the White House called on OPEC to pump
more oil to help reduce gasoline prices.  Both of these were met by many with shock, or at a minimum, confusion. After all, California had been aggressively reducing its reliance on fossil fuels for power generation, and the U.S. had become more-or-less energy independent four or five years ago. Strangely, if supply was a problem last year, it was because there was a massive glut of oil — so large that there was essentially no place to store the commodity.

 

Change of Path?

There was a good reason for each of these diversions from the stated plan. There aren’t too many things that move in a straight line, there will always be bumps along the way. Think about the last stock you held that did well over a long period of time, were there down days?  Sure. Did this mean a change of overall direction? No.

What it does mean in the above cases is that there is some trial and error and unforeseen factors that will come up that aren’t counted on. In the case of California, an exceedingly dry summer has left many of the dams unable to create power via hydroelectric generators. As for the plea for OPEC to help us with our rising gasoline prices, the demand has been so uneven, due to pandemic-related economic gyrations, that it should come as little surprise that there are large imbalances.

Just in Time Solutions

As the current energy initiatives, new technology, and proposed “greener” solutions unfold, there will be new ways, even better solutions to quickly overcome unexpected shortfalls of energy.

One that may soon be a reality is the “nuclear battery.” The nuclear battery or microreactor is a proposed system that could have more quickly assisted California with its problem. The natural gas-powered generating ability that is now being installed will take just over a month to be up and running. However, we were told this is a temporary solution. The microreactor as envisioned, could install in the same or fewer days then run unattended for five or ten years. Similarly, these shipping container-sized, uranium-powered, generators could reduce oil consumption from electric generation allowing imbalances in petroleum demand to be corrected for without calling upon foreign nations.

The flexibility in power that the future holds will be necessary. As demonstrated in California (and last year’s Texas freeze), relying on nature is a risky proposition; having acceptable, just-in-time solutions available reduces this risk.

Take-Away

New power generating designs and technology rely on many non-fossil fuel solutions. Part of the growing need is flexibility, another is the consistency of nuclear generation and the flexibility being designed in new options.

The number of ways the future may include uranium as a power source is increasing.  Add microreactors to the list — they could be well suited to provide for the needs of industry and many other sectors of the economy by producing a steady, dependable source of carbon-free electricity.

 

Noble Capital Markets Uranium Power Players Investor Forum – August 31, 2021 Starting at 9am EDT

The Noble Uranium Power Players Investor Forum is a virtual conference bringing together leading companies involved in the exploration and production of uranium.

Registration is fast and free.

 

Sources:

Nuclear
Powers New Paradigm Includes Microreactors

Traditional
Energy Resources Have Been Shrinking

Contango
and the Unknown Risks to ETFs

California
to Add Five Natural Gas Power Plants

 

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Comtech Telecommunications Corp. Awarded $2.1 Million of Funding for EEE Parts Management, Procurement and Engineering Services

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Comtech Telecommunications Corp. Awarded $2.1 Million of Funding for EEE Parts Management, Procurement and Engineering Services

 

MELVILLE, N.Y.–(BUSINESS WIRE)–Aug. 26, 2021– 
August 26, 2021— 
Comtech Telecommunications Corp. (NASDAQ: CMTL), a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies, announced today, that during its fourth quarter of fiscal year 2021, it was awarded 
$2.1 million of additional funding from a major 
U.S. prime contractor in support of NASA’s Space Launch System (“SLS”) 
Control System Electronics. The contract consolidates requirements for high reliability electrical, electronic and electromechanical (“EEE”) parts and engineering services. The total contract value is now 
$10.3 million and fully funded.

“This most recent award demonstrates that our customer continues to recognize the unique value of Comtech’s space level electronic parts supply chain management and engineering services expertise for this critical manned space program,” said  Fred Kornberg, Chairman of the Board and Chief Executive Officer of 
Comtech Telecommunications Corp.

The contract was awarded to Comtech’s Space & Component Technology (“SCT”) division, which specializes in ground station systems and life cycle management, as well as the supply of high reliability microelectronics (“EEE parts”) for use in satellite, launch vehicle and manned space applications.

Satellite tracking antennas are manufactured from 30cm to 13m, as well as RF feeds, radomes and carbon fiber reflectors, for LEO, MEO and GEO orbits, for customers worldwide, for all frequency bands. This encompasses all aspects of use including requirements definition and analysis, design, development, and integration of turnkey systems from antenna to data processing, civil works and construction, software, station installation and verification, operations and maintenance, and decommissioning at end of life. For more information, visit www.comtechspace.com.

Comtech Telecommunications Corp. is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers around the world. Headquartered in 
Melville, New York and with a passion for customer success, 
Comtech designs, produces and markets advanced and secure wireless solutions to customers in more than 100 countries. For more information, please visit www.comtechtel.com.

Certain information in this press release contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. The Company’s 
Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such 
Securities and Exchange Commission filings.

Comtech Investor Relations:
631-962-7005
investors@comtech.com

Source: 
Comtech Telecommunications Corp.

Release – Arizona Gold and Golden Predator Shareholders Approve Business Combination

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Arizona Gold and Golden Predator Shareholders Approve Business Combination

 

VANCOUVER, British Columbia, Aug. 25, 2021 (GLOBE NEWSWIRE) — Arizona Gold Corp. (“Arizona”) (TSX: AZG, OTCQB: AGAUF) and Golden Predator Mining Corp. (“Golden Predator”) (TSX.V: GPY, OTCQX: NTGSF) are pleased to announce that shareholders of both Arizona and Golden Predator have overwhelmingly approved all matters voted on at Arizona’s special meeting as well as at Golden Predator’s special meeting held earlier today, including the proposed acquisition by Arizona of all of the outstanding common shares of Golden Predator by way of a proposed plan of arrangement (the “Arrangement”), pursuant to the terms and subject to the conditions of the arrangement agreement between Arizona and Golden Predator dated June 28, 2021.

Subject to the satisfaction or waiver of the remaining conditions to the Arrangement, including approval of the Arrangement by the British Columbia Supreme Court, which application will be heard on August 30, 2021, closing of the Arrangement is expected to occur on September 2, 2021.

Under the terms of the Arrangement, all of the issued and outstanding common shares of Golden Predator will be exchanged for common shares of Arizona on the basis of 1.65 common shares of Arizona per common share of Golden Predator (the “Exchange Ratio”). Following completion of the Arrangement, current Arizona shareholders and former Golden Predator shareholders will own approximately 55% and 45% of the combined company common shares, respectively.

Name Change to Sabre Gold Mines Corp.
Arizona also intends to proceed with a name change to Sabre Gold Mines Corp. (“Sabre Gold”) in connection with the closing of the Arrangement. The common shares of the new Sabre Gold are expected to trade under the ticker symbol ‘SGLD’ on the Toronto Stock Exchange. The company expects to begin trading under its new name on the OTCQB at or about the same time and under a new ticker symbol by the middle of September, 2021, until which time the company will continue to trade under the current OTCQB symbol (AGAUF). A new website for the combined company will also be launched in early September.

Golden Predator shares are expected to be delisted from the TSX Venture Exchange and an application will be made for Golden Predator to cease to be a reporting issuer on the date of closing of the Arrangement.

Arizona Meeting & Voting Results
The issuance by Arizona of common shares of Arizona (“Arizona Shares”) to the shareholders of Golden Predator in exchange for all of the issued and outstanding Golden Predator shares pursuant to the Arrangement was approved by 99.5% of the votes cast by Arizona shareholders present or represented by proxy at Arizona’s special meeting.

All matters presented for approval at the Arizona special meeting were duly authorized and approved as follows:

Total Shares Represented at the meeting: 161,052,465 (46.54%)
     
Share Issuance Resolution:    
Shares Represented by Proxy – Voted For 156,132,570 (99.5%)
Shares Represented by Proxy – Voted Against 759,817 (0.5%)
Share Represented by proxy – Not Voted 4,160,078  
     
Name Change Resolution:    
Shares Represented by Proxy – Voted For 158,113,145 (98.2%)
Shares Represented by Proxy – Voted Against 2,939,320 (1.8%)


Golden Predator Meeting & Voting Results
The Arrangement with Arizona was approved by 99.29% of the votes cast by Golden Predator shareholders present by virtual attendance or represented by proxy at Golden Predator’s special meeting.

All matters presented for approval at the Golden Predator special meeting were duly authorized and approved as follows:

Total Shares Represented at the meeting: 78,461,398 (45.50%)
     
Arrangement Resolution:    
Shares Represented by Proxy – Voted For 77,907,359 (99.29%)
Shares Represented by Proxy – Voted Against 554,029 (0.71%)


About Arizona
Arizona Gold is an emerging American gold producer advancing the restart of production at its 100% owned, fully permitted, past-producing Copperstone mine project, located in mining-friendly Arizona. The Copperstone mine project demonstrates significant upside exploration potential that has yet to be drilled within a 50 km2 land package that includes past production of over 500,000 oz gold by way of an open-pit operation.

The company’s current focus is on maximizing Copperstone’s potential by defining and expanding current resources and further optimizing the mine’s economics for purposes of the restart of gold production in the near-term as a result of the recent project funding transaction with Star Royalties Ltd.

For further information please visit the Arizona website at www.arizona-gold.com.

About Golden Predator
Golden Predator is advancing the past-producing Brewery Creek mine towards a timely resumption of mining activities in Canada’s Yukon. The project has established resources grading over 1.0 g/t gold and both a technical report and Bankable Feasibility Study underway to define the economics of a restart of heap leach operations at the Brewery Creek mine. The 180 km2 brownfield property is located 55 km by road from Dawson City, Yukon and operates under a Socio-Economic Accord with the Tr’ondëk Hwëch’in First Nation. The Company also holds the Marg project, with a NI 43-101 compliant resource, the Gold Dome project and the Grew Creek project.

For additional information on Golden Predator and the Brewery Creek mine, please visit the website at www.goldenpredator.com.

Contact Information

Arizona Gold Corp.
Giulio Bonifacio
CEO & Director
604-318-6760 
gtbonifacio@arizona-gold.com		 Golden Predator Mining Corp.
William Sheriff
Executive Chair
972-333-2214
wms@goldenpredator.com


Cautionary Statements

Certain information contained herein constitutes forward-looking information or statements under applicable securities legislation and rules. Such statements include, but are not limited to, statements with respect to the anticipated completion of the Transaction. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made and are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Arizona and/or Golden Predator to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to: (i) any inability of the parties to satisfy the conditions to the completion of the transaction on acceptable terms or at all; and (ii) receipt of necessary stock exchange and court approvals. Although management of each of Arizona and Golden Predator has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate. Accordingly, readers should not place undue reliance on forward-looking statements. Neither party will update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws. The parties caution readers not to place undue reliance on these forward-looking statements and it does not undertake any obligation to revise and disseminate forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of or non-occurrence of any events.

This press release is not and is not to be construed in any way as, an offer to buy or sell securities in the United States. The distribution of the Arizona common shares in connection with the transactions described herein will not be registered under the United States Securities Act of 1933 (the “U.S. Securities Act”) and the Arizona common shares may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Arizona common shares, nor shall there be any offer or sale of the Arizona common shares in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Neither the TSX, the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX and TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

1-800-FLOWERS.COM, Inc. Reports Record Revenues for its Fiscal 2021 Fourth Quarter and Full Year

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1-800-FLOWERS.COM, Inc. Reports Record Revenues for its Fiscal 2021 Fourth Quarter and Full Year; Company Guides to Continued Double-Digit Revenue Growth in its Current Fiscal 2022 Full Year

 

Fourth Quarter Highlights:

  • Total Net Revenues increased 16.5 percent to $487.0 million, compared with $418.0 million in the prior year period.
  • Net Income and Adjusted Net Income1 was $13.3 million, or $0.20 per diluted share, compared with Net Income of $9.8 million, or $0.15 per diluted share, and Adjusted Net Income1 of $15.1 million, or $0.23 per diluted share in the prior year period.
  • Adjusted EBITDA1 was $30.2 million, compared with $32.5 million in the prior year period, primarily reflecting historically low digital marketing rates related to the onset of the COVID-19 pandemic in the prior year period.

Full Year Highlights:

  • Total Net Revenues increased 42.5 percent to a record $2.12 billion, compared with $1.49 billion in the prior year, reflecting strong growth across the Company’s three business segments.
  • Net Income was $118.7 million, or $1.78 per diluted share, compared with Net Income of $59.0 million, or $0.89 per diluted share, in the prior year period. Adjusted Net Income1 increased 88.6 percent to $122.6 million, or $1.84 per diluted share, compared with $65.0 million, or $0.98 per diluted share, in the prior year.
  • Adjusted EBITDA1 increased 64.5 percent to a record $213.1 million, compared with $129.5 million in the prior year.

(1 Refer to “Definitions of Non-GAAP Financial Measures” and the tables attached at the end of this press release for reconciliation of Non-GAAP (“Adjusted”) results to applicable GAAP results.)

JERICHO, N.Y.–(BUSINESS WIRE)– 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading e-commerce provider of products and services designed to inspire more human expression, connection, and celebration, today reported results for its Fiscal 2021 fourth quarter and full year ended June 27, 2021.

Chris McCann, CEO of 1-800-FLOWERS.COM, Inc., said, “We are very proud of our record top and bottom-line results for fiscal 2021. These achievements, in what was both an incredibly dynamic and challenging year, reflect the dedication of our associates across the Company who worked diligently to overcome the unprecedented hurdles of the global pandemic to help millions of customers stay connected and express themselves to the important people in their lives.” For the year, McCann noted that the Company had achieved a significant milestone, surpassing 
$2 billion in revenues and it expects to continue to drive sustainable, long-term revenue growth, as well as strong cash flows, both organically and through strategic acquisitions that can help expand its unique ecommerce platform. “Our guidance for double-digit revenue growth in fiscal 2022 is based on several factors, including the significant shift of consumers to ecommerce shopping, which we anticipate will continue, the tremendous growth and positive behaviors we have seen in our customer files and our significantly expanded product offering.”

McCann said the Company’s customer file grew at an unprecedented level in fiscal 2021 with new-to-file customers increasing 62 percent, adding more than 6.5 million new customers, and helping to bring the Company’s 12-month active customer file to approximately 14 million. “Equally important,” he said, “was that, even with strong new customer growth, existing customers represented approximately 64 percent of our total revenue in fiscal 2021.”

“Looking ahead into fiscal 2022, we will continue to focus on engaging with our customers through increasingly personalized content, enhanced customer care initiatives, and a growing range of experiential programs designed to deepen our relationships and build a true customer community,” he said.

Fiscal 2021 Fourth Quarter Results:

For the fourth quarter of 2021, total net revenues increased 16.5 percent to 
$487.0 million compared with 
$418.0 million in the prior year period. Excluding contributions from PersonalizationMall.com®, which the Company acquired in August of 2020, total revenue for the quarter increased 3.8 percent. Revenues for the quarter increased 87.7 percent compared with total revenues of 
$259.4 million in the fourth quarter of fiscal 2019.

Gross profit margin for the quarter increased 20 basis points to 40.7 percent, compared with gross profit margin of 40.5 percent in the prior year period. Operating expenses as a percent of total revenues improved 10 basis points to 37.5 percent, compared with 37.6 percent in the prior year period. Excluding the impact of the Company’s non-qualified deferred 401k compensation plan and, in fiscal 2020, the costs associated with the closing of its Harry & David® retail stores and its acquisition of PersonalizationMall.com, operating expenses as a percentage of total revenues increased 180 basis points to 37.2 percent compared with 35.4 percent in the prior year. This reflects higher digital marketing and advertising rates compared with the prior year period.

As a result, Adjusted EBITDA1 for the quarter was 
$30.2 million compared with 
$32.5 million in the prior year period. Net Income and Adjusted Net Income1 for the quarter was 
$13.3 million, or 
$0.20 per diluted share, compared with Net Income of 
$9.8 million, or 
$0.15 per diluted share and Adjusted Net Income1 of 
$15.1 million, or 
$0.23 per diluted share in the prior year period.

Fiscal 2021 Full Year Results:

Total net revenues for the full year increased 42.5 percent to 
$2.12 billion, compared with 
$1.49 billion in the prior year, reflecting strong growth across the Company’s three business segments as well as contributions from PersonalizationMall.com which the Company acquired in August of 2020. Excluding the contribution from PersonalizationMall.com, total net revenues grew 26.6 percent compared with the prior year. Gross profit margin for the year increased 40 basis points to 42.2 percent, compared with 41.8 percent in the prior year. Operating expense as a percent of total revenues improved 120 basis points to 35.2 percent, compared with 36.4 percent in the prior year. Excluding the impact of the Company’s non-qualified deferred 401k compensation plan and costs associated with the closing of its Harry & David retail stores and its acquisition of PersonalizationMall.com, operating expenses as a percentage of total revenues improved 110 basis points to 34.7 percent compared with 35.8 percent in the prior year. Strong revenue growth and enhanced operating leverage resulted in Adjusted EBITDA1 growth of 64.5 percent to 
$213.1 million, compared with 
$129.5 million in the prior year. Net Income for the year was 
$118.7 million, or 
$1.78 per diluted share, compared with 
$59.0 million, or 
$0.89 per diluted share, in the prior year. Adjusted Net Income1 for the year was 
$122.6 million, or 
$1.84 per diluted share, compared with 
$65.0 million, or 
$0.98 per diluted share in the prior year.

SEGMENT RESULTS:

The Company provides fiscal 2021 fourth quarter and full year selected financial results for its Gourmet Foods and Gift Baskets, Consumer Floral and Gifts, and BloomNet® segments in the tables attached to this release and as follows:

  • Gourmet Foods and Gift Baskets: Revenue for the quarter was 
    $152.2 million, down 1.1 percent compared with the prior year period. Revenue for the quarter was up 110.0 percent compared to the same period in the Company’s fiscal 2019 fourth quarter. Gross profit margin was 38.9 percent, down 160 basis points, compared with 40.5 percent in the prior year period. Segment contribution margin was 
    $4.2 million, down 58.4 percent compared with 
    $10.1 million in the prior year period and down 72.5 percent compared with adjusted contribution margin of 
    $15.3 million in the prior year period. This primarily reflected higher year-over-year marketing rates as well as higher labor and shipping costs. For the year, revenue in this segment increased 21.6 percent to 
    $955.6 million, compared with 
    $785.5 million in the prior year. Gross profit margin for the year increased 40 basis points to 42.9 percent, compared with 42.5 percent in the prior year. As a result of these factors, along with leveraging operating expenses, adjusted segment contribution margin1 for the year increased 28.6 percent to 
    $148.9 million, compared with 
    $115.8 million in the prior year.
  • Consumer Floral & Gifts: Revenues for the quarter increased 27.2 percent to 
    $297.7 million, compared with 
    $234.1 million in the prior year period. This primarily reflects the contributions from PersonalizationMall.com, which the Company acquired in August of 2020, combined with growth for the Mother’s Day holiday period. Excluding the contributions from PersonalizationMall.com, growth in this segment was 4.4 percent for the quarter. Revenue for the quarter, excluding PersonalizationMall.com, was up 53.0 percent compared to the same period in the Company’s fiscal 2019 fourth quarter. Gross profit margin increased 120 basis points to 41.1 percent, compared with 39.9 percent in the prior year period. Segment contribution margin1 increased 5.8 percent to 
    $41.2 million, compared with 
    $39.0 million in the prior year period. For the year, revenues increased 72.8 percent to 
    $1.03 billion, compared with 
    $593.2 million in the prior year. Excluding contributions from PersonalizationMall.com, revenue in this segment grew 33.0 percent for the year. Gross margin increased 170 basis points to 41.1 percent compared with 39.4 percent in the prior year. Segment contribution margin1 increased 74.3 percent to 
    $128.6 million, compared with 
    $73.8 million in the prior year. The strong growth in contribution margin reflects contributions from PersonalizationMall.com combined with continued robust performance in the segment’s flagship 1-800-Flowers.com® consumer floral brand.
  • BloomNet: Revenues for the quarter increased 23.5 percent to 
    $37.3 million, compared with 
    $30.2 million in the prior year period. Revenue for the quarter was up 36.8 percent compared to the same period in the Company’s fiscal 2019 fourth quarter. Gross profit margin was 43.2 percent, down 210 basis points, compared with 45.3 percent in the prior year period, primarily reflecting product mix. Segment contribution margin1 increased 48.4 percent to 
    $11.3 million, compared with 
    $7.6 million in the prior year period, in part due to the Company’s decision in the year-ago period to waive certain fees. For the year, revenue increased 27.9 percent to 
    $142.9 million, compared with 
    $111.8 million in the prior year. Gross profit margin was 45.5 percent, down 300 basis points compared with 48.5 percent in the prior year, primarily reflecting product mix. Segment contribution margin1 for the year increased 30.7 percent to 
    $45.9 million, compared with 
    $35.1 million in the prior year.

COMPANY GUIDANCE

  • For the fiscal 2022 full year, the Company is providing the following guidance:
    • Total revenue growth of 10.0 percent-to-12.0 percent compared with the prior year;
    • Adjusted EBITDA growth of 5.0 percent-to-8.0 percent;
    • EPS in line with fiscal 2021 as improved EBITDA is offset by higher depreciation and a higher effective tax rate; and
    • Free Cash Flow to exceed 
      $100 million
  • The Company’s guidance for the year is based on several factors including:
    • The significant increase in consumers shopping online where the Company’s broad product offering and brand portfolio makes it a leading destination for customers looking for solutions to help them connect, express themselves and celebrate – sentiments that have become more important than ever;
    • Significant expansion of the Company’s product offering, both organically and through strategic acquisitions like Shari’s Berries and PersonalizationMall.com;
    • Continued strong growth and positive behaviors in the Company’s customer file, including strong new-to-file customer growth as well as increased demand from existing customers; and
    • Continued strong growth in the Company’s Celebrations Passport® loyalty program, which is helping drive increased frequency, retention, and cross-category/cross-brand purchases.
  • The Company is also aware of several headwinds affecting its business, including:
    • a challenging labor market with both limited availability and rising wage rates; and
    • significant increases in both inbound and outbound shipping rates as well as higher commodity costs.

Definitions of non-GAAP Financial Measures:

We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with 
U.S. generally accepted accounting principles (“GAAP”). Certain of these are considered “non-GAAP financial measures” under the 
U.S. Securities and Exchange Commission rules. Non-GAAP financial measures referred to in this document are either labeled as “non-GAAP” or designated as such with a “1”. See below for definitions and the reasons why we use these non-GAAP financial measures. Where applicable, see the Selected Financial Information below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures.

EBITDA and Adjusted EBITDA

We define EBITDA as net income (loss) before interest, taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Plan Investment appreciation/depreciation, and for certain items affecting period-to-period comparability. See Selected Financial Information for details on how EBITDA and Adjusted EBITDA were calculated for each period presented. The Company presents EBITDA and Adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and Adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company’s credit agreement uses EBITDA and Adjusted EBITDA to determine its interest rate and to measure compliance with certain covenants. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of the limitations are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company’s working capital needs; (b) EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA and Adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company’s performance.

Segment Contribution Margin and Adjusted Segment Contribution Margin

We define Segment Contribution Margin as earnings before interest, taxes, depreciation, and amortization, before the allocation of corporate overhead expenses. Adjusted Contribution Margin is defined as Contribution Margin adjusted for certain items affecting period-to-period comparability. See Selected Financial Information for details on how Segment Contribution Margin and Adjusted Segment Contribution Margin were calculated for each period presented. When viewed together with our GAAP results, we believe Segment Contribution Margin and Adjusted Segment Contribution Margin provide management and users of the financial statements meaningful information about the performance of our business segments. Segment Contribution Margin and Adjusted Segment Contribution Margin are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of the Segment Contribution Margin and Adjusted Segment Contribution Margin is that they are an incomplete measure of profitability as they do not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as Operating Income and Net Income.

Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share:

We define Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share as Net Income (Loss) and Net Income (Loss) Per Common Share adjusted for certain items affecting period to period comparability. See Selected Financial Information below for details on how Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share were calculated for each period presented. We believe that Adjusted Net Income (Loss) and Adjusted or Comparable EPS are meaningful measures because they increase the comparability of period-to-period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP Net Income (Loss) and Net Income (Loss) Per Common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.

Free Cash Flow:

We define Free Cash Flow as net cash provided by operating activities less capital expenditures. The Company considers Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet and repurchase stock or retire debt. Free Cash Flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since Free Cash Flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period.

About 1-800-FLOWERS.COM, Inc.

1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help customers express, connect and celebrate. The Company’s e-commerce business platform features an all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, PersonalizationMall.com®, Shari’s Berries®, FruitBouquets.com®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Stock Yards® and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad-range of products and services designed to help members grow their businesses profitably; Napco?, a resource for floral gifts and seasonal décor; and DesignPac Gifts, LLC, a manufacturer of gift baskets and towers. 1-800-FLOWERS.COM, Inc. was recognized among the top 5 on the National Retail Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s fastest-growing retail companies. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS. For more information, visit 1800flowersinc.com or follow @1800FLOWERSInc on Twitter.

Special Note Regarding Forward Looking Statements:

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified using statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of the Company’s control which could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, but not limited to, statements regarding the Company’s ability to achieve its guidance for fiscal-year 2021 first quarter and the key holiday season; the impact of the Covid-19 pandemic on the Company; its ability to leverage its operating platform and reduce operating expense ratio; its ability to successfully integrate acquired businesses and assets; its ability to successfully execute its strategic initiatives; its ability to cost effectively acquire and retain customers; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; its ability to reduce promotional activities and achieve more efficient marketing programs; and general consumer sentiment and industry and economic conditions that may affect levels of discretionary customer purchases of the Company’s products. Reconciliations for forward looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including for example those related to compensation, tax items, amortization or others that may arise during the year, and the Company’s management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. The lack of such reconciling information should be considered when assessing the impact of such disclosures. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether because of new information, future events or otherwise, made in this release or in any of its SEC filings. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties. For a more detailed description of these and other risk factors, refer to the Company’s SEC filings, including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.

Conference Call:

The Company will conduct a conference call to discuss the above details and attached financial results today, Thursday, August 26, 2021, at 8:00 a.m. (ET). The conference call will be webcast from the Investor Relations section of the Company’s website at www.1800flowersinc.com. A recording of the call will be posted on the Investor Relations section of the Company’s website within two hours of the call’s completion. A replay of the call can be accessed beginning at 2:00 p.m. (ET) on the day of the call through September 2, 2021, at: (US) 1-877-344-7529; (
Canada) 855-669-9658; (International) 1-412-317-0088; enter conference ID #: 10159487. If you have any questions regarding the above information, please contact the Investor Relations office at invest@1800flowers.com.

Note: The following tables are an integral part of this press release without which the information presented in this press release should be considered incomplete.

1-800-FLOWERS.COM, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)

 

 

June 27, 2021

 

 

June 28, 2020

 

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

173,573

 

 

$

240,506

 

Trade receivables, net

 

 

20,831

 

 

 

15,178

 

Inventories

 

 

153,863

 

 

 

97,760

 

Prepaid and other

 

 

51,792

 

 

 

25,186

 

Total current assets

 

 

400,059

 

 

 

378,630

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

215,287

 

 

 

169,075

 

Operating lease right-of-use assets

 

 

86,230

 

 

 

66,760

 

Goodwill

 

 

208,150

 

 

 

74,711

 

Other intangibles, net

 

 

139,048

 

 

 

66,273

 

Other assets

 

 

27,905

 

 

 

18,986

 

Total assets

 

$

1,076,679

 

 

$

774,435

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

57,434

 

 

$

25,306

 

Accrued expenses

 

 

178,512

 

 

 

141,741

 

Current maturities of long-term debt

 

 

20,000

 

 

 

5,000

 

Current portion of long-term operating lease liabilities

 

 

9,992

 

 

 

8,285

 

Total current liabilities

 

 

265,938

 

 

 

180,332

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

161,512

 

 

 

87,559

 

Long-term operating lease liabilities

 

 

79,375

 

 

 

61,964

 

Deferred tax liabilities

 

 

34,162

 

 

 

28,632

 

Other liabilities

 

 

26,622

 

 

 

16,174

 

Total liabilities

567,609

 

 

 

374,661

 

Total stockholders’ equity

 

 

509,070

 

 

 

399,774

 

Total liabilities and stockholders’ equity

 

$

1,076,679

 

 

$

774,435

 

1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Operations
(in thousands, except for per share data)
(unaudited)

 

 

Three Months Ended

 

 

Years Ended

 

 

 

June 27, 2021

June 28, 2020

June 27, 2021

June 28, 2020

 

Net revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

E-Commerce

 

$

438,109

 

 

$

382,400

 

 

$

1,879,550

 

 

$

1,230,385

 

Other

 

 

48,874

 

 

 

35,556

 

 

 

242,695

 

 

 

259,252

 

Total net revenues

 

 

486,983

 

 

 

417,956

 

 

 

2,122,245

 

 

 

1,489,637

 

Cost of revenues

 

 

288,979

 

 

 

248,530

 

 

 

1,225,816

 

 

 

867,441

 

Gross profit

 

 

198,004

 

 

 

169,426

 

 

 

896,429

 

 

 

622,196

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing and sales

 

 

130,364

 

 

 

100,378

 

 

 

533,268

 

 

 

363,227

 

Technology and development

 

 

14,491

 

 

 

14,262

 

 

 

54,428

 

 

 

48,698

 

General and administrative

 

 

27,176

 

 

 

33,207

 

 

 

117,136

 

 

 

97,394

 

Depreciation and amortization

 

 

10,718

 

 

 

9,245

 

 

 

42,510

 

 

 

32,513

 

Total operating expenses

 

 

182,749

 

 

 

157,092

 

 

 

747,342

 

 

 

541,832

 

Operating income

 

 

15,255

 

 

 

12,334

 

 

 

149,087

 

 

 

80,364

 

Interest expense, net

 

 

1,340

 

 

 

711

 

 

 

5,860

 

 

 

2,438

 

Other income (expense), net

 

 

1,687

 

 

 

1,630

 

 

 

5,888

 

 

 

(84

)

Income before income taxes

 

 

15,602

 

 

 

13,253

 

 

 

149,115

 

 

 

77,842

 

Income tax expense

 

 

2,292

 

 

 

3,479

 

 

 

30,463

 

 

 

18,844

 

Net income

 

$

13,310

 

 

$

9,774

 

 

$

118,652

 

 

$

58,998

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.20

 

 

$

0.15

 

 

$

1.83

 

 

$

0.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net income per common share

 

$

0.20

 

 

$

0.15

 

 

$

1.78

 

 

$

0.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in the calculation of net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

65,023

 

 

 

64,283

 

 

 

64,739

 

 

 

64,463

 

Diluted

 

 

66,477

 

 

 

66,385

 

 

 

66,546

 

 

 

66,408

 

1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

 

  

Years ended

 

  

June 27, 2021

 

June 27, 2020

 

  

 

 

 

Operating activities:

  

 

 

 

Net income

  

$

118,652

 

 

$

58,998

 

Adjustments to reconcile net income to net cash provided by operating activities:

  

 

 

 

Depreciation and amortization

  

 

42,510

 

 

 

32,513

 

Amortization of deferred financing costs

  

 

1,143

 

 

 

646

 

Deferred income taxes

  

 

5,530

 

 

 

(266

)

Bad debt expense

  

 

964

 

 

 

4,143

 

Stock-based compensation

  

 

10,835

 

 

 

8,434

 

Other non-cash items

  

 

645

 

 

 

1,032

 

Changes in operating items:

  

 

 

 

Trade receivables

  

 

(5,236

)

 

 

(6,947

)

Inventories

  

 

(39,104

)

 

 

(4,371

)

Prepaid and other

  

 

(22,850

)

 

 

(726

)

Accounts payable and accrued expenses

  

 

57,397

 

 

 

44,359

 

Other assets and liabilities

  

 

2,804

 

 

 

1,602

 

Net cash provided by operating activities

  

 

173,290

 

 

 

139,417

 

 

  

 

 

 

Investing activities:

  

 

 

 

Acquisitions, net of cash acquired

  

 

(250,942

)

 

 

(20,500

)

Capital expenditures, net of non-cash expenditures

  

 

(55,219

)

 

 

(34,703

)

Purchase of equity investments

  

 

(1,756

)

 

 

(1,176

)

Net cash used in investing activities

  

 

(307,917

)

 

 

(56,379

)

 

  

 

 

 

Financing activities:

  

 

 

 

Acquisition of treasury stock

  

 

(22,369

)

 

 

(10,680

)

Proceeds from exercise of employee stock options

  

 

2,253

 

 

 

285

 

Proceeds from bank borrowings

  

 

265,000

 

 

 

20,000

 

Repayment of notes payable and bank borrowings

  

 

(174,997

)

 

 

(25,000

)

Debt issuance cost

  

 

(2,193

)

 

 

(60

)

Net cash provided by (used in) financing activities

  

 

67,694

 

 

 

(15,455

)

 

  

 

 

 

Net change in cash and cash equivalents

  

 

(66,933

)

 

 

67,583

 

Cash and cash equivalents:

  

 

 

 

Beginning of period

  

 

240,506

 

 

 

172,923

 

End of period

  

$

173,573

 

 

$

240,506

 

1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information – Category Information
(dollars in thousands) (unaudited)

Segment Information shown below is appended to the Company’s Earnings Release and includes the impact of Stock Based Compensation

Three Months Ended

June 27,

2021

June 28,

2020

Personalization

Mall Litigation

& Transaction

Costs

Harry &

David Store

Closure

Costs

As Adjusted

(non-GAAP)

June 28,

2020

%

Change

Net revenues:

Consumer Floral & Gifts

$

297,719

 

$

234,094

 

$

–

$

–

$

234,094

 

27.2

%

BloomNet

 

37,297

 

 

30,189

 

 

30,189

 

23.5

%

Gourmet Foods & Gift Baskets

 

152,168

 

 

153,842

 

 

153,842

 

-1.1

%

Corporate

 

46

 

 

119

 

 

119

 

-61.3

%

Intercompany eliminations

 

(247

)

 

(288

)

 

 

 

(288

)

14.2

%

Total net revenues

$

486,983

 

$

417,956

 

$

–

 

$

–

 

$

417,956

 

16.5

%
 

Gross profit:

Consumer Floral & Gifts

$

122,403

 

$

93,404

 

$

–

 

$

–

 

$

93,404

 

31.0

%

 

41.1

%

 

39.9

%

 

39.9

%
 

BloomNet

 

16,126

 

 

13,673

 

 

13,673

 

17.9

%

 

43.2

%

 

45.3

%

 

45.3

%
 

Gourmet Foods & Gift Baskets

 

59,220

 

 

62,260

 

 

62,260

 

-4.9

%

 

38.9

%

 

40.5

%

 

40.5

%
 

Corporate

 

255

 

 

89

 

 

89

 

186.5

%

 

554.3

%

 

74.8

%

 

74.8

%

 

 

 

 

 

Total gross profit

$

198,004

 

$

169,426

 

$

–

 

$

–

 

$

169,426

 

16.9

%

 

40.7

%

 

40.5

%

 

–

 

 

–

 

 

40.5

%
 

EBITDA (non-GAAP):

Segment Contribution Margin (non-GAAP) (a):

Consumer Floral & Gifts

$

41,195

 

$

38,953

 

$

–

 

$

–

 

$

38,953

 

5.8

%

BloomNet

 

11,271

 

 

7,595

 

 

7,595

 

48.4

%

Gourmet Foods & Gift Baskets

 

4,205

 

 

10,115

 

 

 

5,177

 

 

15,292

 

-72.5

%

Segment Contribution Margin Subtotal

 

56,671

 

 

56,663

 

 

–

 

 

5,177

 

 

61,840

 

-8.4

%

Corporate (b)

 

(30,698

)

 

(35,084

)

 

1,795

 

 

 

(33,289

)

7.8

%

EBITDA (non-GAAP)

 

25,973

 

 

21,579

 

 

1,795

 

 

5,177

 

 

28,551

 

-9.0

%

Add: Stock-based compensation

 

2,606

 

 

1,993

 

 

1,993

 

30.8

%

Add: Compensation charge related to NQ Plan Investment Appreciation

 

1,590

 

 

2,000

 

 

 

 

2,000

 

 

-20.5

 

%

Adjusted EBITDA (non-GAAP)

$

30,169

 

$

25,572

 

$

1,795

 

$

5,177

 

$

32,544

 

-7.3

%

1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information – Category Information
(dollars in thousands) (unaudited)

Segment Information shown below is appended to the Company’s Earnings Release and includes the impact of Stock Based Compensation

Twelve Months Ended

June 27,

2021

Personalization

Mall Litigation

& Transaction

Costs

Harry &

David Store

Closure

Costs

As Adjusted

(non-GAAP)

June 27, 2021

June 28,

2020

Personalization

Mall Litigation

& Transaction

Costs

Harry &

David Store

Closure

Costs

As Adjusted

(non-GAAP)

Jun 28, 2020

%

Change

Net revenues:

Consumer Floral & Gifts

$

1,025,015

$

–

$

–

$

1,025,015

$

593,197

$

–

$

–

$

593,197

72.8

%

BloomNet

 

142,919

 

 

142,919

 

 

111,766

 

 

111,766

 

27.9

%

Gourmet Foods & Gift Baskets

 

955,607

 

 

955,607

 

 

785,547

 

 

785,547

 

21.6

%

Corporate

 

341

 

 

341

 

 

591

 

 

591

 

-42.3

%

Intercompany eliminations

 

(1,637

)

 

 

 

(1,637

)

 

(1,464

)

 

 

 

(1,464

)

-11.8

%

Total net revenues

$

2,122,245

 

$

–

 

$

–

 

$

2,122,245

 

$

1,489,637

 

$

–

 

$

–

 

$

1,489,637

 

42.5

%

Gross profit:

Consumer Floral & Gifts

$

420,860

 

$

–

 

$

–

 

$

420,860

 

$

233,941

 

$

–

 

$

–

 

$

233,941

 

79.9

%

 

41.1

%

 

41.1

%

 

39.4

%

 

39.4

%

 

 

 

 

 

 

 

 

 

 

BloomNet

 

64,978

 

 

64,978

 

 

54,193

 

 

54,193

 

19.9

%

 

45.5

%

 

45.5

%

 

48.5

%

 

48.5

%

Gourmet Foods & Gift Baskets

 

410,208

 

 

410,208

 

 

333,620

 

 

333,620

 

23.0

%

 

42.9

%

 

42.9

%

 

42.5

%

 

42.5

%

Corporate

 

383

 

 

383

 

 

442

 

 

442

 

-13.3

%

 

112.3

%

 

112.3

%

 

74.8

%

 

74.8

%

Total gross profit

$

896,429

 

$

–

 

$

–

 

$

896,429

 

$

622,196

 

$

–

 

$

–

 

$

622,196

 

44.1

%

 

42.2

%

 

–

 

 

–

 

 

42.2

%

 

41.8

%

 

–

 

 

–

 

 

41.8

%

EBITDA (non-GAAP):

Segment Contribution Margin (non-GAAP) (a):

Consumer Floral & Gifts

$

128,625

 

$

–

 

$

–

 

$

128,625

 

$

73,806

 

$

–

 

$

–

 

$

73,806

 

74.3

%

BloomNet

 

45,875

 

 

45,875

 

 

35,111

 

 

35,111

 

30.7

%

Gourmet Foods & Gift Baskets

 

149,377

 

 

 

(483

)

 

148,894

 

 

110,627

 

 

 

5,177

 

 

115,804

 

28.6

%

Segment Contribution Margin Subtotal

 

323,877

 

 

–

 

 

(483

)

 

323,394

 

 

219,544

 

 

–

 

 

5,177

 

 

224,721

 

43.9

%

Corporate (b)

 

(132,280

)

 

5,403

 

 

 

(126,877

)

 

(106,667

)

 

2,706

 

 

 

(103,961

)

-22.0

%

EBITDA (non-GAAP)

 

191,597

 

 

5,403

 

 

(483

)

 

196,517

 

 

112,877

 

 

2,706

 

 

5,177

 

 

120,760

 

62.7

%

Add: Stock-based compensation

 

10,835

 

 

10,835

 

 

8,434

 

 

8,434

 

28.5

%

Add: Compensation charge related to NQ Plan Investment Appreciation

 

5,713

 

 

5,713

 

 

347

 

 

347

 

1546.4

%

Adjusted EBITDA (non-GAAP)

$

208,145

 

$

5,403

$

(483

)

$

213,065

 

$

121,658

 

$

2,706

$

5,177

$

129,541

 

64.5

%

1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
(in thousands) (unaudited)

Reconciliation of net income to adjusted net income (non-GAAP):

 Three Months Ended

 Years Ended

June 27,

2021

June 28,

2020

June 27,

2021

June 28,

2020
 

Net income

$

13,310

$

9,774

 

$

118,652

 

$

58,998

 

Adjustments to reconcile net income to adjusted net income (non-GAAP)

Add: Personalization Mall litigation and transaction costs

 

–

 

 

1,795

 

 

5,403

 

 

2,706

 

Add: Harry & David store closure cost

 

–

 

 

5,177

 

 

(483

)

 

5,177

 

Deduct: Income tax benefit on adjustments

 

33

 

 

(1,691

)

 

(1,005

)

 

(1,908

)

Adjusted net income (non-GAAP)

$

13,343

 

$

15,055

 

$

122,567

 

$

64,973

 
 

Basic and diluted net income per common share

Basic

$

0.20

 

$

0.15

 

$

1.83

 

$

0.92

 

Diluted

$

0.20

 

$

0.15

 

$

1.78

 

$

0.89

 
 
 

Basic and diluted adjusted net income per common share (non-GAAP)

Basic

$

0.21

 

$

0.23

 

$

1.89

 

$

1.01

 

Diluted

$

0.20

 

$

0.23

 

$

1.84

 

$

0.98

 
 

Weighted average shares used in the calculation of net income and adjusted net income per common share

Basic

 

65,023

 

 

64,283

 

 

64,739

 

 

64,463

 

Diluted

 

66,477

 

 

66,385

 

 

66,546

 

 

66,408

 

1-800-FLOWERS.COM, Inc. and Subsidiaries
Selected Financial Information
(in thousands) (unaudited)

Reconciliation of net income to adjusted EBITDA (non-GAAP):

 

Three Months Ended

 

Years Ended

June 27,

2021

June 28,

2020

June 27,

2021

June 28,

2020
 

Net income

$

13,310

 

$

9,774

 

$

118,652

 

$

58,998

Add: Interest expense, net

 

(347

)

 

(919

)

 

(28

)

 

2,522

 

Add: Depreciation and amortization

 

10,718

 

 

9,245

 

 

42,510

 

 

32,513

 

Add: Income tax expense

 

2,292

 

 

3,479

 

 

30,463

 

 

18,844

 

EBITDA

 

25,973

 

 

21,579

 

 

191,597

 

 

112,877

 

Add: Stock-based compensation

 

2,606

 

 

1,993

 

 

10,835

 

 

8,434

Add: Compensation charge related to NQ plan investment appreciation

1,590

2,000

5,713

347

Add: Personalization Mall litigation and transaction costs

 

–

 

 

1,795

 

 

5,403

 

 

2,706

 

Add: Harry & David store closure cost

 

–

 

 

5,177

 

 

(483

)

 

5,177

 

Adjusted EBITDA

$

30,169

 

$

32,544

 

$

213,065

 

$

129,541

 

(a)  Segment performance is measured based on segment contribution margin or segment Adjusted EBITDA, reflecting only the direct controllable revenue and operating expenses of the segments, both of which are non-GAAP measurements. As such, management’s measure of profitability for these segments does not include the effect of corporate overhead, described above, depreciation and amortization, other income (net), and other items that we do not consider indicative of our core operating performance.

(b)  Corporate expenses consist of the Company’s enterprise shared service cost centers, and include, among other items, Information Technology, Human Resources, Accounting and Finance, Legal, Executive and Customer Service Center functions, as well as Stock-Based Compensation. In order to leverage the Company’s infrastructure, these functions are operated under a centralized management platform, providing support services throughout the organization. The costs of these functions, other than those of the Customer Service Center, which are allocated directly to the above categories based upon usage, are included within corporate expenses as they are not directly allocable to a specific segment.

Investors:

Joseph D. Pititto

(516) 237-6131

invest@1800flowers.com

Media:

Kathleen Waugh

(516) 237-6028

kwaugh@1800flowers.com

Source: 1-800-FLOWERS.COM, Inc.

Release – Comtech Telecommunications Corp. Awarded $2.1 Million of Funding

Posted on by Admin


Comtech Telecommunications Corp. Awarded $2.1 Million of Funding for EEE Parts Management, Procurement and Engineering Services

 

MELVILLE, N.Y.–(BUSINESS WIRE)–Aug. 26, 2021– 
August 26, 2021— 
Comtech Telecommunications Corp. (NASDAQ: CMTL), a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies, announced today, that during its fourth quarter of fiscal year 2021, it was awarded 
$2.1 million of additional funding from a major 
U.S. prime contractor in support of NASA’s Space Launch System (“SLS”) 
Control System Electronics. The contract consolidates requirements for high reliability electrical, electronic and electromechanical (“EEE”) parts and engineering services. The total contract value is now 
$10.3 million and fully funded.

“This most recent award demonstrates that our customer continues to recognize the unique value of Comtech’s space level electronic parts supply chain management and engineering services expertise for this critical manned space program,” said  Fred Kornberg, Chairman of the Board and Chief Executive Officer of 
Comtech Telecommunications Corp.

The contract was awarded to Comtech’s Space & Component Technology (“SCT”) division, which specializes in ground station systems and life cycle management, as well as the supply of high reliability microelectronics (“EEE parts”) for use in satellite, launch vehicle and manned space applications.

Satellite tracking antennas are manufactured from 30cm to 13m, as well as RF feeds, radomes and carbon fiber reflectors, for LEO, MEO and GEO orbits, for customers worldwide, for all frequency bands. This encompasses all aspects of use including requirements definition and analysis, design, development, and integration of turnkey systems from antenna to data processing, civil works and construction, software, station installation and verification, operations and maintenance, and decommissioning at end of life. For more information, visit www.comtechspace.com.

Comtech Telecommunications Corp. is a leading global provider of next-generation 911 emergency systems and secure wireless communications technologies to commercial and government customers around the world. Headquartered in 
Melville, New York and with a passion for customer success, 
Comtech designs, produces and markets advanced and secure wireless solutions to customers in more than 100 countries. For more information, please visit www.comtechtel.com.

Certain information in this press release contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. The Company’s 
Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such 
Securities and Exchange Commission filings.

Comtech Investor Relations:
631-962-7005
investors@comtech.com

Source: 
Comtech Telecommunications Corp.

Release – Gevo Files for Environmental Permits in South Dakota for the Net-Zero 1 Project

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Gevo Files for Environmental Permits in South Dakota for the Net-Zero 1 Project

 

ENGLEWOOD, Colo., Aug. 26, 2021 (GLOBE NEWSWIRE) — Gevo, Inc. (NASDAQ: GEVO) is pleased to announce that the air quality and wastewater permit applications for the company’s Net-Zero 1 project have been filed with the South Dakota Department of Agriculture & Natural Resources.

“These permit applications are on schedule and represent the first of the permits necessary for the construction of Net-Zero 1,” commented Dr. Chris Ryan, Gevo’s President and Chief Operating Officer. “We are happy to work closely with Pinnacle Engineering, a world-class engineering firm known for specializing in environmental permitting, to draft our permits. These combined efforts are focused on minimizing environmental impact and establishing the lowest CI (Carbon Intensity) score possible,” continued Dr. Ryan.

“It’s a pleasure to work with the Gevo team and we look forward to our continued collaborations on this exciting project,” stated Steve Schleicher, Pinnacle Engineering, Partner and Vice President, Industrial Services.

About Gevo

Gevo’s mission is to transform renewable energy and carbon into energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel and diesel fuel, that when burned have potential to yield net-zero greenhouse gas emissions when measured across the full life cycle of the products. Gevo uses low-carbon renewable resource-based carbohydrates as raw materials, and is in an advanced state of developing renewable electricity and renewable natural gas for use in production processes, resulting in low-carbon fuels with substantially reduced carbon intensity (the level of greenhouse gas emissions compared to standard petroleum fossil-based fuels across their life cycle). Gevo’s products perform as well or better than traditional fossil-based fuels in infrastructure and engines, but with substantially reduced greenhouse gas emissions. In addition to addressing the problems of fuels, Gevo’s technology also enables certain plastics, such as polyester, to be made with more sustainable ingredients. Gevo’s ability to penetrate the growing low-carbon fuels market depends on the price of oil and the value of abating carbon emissions that would otherwise increase greenhouse gas emissions. Gevo believes that its proven, patented technology enabling the use of a variety of low-carbon sustainable feedstocks to produce price-competitive low-carbon products such as gasoline components, jet fuel and diesel fuel yields the potential to generate project and corporate returns that justify the build-out of a multi-billion-dollar business.

Gevo believes that the Argonne National Laboratory GREET model is the best available standard of scientific-based measurement for life cycle inventory or LCI.

Learn more at Gevo’s website: www.gevo.com

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to a variety of matters such as, without limitation, statements regarding Pinnacle Engineering; the Net-Zero 1 project, including the permits necessary for the Net-Zero 1 project, whether Gevo will receive the permits, Gevo’s ability to produce products with a “net-zero” greenhouse gas footprint; Gevo’s plans and strategy and other statements that are not purely statements of historical fact. These forward-looking statements are made on the basis of the current beliefs, expectations and assumptions of the management of Gevo and are subject to significant risks and uncertainty. Investors are cautioned not to place undue reliance on any such forward-looking statements. All such forward-looking statements speak only as of the date they are made, and Gevo undertakes no obligation to update or revise these statements, whether as a result of new information, future events or otherwise. Although Gevo believes that the expectations reflected in these forward-looking statements are reasonable, these statements involve many risks and uncertainties that may cause actual results to differ materially from what may be expressed or implied in these forward-looking statements. For a further discussion of risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Gevo in general, see the risk disclosures in the Annual Report on Form 10-K of Gevo for the year ended December 31, 2020, and in subsequent reports on Forms 10-Q and 8-K and other filings made with the U.S. Securities and Exchange Commission by Gevo.

Investor and Media Contact

+1 720-647-9605

IR@gevo.com

Release – Ceapro Inc. Reports 2021 Second Quarter and Six-Month Financial Results and Operational Highlights

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Ceapro Inc. Reports 2021 Second Quarter and Six-Month Financial Results and Operational Highlights

 

– Company continues to increase R&D activities to advance clinical and preclinical programs –

– Second quarter sales of $4,409,000 compared to $4,666,000 for second quarter 2020 –

– Cash generated from operations of $2,128,000 in Q2 2021 compared to $2,195,000 in Q2 2020 –

– Maintained production operations during COVID-19 pandemic, providing customers with essential products while ensuring the health and safety of our employees –

EDMONTON, Alberta, Aug. 26, 2021 (GLOBE NEWSWIRE) — Ceapro Inc. (TSX-V: CZO; OTCQX: CRPOF) (“Ceapro” or the “Company”), a growth-stage biotechnology company focused on the development and commercialization of active ingredients for healthcare and cosmetic industries, today announced financial results and operational highlights for the second quarter and six months ended June 30, 2021.

“Progress continues on all fronts from production operations to research and development, allowing us to advance our pipeline while expanding our business model. With our newly formed network of highly renowned experts from University of Alberta, McMaster University, the Montreal Heart Institute, and the Angiogenesis Foundation, we have implemented a comprehensive strategic research plan that we believe enables us to address immune/inflammation-based and lifestyle diseases at various stages and from all angles. Additionally, with upcoming results expected in the fourth quarter of this year for Ceapro’s very first clinical trial, I believe we are well positioned for the next steps in becoming a premier life sciences company. The Company has exciting things on the horizon and we are committed to building on momentum,” stated Gilles Gagnon, M.Sc., MBA, President and CEO.

Corporate and Operational Highlights

Pipeline Development:

  • Announced successful completion of collaborative research and development program with University of Alberta. The program developed several new chemical complexes as potential delivery systems and demonstrated the possibility of drying peptides using Pressurized Gas eXpanded (PGX) Technology.
  • Initiated bioavailability studies with University of Alberta for new chemical complexes yeast beta glucan-CoQ10 and alginate-CoQ10.
  • Resumed research activities with McMaster University to develop an inhalable therapeutic for COVID-19 using yeast beta glucan.
  • Completed patient enrollment in clinical study evaluating beta glucan as a cholesterol-lowering agent. Last patient last visit is expected by end of September 2021, followed by locking of data base, unblinding of the study and topline results expected in Q4 2021.

Technology:

  • Pursued technical upgrades of PGX demo plant in Edmonton including initiation of commercial scale up of impregnation unit to produce chemical complexes.
  • Initiated engineering design for PGX commercial scale unit. Final decision on the type and location of future commercial scale PGX unit to be announced during Q4 2021.

Production Operations:

  • Successfully passed thorough audits conducted by two major customers for the Edmonton facility, which is now housing all production operations for the Company.

Corporate:

  • Pursued out-licensing discussions for PGX-processed new chemical complexes.

Subsequent to Quarter:

  • Announced research agreement with Montreal Heart Institute for a Phase 1 clinical trial assessing safety and tolerability of pharmaceutical grade avenanthramides.
  • Announced research agreement with Boston-based Angiogenesis Foundation to assess in vivo bioefficacy of oat beta glucan and avenanthramides in angiogenesis, blood vessel repairs, wound healing and tissue regeneration in various inflammation-based diseases and conditions like COVID-19 presenting damages of the lung blood vessels.

Financial Highlights for the Second Quarter and the Six-Month Period Ended June 30, 2021

  • Total sales of $4,409,000 for the second quarter of 2021 and $9,110,000 for the first six months of 2021 compared to $4,666,000 and $8,939,000 for the comparative periods in 2020.

    Sales being made in USA dollars and then reported in CDN dollars, it is noteworthy to look at the impact of the exchange rate (USD/CDN) from year to year. In fact, the Company has recorded respective sales in USD of $3.6M and USD $7.3M for the second quarter and the first six months of 2021 as compared to USD $3.4M and USD $6.5M for the comparative periods of 2020, representing a year-to-date effective increase of 12% in 2021.
  • Net profit of $676,000 for the second quarter of 2021 and $1,191,000 for the first six months of 2021 compared to a net profit of $1,077,000 and $2,203,000 for the comparative periods in 2020.

  • Cash flows generated from operations of $2,433,000 for the first six months of 2021 vs $2,727,000 in 2020.

  • Positive working capital balance of $9,303,000 as of June 30, 2021.

“The ability of our business to successfully navigate through the challenging second quarter business environment is a testament to the commitment and hard work of our dedicated employees, and a measurable indication of the operational improvements generated by our strategic investments of the past few years,” continued Mr. Gagnon. “Looking ahead, while considering the ongoing potential economic impact related to the new surge of COVID-19, we believe Ceapro is well-positioned to once again deliver solid growth in 2021. With a strong and very clean balance sheet, a group of dedicated people, and a solid base business coupled with the innovative technologies and products that we have developed to enable us to expand, Ceapro is poised to emerge as a successful life science company.”

CEAPRO INC.    
Consolidated Balance Sheets    
Unaudited    
     
  June 30, December 31,
  2021 2020
  $ $
     
ASSETS    
Current Assets    
Cash and cash equivalents 7,269,428 5,369,029
Trade receivables 1,801,568 2,019,723
Other receivables 45,913 102,224
Inventories (note 3) 1,168,163 1,210,079
Prepaid expenses and deposits 236,932 348,845
     
  10,522,004 9,049,900
Non-Current Assets    
Investment tax credits receivable 607,700 607,700
Deposits 82,124 82,124
Licences (note 4) 17,032 18,514
Property and equipment (note 5) 18,029,316 18,591,189
Deferred tax assets 874,304 874,304
     
  19,610,476 20,173,831
     
TOTAL ASSETS 30,132,480 29,223,731
     
LIABILITIES AND EQUITY    
Current Liabilities    
Accounts payable and accrued liabilities 857,731 1,067,622
Current portion of lease liabilities (note 6) 283,204 250,658
Current portion of CAAP loan (note 8) 77,855 72,263
     
  1,218,790 1,390,543
Non-Current Liabilities    
Long-term lease liabilities (note 6) 2,505,623 2,648,917
Deferred tax liabilities 874,304 874,304
     
  3,379,927 3,523,221
     
TOTAL LIABILITIES 4,598,717 4,913,764
     
Equity    
Share capital (note 7 (b)) 16,555,619 16,511,067
Contributed surplus (note 7 (e)) 4,670,289 4,682,393
Retained earnings 4,307,855 3,116,507
     
  25,533,763 24,309,967
     
TOTAL LIABILITIES AND EQUITY 30,132,480 29,223,731
     


CEAPRO INC.        
Consolidated Statements of Net Income and Comprehensive Income
Unaudited        
     
     
  Quarters Ended June 30,   Six Months Ended June 30,
  2021   2020   2021   2020
  $   $   $   $
         
Revenue (note 14) 4,408,631   4,665,971   9,110,374   8,939,345
Cost of goods sold 1,770,153   2,079,270   4,213,953   3,980,493
         
Gross margin 2,638,478   2,586,701   4,896,421   4,958,852
         
Research and product development 830,511   399,797   1,647,358   902,339
General and administration 952,847   838,263   1,665,054   1,703,297
Sales and marketing 16,362   29,207   29,600   77,435
Finance costs (note 11) 38,344   44,583   132,254   146,192
         
Income from operations 800,414   1,274,851   1,422,155   2,129,589
         
Other (expenses) income (note 10) (123,942 ) (197,812 ) (230,807 ) 73,505
         
Income before tax 676,472   1,077,039   1,191,348   2,203,094
         
Income taxes –   –   –   –
         
Total comprehensive income for the period 676,472   1,077,039   1,191,348   2,203,094
         
Net income per common share (note 17):        
Basic 0.01   0.01   0.02   0.03
Diluted 0.01   0.01   0.02   0.03
         
Weighted average number of common shares outstanding (note 17):        
Basic 77,673,832   77,608,341   77,662,495   77,573,327
Diluted 78,684,303   77,980,876   78,684,344   77,930,529
         


CEAPRO INC.    
Consolidated Statements of Cash Flows    
Unaudited    
     
     
  2021   2020  
Six Months Ended June 30, $   $  
OPERATING ACTIVITIES    
Net income for the period 1,191,348   2,203,094  
Adjustments for items not involving cash    
Finance costs 71,662   79,674  
Transaction costs –   1,108  
Depreciation and amortization 937,356   920,521  
Accretion 5,592   10,410  
Share-based payments 6,828   108,147  
Net income for the period adjusted for non-cash items 2,212,786   3,322,954  
CHANGES IN NON-CASH WORKING CAPITAL ITEMS    
Trade receivables 218,155   600,990  
Other receivables 56,311   (43,599 )
Inventories 41,916   (592,489 )
Prepaid expenses and deposits 51,179   (33,088 )
Accounts payable and accrued liabilities relating to operating activities (75,337 ) (448,200 )
Total changes in non-cash working capital items 292,224   (516,386 )
         
Net income for the period adjusted for non-cash and working capital items 2,505,010   2,806,568  
Interest paid (71,662 ) (79,674 )
CASH GENERATED FROM OPERATIONS 2,433,348   2,726,894  
INVESTING ACTIVITIES    
Purchase of property and equipment (277,062 ) (38,230 )
Purchase of leasehold improvements (19,472 ) –  
Deposits relating to investment in equipment (16,733 ) (50,203 )
Accounts payable and accrued liabilities relating to investing activities (134,554 ) –  
CASH USED IN INVESTING ACTIVITIES (447,821 ) (88,433 )
FINANCING ACTIVITIES    
Stock options exercised 25,620   –  
Repayment of long-term debt –   (97,507 )
Repayment of lease liabilities (110,748 ) (130,829 )
CASH USED IN FINANCING ACTIVITIES (85,128 ) (228,336 )
Increase in cash and cash equivalents 1,900,399   2,410,125  
     
Cash and cash equivalents at beginning of the period 5,369,029   1,857,195  
     
Cash and cash equivalents at end of the period 7,269,428   4,267,320  
     

The complete financial statements are available for review on SEDAR at https://sedar.com/Ceapro and on the Company’s website at www.ceapro.com.

About Ceapro Inc.

Ceapro Inc. is a Canadian biotechnology company involved in the development of proprietary extraction technology and the application of this technology to the production of extracts and “active ingredients” from oats and other renewable plant resources. Ceapro adds further value to its extracts by supporting their use in cosmeceutical, nutraceutical, and therapeutics products for humans and animals. The Company has a broad range of expertise in natural product chemistry, microbiology, biochemistry, immunology and process engineering. These skills merge in the fields of active ingredients, biopharmaceuticals and drug-delivery solutions. For more information on Ceapro, please visit the Company’s website at www.ceapro.com.

For more information contact:

Jenene Thomas
JTC Team, LLC
Investor Relations and Corporate Communications Advisor
T (US): +1 (833) 475-8247
E: czo@jtcir.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Source: Ceapro Inc.

Are There Enough ESG Stocks to Go Around?

Posted on by Admin

SEC Prioritizing ESG Investment Products May Uncover a Supply Problem

 

Earlier this year, the Securities and Exchange Commission (SEC) announced its exam priorities for 2021. The first priority mentioned in a press release was ESG related. Specifically, it stated, “This year, the Division is enhancing its focus on climate and ESG-related risks by examining proxy voting policies and practices to insure voting aligns with investors’ best interests and expectations, as well as firms’ business continuity plans in light of intensifying physical risks associated with climate change,” The acting SEC Chair said, “Through these and other efforts, we are integrating climate and ESG considerations into the agency’s broader regulatory framework.

The Division of Examinations at the SEC is responsible for initiating the reviews of products purported to follow the ESG guidelines outlined in offering documents of mutual funds, ETFs, and securities, (both public and private). The intention is to make sure investors have a clear idea of what they’re buying, also the nature of the instrument should not change without proper notification. In the case of actively managed funds, the underlying holdings must match investor expectations.

In practice, this is necessary for those that are either self-directed investors or manage money for others. If an investor believes that ESG investments are growing in demand and thus decides to allocate 20% to an ESG fund, meanwhile that fund is only 40% allocated to ESG investments, the investor is not allocated based on their portfolio design. Especially if the investor expects the investment vehicle to be 95% or more exposed to the category. In this case, the investor surely is not getting the product they bought nor are they achieving the allocation they deemed prudent.

The SEC in Action

In an August 1st article by The Wall Street Journal titled: “Fired Executive Says Deutsche Bank’s DWS Overstated Sustainable-Investing Efforts” the WSJ reported the Sustainability Chief of the DWS Group told investors that environmental, social and governance concerns are at the heart of everything it does and that their ESG standards are above the industry average. The now-former Sustainability Chief at DWS has recently said that, behind closed doors, it has struggled to define and implement an ESG strategy and that at times they presented a more positive front than reality.

Yesterday (August 25), the Journal wrote a follow-up story that the SEC and federal prosecutors are investigating whether DWS overstated its sustainable investing efforts. DWS is not a small player in the asset management arena with $1 trillion under management. Certainly, the impact of this investigation, still in the early stages, will have ramifications on the sector. How the sector behaves, remains to be seen. But the impact could be in the form of added upward price pressure on stocks that most solidly fit within widely accepted definitions of sustainability or ESG. It may even cause stocks and other securities that are borderline to be sold out of funds for fear of failing a regulator’s examination.

The Growing
Sustainability Sector

At the end of 2020, CNBC reported that sustainable investing is surging and accounted for 33% of assets under management, driven mainly by institutional buyers.  In July, Morningstar reported that global sustainable fund assets hit a record $2.3 trillion during Q2 2021. While many companies are “greening” their operations and making policy changes in their Human Capital divisions, the demand for securities within managed funds may be outpacing what is available in “size.”

For investors that don’t trade in large lot sizes, this may present an opportunity to benefit from the difficulties large funds may be having fulfilling the requirements of their prospectuses. If this is true, small accounts buying individual stocks may have an advantage over funds.

 

Take-Away

The growth of investing in sustainability or ESG companies has led to a huge shift in portfolio allocations. From the point of view of an investment advisor or individual, an allocation change often is as easy as selling out of one fund and buying into another — one that sincerely works to invest in companies that meet this category and simultaneously target value, growth, or income. With the large trades some funds must make to stay invested, even the best-intentioned fund manager may run out of good opportunities within the category. This is not necessarily the case for the individual self-directed investor or advisor that is adept at analyzing and reading the research on individual companies. For the average individual, there are more opportunities to fulfill their smaller size requirements than there are for the $2.3 trillion in managed by funds.

Channelchek provides information for investors to explore small and microcap stocks in many categories; within the Company Data section, investors can review stocks to decide what meets requirements important to their allocation decisions.

Paul Hoffman

Managing Editor, Channelchek

 

Noble Capital Markets Uranium Power Players Investor Forum – August 31, 2021 Starting at 9am EDT

The Noble Uranium Power Players Investor Forum is a virtual conference bringing together leading companies involved in the exploration and production of uranium.

Registration is fast and free.

 

Source:

https://www.sec.gov/news/press-release/2021-39

https://www.cnbc.com/2020/12/21/sustainable-investing-accounts-for-33percent-of-total-us-assets-under-management.html

https://www.wsj.com/articles/fired-executive-says-deutsche-banks-dws-overstated-sustainable-investing-efforts-11627810380?mod=article_inline

https://www.wsj.com/articles/u-s-authorities-probing-deutsche-banks-dws-over-sustainability-claims-11629923018?mod=searchresults_pos5&page=1

https://www.reuters.com/business/sustainable-business/global-sustainable-fund-assets-hit-record-23-tln-q2-says-morningstar-2021-07-27/

 

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