cpereira@noblefcm.com, Author at Channelchek

Comstock Inc. (LODE) – Subsidiary-Level Financing to Fund Growth

Posted on June 20, 2024June 20, 2024 by cpereira@noblefcm.com

Thursday, June 20, 2024

Comstock (NYSE: LODE) innovates technologies that contribute to global decarbonization and circularity by efficiently converting under-utilized natural resources into renewable fuels and electrification products that contribute to balancing global uses and emissions of carbon. The Company intends to achieve exponential growth and extraordinary financial, natural, and social gains by building, owning, and operating a fleet of advanced carbon neutral extraction and refining facilities, by selling an array of complimentary process solutions and related services, and by licensing selected technologies to qualified strategic partners. To learn more, please visit www.comstock.inc.

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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

Shareholder update. In a letter to shareholders, Comstock provided additional details regarding how the company expects to finance its growth initiatives across its business segments. Comstock intends to minimize the issuance of equity by using alternative sources of funding at the subsidiary level. Additionally, Comstock expects to commence sales of its real estate holdings in Silver Springs, Nevada and its interest in the Sierra Springs Opportunity Fund in the coming months. Proceeds from the asset sales will fund, among other things, advancing mine development plans for the company’s Dayton-Spring Valley resource areas.

Comstock Metals. Comstock intends to secure debt and equity capital at the subsidiary level to fund the construction of Comstock Metals’ first two industry-scale facilities. Discussions are ongoing with multiple counterparties interested in participating in primarily debt financing with agreements expected in the third quarter of 2024. Comstock Metals recently commissioned its first demonstration-scale photovoltaic recycling facility in Silver Springs, Nevada, secured revenue generating contracts, and began receiving end-of-life solar panels.

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*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.

Comtech Telecommunications (CMTL) – Finally, the Refi is Done. And 3QFY24 Results

Posted on June 20, 2024June 20, 2024 by cpereira@noblefcm.com

Thursday, June 20, 2024

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs, develops, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

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

A Refinancing. Comtech announced a new $222 million credit facility, replacing the previous facility which was due this October. The refi removes a significant uncertainty, in our view, and will enable a return to a normal operating environment over time. The interest rate is a blended 14%, up from the 10% under the previous facility.

3Q Results. Supplier and customer worry about Comtech’s financial status resulted in a push to the right for sales, negatively impacting 3Q24 results. Revenue was $128.1 million, down from $136.3 million last year and below our $139 million projection. Adjusted EBITDA totaled $11.9 million, or a 9.3% margin, compared to $12.5 million and a 9.2% margin in 3Q23. Comtech reported a net loss of $1.0 million, or a loss of $0.04/sh, compared to a loss of $9.2 million, or $0.33/sh last year.

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

Kelly Services (KELYA) – More Details on Motion Recruitment Partners

Posted on June 20, 2024June 20, 2024 by cpereira@noblefcm.com

Thursday, June 20, 2024

Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

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

MRP Call. On Tuesday, Kelly management held a conference call to discuss the completion of the Motion Recruitment Partners (MRP) deal. Management provided additional details regarding the financial profile of MRP and how it will integrate into Kelly, valuation details regarding the deal, and the Company’s goal of reducing debt as a result of the acquisition.

Improved Financial Profile. Kelly improves on both its gross and adjusted EBITDA margins with the deal. MRP had a 30% gross margin and 7% adj. EBITDA margin for fiscal year 2023 compared to Kelly’s 20% and 2.3%, respectively. Like the rest of the staffing industry, MRP’s fiscal 2023 was impacted by the macro environment as margins decreased from 33% gross and 9% adj. EBITDA for the 2022 fiscal year. We believe that MRP’s financial performance will be beneficial in the short-term for Kelly, but more so in the future when the environment starts to normalize.

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GeoVax Labs (GOVX) – GeoVax Receives BARDA Award For COVID Vaccine Trial

Posted on June 18, 2024June 18, 2024 by cpereira@noblefcm.com

Tuesday, June 18, 2024

GeoVax Labs, Inc. is a clinical-stage biotechnology company developing novel therapies and vaccines for solid tumor cancers and many of the world’s most threatening infectious diseases. The company’s lead program in oncology is a novel oncolytic solid tumor gene-directed therapy, Gedeptin®, presently in a multicenter Phase 1/2 clinical trial for advanced head and neck cancers. GeoVax’s lead infectious disease candidate is GEO-CM04S1, a next-generation COVID-19 vaccine targeting high-risk immunocompromised patient populations. Currently in three Phase 2 clinical trials, GEO-CM04S1 is being evaluated as a primary vaccine for immunocompromised patients such as those suffering from hematologic cancers and other patient populations for whom the current authorized COVID-19 vaccines are insufficient, and as a booster vaccine in patients with chronic lymphocytic leukemia (CLL). In addition, GEO-CM04S1 is in a Phase 2 clinical trial evaluating the vaccine as a more robust, durable COVID-19 booster among healthy patients who previously received the mRNA vaccines. GeoVax has a leadership team who have driven significant value creation across multiple life science companies over the past several decades.

Robert LeBoyer, Senior Vice President, Equity Research Analyst, Biotechnology, Noble Capital Markets, Inc.

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

Grant Provides Up To $367 Million Funding For The Phase 2b Trial. GeoVax announced that it has been selected to receive a Project NexGen grant to test CM04S1 in a Phase 2b study for prevention of COVID-19. The study will test CM04S1 against an approved vaccine in a randomized trial enrolling 10,000 volunteers. GeoVax will receive about $24.3 million for manufacturing, materials, and trial preparations, which can be increased to $45 million. About $343 million will be awarded to a CRO to conduct the trial.

Phase 2b Trial Will Have A Large Enrollment. The trial is designed as a Phase 2b double-blind study comparing GeoVax CM-04S1 to an approved mRNA COVID-19 vaccine. Enrollment will have an estimated 10,000 healthy volunteers to determine efficacy, safety, and immunogenicity of the vaccines. Previous trials with CM04S1 have shown both humoral and cellular immunity to multiple strains of the SARS-CoV-2 virus, with rapid and durable protection.

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

Aurania Resources (AUIAF) – Take-Aways from the Annual General Meeting

Posted on June 17, 2024June 17, 2024 by cpereira@noblefcm.com

Monday, June 17, 2024

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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

Annual shareholder meeting. Shareholders approved all resolutions at the company’s annual meeting on June 13. These included approving the financial statements for the year-ended December 31, 2023, the report of the auditors, the appointment of auditors, election of directors, and the company’s incentive stock option plan for the upcoming year.

Corporate update. Dr. Keith Barron, CEO and Director, provided a corporate update highlighting key priorities in 2024 and 2025. These include: 1) exploration at the Lost Cities project in Ecuador, 2) advancing the company’s application for an exploration license in the Brittany Peninsula of northwestern France, 3) advancing joint venture and strategic partnership discussions, and 4) expanding community access agreements and community projects in Ecuador. At least one major mining company has been active in Aurania’s data room and in discussions with the company.

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

Alliance Resource Partners (ARLP) – Revising Estimates Following Successful Note Offering

Posted on June 14, 2024June 14, 2024 by cpereira@noblefcm.com

Friday, June 14, 2024

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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

Senior notes offering. Alliance recently completed a $400 million private offering of 8.625% senior unsecured notes due in 2029. A portion of the net proceeds will fund the redemption of its outstanding 7.5% senior notes due in 2025. Alliance delivered a notice of redemption for all outstanding 2025 notes. The redemption price for the 2025 notes is 100% of the principal amount plus accrued and unpaid interest to the redemption date, which is expected to be June 28. As of March 31, senior notes outstanding were $284.6 million.

Second quarter coal shipments. The partnership’s April 2024 coal sales volumes declined 15% to ~2.4 million tons versus ~2.9 million tons during the prior year month. In Appalachia, coal sales volumes decreased 48.2% compared to April 2023 due to the loss of 10 shipping days as a result of high-water events that impacted loading at the Tunnel Ridge complex, along with deferred shipments due to the Francis Scott Key Bridge collapse. In the Illinois Basin, coal sales volume remained relatively consistent with April 2023. Lower volumes at River View due to slowing barge traffic were almost entirely offset by higher volumes at Gibson South due to spot export sales. Volumes deferred at River View and Tunnel Ridge amounted to 420,000 tons and 77,000 tons, respectively, and are expected to be shipped throughout the balance of 2024.

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

Kelly Services (KELYA) – Further Portfolio Optimization

Posted on June 13, 2024June 13, 2024 by cpereira@noblefcm.com

Thursday, June 13, 2024

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

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

Portfolio Optimization. Continuing its strategic actions to optimize its operating model and unlock capital, Kelly has sold the Ayers Group, a division of KellyOCG, to Keystone Partners, a Silver Oak Services Partners LLC portfolio company. While financial terms were not disclosed, the transaction further allows the Company to focus resources on specialties where KellyOCG is well positioned to compete and win over the long term, in our view.

Ayers Group. A provider of outplacement, executive coaching, and leadership development solutions to employers, Ayers was acquired by Kelly in 2006 for $4.6 million, with another $1.3 million of potential earnouts. Ayers was generating about $10 million of revenue at the time and while Kelly does not break out Ayers’ current revenue contribution, various sources estimate current revenue in the $20 million range.

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

The GEO Group (GEO) – An Incremental Net Positive

Posted on June 12, 2024June 12, 2024 by cpereira@noblefcm.com

Wednesday, June 12, 2024

The GEO Group, Inc. (NYSE: GEO) is a leading diversified government service provider, specializing in design, financing, development, and support services for secure facilities, processing centers, and community reentry centers in the United States, Australia, South Africa, and the United Kingdom. GEO’s diversified services include enhanced in-custody rehabilitation and post-release support through the award-winning GEO Continuum of Care®, secure transportation, electronic monitoring, community-based programs, and correctional health and mental health care. GEO’s worldwide operations include the ownership and/or delivery of support services for 103 facilities totaling approximately 83,000 beds, including idle facilities and projects under development, with a workforce of up to approximately 18,000 employees.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

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

More Available Funding. ICE’s termination of competitor CoreCivic’s South Texas contract (see our report on CoreCivic) will provide funding for additional beds. According to ICE, “Closing this facility will enable ICE to reallocate funding to increase the overall detention bed capacity across the system by an estimated 1,600 beds to better support operational needs. This additional bedspace is being pursued across the country and is expected to be available immediately.”

The Opportunity. First, we expect some portion of the nearly 1,600 detainees at South Texas may need to be re-homed. Second, as noted, the freed up funding will increase overall detention bed capacity by 1,600 beds. The Agency stated, “Today’s announcement will provide an overall increase in bedspace and operate at or above the FY24 appropriated 41,500 minimum bed requirement…” With the current detainee population just over 37,300, ICE could now access nearly 6,000 more beds. GEO has ample capacity, both at existing and idled facilities, to assist ICE.

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

Euroseas (ESEA) – Favorable Time Charter Contract for the M/V Stephania K

Posted on June 12, 2024June 12, 2024 by cpereira@noblefcm.com

Wednesday, June 12, 2024

Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 140 years. Euroseas trades on the NASDAQ Capital Market under the ticker ESEA. Euroseas operates in the container shipping market. Euroseas’ operations are managed by Eurobulk Ltd., an ISO 9001:2008 and ISO 14001:2004 certified affiliated ship management company, which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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

New time charter contract. Euroseas Ltd. executed a time charter contract for M/V Stephania K at a gross daily rate of $22,000 for a minimum period of 23 months to a maximum period of 25 months at the option of the charterer. The M/V Stephania K is a newbuild 1,800 twenty-foot equivalent unit (TEU) feeder container ship. Recall that TEU is a unit of cargo capacity that is based on the volume of a 20-foot-long intermodal container that can be transferred between different carriers. The new charter will commence upon delivery of the vessel from the shipyard which is expected to take place on June 28.

Favorable charter rate. The charter is expected to contribute EBITDA of roughly $11.0 million for the minimum contracted period and improves Euroseas’ remaining 2024 charter coverage to 90%. Based on the rate and duration, the charter represents a significant improvement compared to its sister vessel, the M/V Monica, which was recently chartered for 12 months at a rate of $16,000 per day.

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

CoreCivic, Inc. (CXW) – A Significant Loss – Moving to Market Perform

Posted on June 12, 2024June 12, 2024 by cpereira@noblefcm.com

Wednesday, June 12, 2024

CoreCivic is a diversified, government-solutions company with the scale and experience needed to solve tough government challenges in flexible, cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, a network of residential and non-residential alternatives to incarceration to help address America’s recidivism crisis, and government real estate solutions. We are the nation’s largest owner of partnership correctional, detention and residential reentry facilities, and believe we are the largest private owner of real estate used by government agencies in the United States. We have been a flexible and dependable partner for government for nearly 40 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at www.corecivic.com.

Joe Gomes, CFA, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

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

South Texas. ICE has informed CoreCivic of its intention to terminate the existing agreement for use of the South Texas Family Residential Center effective August 9th. This is a major blow, at least in the short-term, to CoreCivic. We are lowering our rating to Market Perform from Outperform as a result until the smoke clears.

Financial Impact. The 2,400 bed South Texas is CoreCivic’s most important contract, in our opinion. In 2023, the facility generated over 8% of overall revenue. Management estimates the annualized EPS impact to be a reduction of $0.38-$0.41 due to the closure. The Company has suspended its 2024 financial guidance. Facility population as of June 9th was 1,561.

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Conduent Inc. (CNDT) – Well-Priced Share Repurchase Takes Out Activist

Posted on June 11, 2024June 11, 2024 by cpereira@noblefcm.com

Tuesday, June 11, 2024

Patrick McCann, CFA, Research Analyst, Noble Capital Markets, Inc.

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

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

Carl Icahn exits. Yesterday the company announced that it repurchased roughly 38 million shares controlled by Carl Icahn for $3.47/share ($132 million). The purchase price was based on the close on June 7th. With the transaction, Carl Icahn no longer has a beneficial interest in the company’s common equity. In addition, the 3 Icahn sponsored board members resigned. We expect the company to seek replacements for the retired board members with members that could support its growth initiatives.

Backstory. Carl Icahn played an activist role in spinning out Conduent from Xerox in 2017 and had been a CNDT shareholder ever since. We believe that Icahn was supportive of the company’s asset sales and its current transition plan, but likely chose to focus on his larger positions. Notably, Icahn exited his Xerox stake last year.

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Comstock Inc. (LODE) – Comstock Expands the Scope of its Partnership with RenFuel in Europe

Posted on June 11, 2024June 11, 2024 by cpereira@noblefcm.com

Tuesday, June 11, 2024

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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

Amending agreements with RenFuel. Comstock Inc. is amending agreements with RenFuel K2B AB pertaining to the development of RenFuel’s planned biorefinery project at a pulp and paper mill in Sweden. RenFuel is liquidating a subsidiary originally formed to administer its previously planned Swedish biorefinery as part of a joint venture with Preem. While not having any impact on Comstock other than Comstock declining its option to enter the joint venture, the amendments are expected to broaden the scope of Comstock’s partnership with RenFuel in Europe.

A powerful combination. Comstock utilizes RenFuel’s patented catalytic esterification technology to refine its proprietary Bioleum derivatives into hydro-deoxygenated bioleum oil (HBO). Advanced biofuel refineries use HBO for blending with, diversifying, and extending conventional hydro-processed fat, oil, and grease feedstocks to produce sustainable aviation fuel and renewable diesel fuel. Comstock holds the exclusive license to RenFuel’s refining technologies in North America, Central America, and South America.

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AZZ Inc. (AZZ) – Upgrading to Outperform Based on Strengthening Cash Flow Profile and Outlook

Posted on June 11, 2024June 11, 2024 by cpereira@noblefcm.com

Tuesday, June 11, 2024

Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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

Upgrading our rating to Outperform. We have raised our investment rating to Outperform based on an increasingly favorable cash flow growth profile. With the new greenfield plant construction in Washington, Missouri expected to be completed in fiscal year 2025, we expect the facility to contribute to top-line growth while capital expenditures associated with organic growth initiatives could decline in fiscal year 2026. Once its effort to deleverage the balance sheet is complete, we think AZZ could more aggressively pursue acquisitions to enable the company to expand geographically and broaden its product and service offerings.

New manufacturing facility in Washington, Missouri. AZZ Precoat Metals’ new 250,000 square foot manufacturing facility is expected to contribute to earnings beginning in fiscal year 2026. Approximately 75% of the facility’s production is already committed that we estimate could generate approximately $60 million in revenue. We expect EBITDA margins to be at the high end of the company’s stated 17% to 22% range for the precoat metals segment.

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