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Q3 revenue down 2.3%; up 0.3% in constant currency
Q3 operating loss of $21.4 million and loss per share of $0.43 down from a year ago on a non-cash goodwill impairment charge
Adjusted operating earnings of $9.5 million; up 7% from a year ago or up 21% in constant currency
Kelly’s Board of Directors approves a $50 million share repurchase plan
TROY, Mich., Nov. 10, 2022 /PRNewswire/ — Kelly (Nasdaq: KELYA, KELYB), a leading specialty talent solutions provider, today announced results for the third quarter of 2022.
Peter Quigley, president and chief executive officer, announced revenue for the third quarter of 2022 totaled $1.2 billion, a 2.3% decrease, or 0.3% increase in constant currency, compared to the corresponding quarter of 2021. Year-over-year revenue trends were impacted by foreign currency headwinds and the impact of the sale of our Russian operations in July 2022. Year-over-year results in the quarter also reflect the impact of the recent acquisitions of RocketPower, a recruitment process outsourcing firm, and Pediatric Therapeutic Services, a specialty firm providing in-school therapy services.
Kelly reported a loss from operations in the third quarter of 2022 of $21.4 million, compared to earnings of $9.0 million reported in the third quarter of 2021. The loss in the third quarter of 2022 resulted from a $30.7 million goodwill impairment charge related to RocketPower. The charge reflects the impact of increasing economic uncertainty including the sharp decline in hiring in the high-tech industry in which RocketPower specializes, as well as slowing growth in the near-term demand for recruitment process outsourcing more broadly. Excluding the impairment charge, adjusted earnings from operations were $9.5 million compared to $8.9 million in the third quarter of 2021. Earnings improved primarily as a result of structural improvements in the business mix which resulted in higher gross profit.
Loss per share in the third quarter of 2022 was $0.43 compared to earnings per share of $0.87 in the third quarter of 2021. Included in the loss per share in the third quarter of 2022 is a $0.67 per share goodwill impairment charge, net of tax, related to RocketPower, and a $0.01 loss per share, net of tax, related to the completion of the sale of our Russian operations. Included in the third quarter of 2021 earnings per share is a $0.62 gain, net of tax, related to non-cash gains, net of tax, on Persol Holding common shares. On an adjusted basis, earnings per share were $0.25 in the third quarter of 2022, consistent with $0.25 in the corresponding quarter of 2021.
“Kelly’s third-quarter performance demonstrates that our more profitable solutions are in demand and our specialty growth strategy is delivering a higher-margin, higher-value business mix even in the face of heightened uncertainty, rising interest rates, and inflationary pressures,” said Quigley. “We saw solid revenue growth in our SET and Education specialties, and all five operating segments delivered GP rate growth in the quarter. While challenges precipitated the RocketPower goodwill impairment, we remain confident that with diversification and integration this acquisition will bring strategic long-term value to our business. Finally, our planned buyback of Kelly Class A common shares highlights our flexible and balanced capital allocation strategy to maximize the return on capital and complements our organic and inorganic specialty growth strategy.”
Kelly also reported that on November 9, its board of directors declared a dividend of $0.075 per share. The dividend is payable on December 7, 2022 to stockholders of record as of the close of business on November 23, 2022.
In conjunction with its third-quarter earnings release, Kelly has published a financial presentation on the Investor Relations page of its public website and will host a conference call at 9 a.m. ET on November 10 to review the results and answer questions. The call may be accessed in one of the following ways:
Via the Telephone (877) 692-8955 (toll free) or (234) 720-6979 (caller paid) Enter access code 5728672 After the prompt, please enter ”#”
A recording of the conference call will be available after 2:30 p.m. ET on November 10, 2022, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 8237932#. The recording will also be available at kellyservices.com during this period.
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These factors include, but are not limited to, changing market and economic conditions, the impact of the novel coronavirus (COVID-19) outbreak, competitive market pressures including pricing and technology introductions and disruptions, disruption in the labor market and weakened demand for human capital resulting from technological advances, competition law risks, the impact of changes in laws and regulations (including federal, state and international tax laws), unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, or the risk of additional tax liabilities in excess of our estimates, our ability to achieve our business strategy, our ability to successfully develop new service offerings, material changes in demand from or loss of large corporate customers as well as changes in their buying practices, risks particular to doing business with government or government contractors, the risk of damage to our brand, our exposure to risks associated with services outside traditional staffing, including business process outsourcing, services of licensed professionals and services connecting talent to independent work, our increasing dependency on third parties for the execution of critical functions, our ability to effectively implement and manage our information technology strategy, the risks associated with past and future acquisitions, including risk of related impairment of goodwill and intangible assets, risks associated with conducting business in foreign countries, including foreign currency fluctuations, risks associated with violations of anti-corruption, trade protection and other laws and regulations, availability of qualified full-time employees, availability of temporary workers with appropriate skills required by customers, liabilities for employment-related claims and losses, including class action lawsuits and collective actions, our ability to sustain critical business applications through our key data centers, risks arising from failure to preserve the privacy of information entrusted to us or to meet our obligations under global privacy laws, the risk of cyberattacks or other breaches of network or information technology security, our ability to realize value from our tax credit and net operating loss carryforwards, our ability to maintain specified financial covenants in our bank facilities to continue to access credit markets, and other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. Actual results may differ materially from any forward-looking statements contained herein, and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
About Kelly®
Kelly Services, Inc. (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 more than 350,000 people around the world, and we 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.
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, Senior Research Analyst, 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.
3Q22 Operating Results. CoreCivic reported revenue of $464.2 million, compared to $471.2 million in the year ago period and our estimate of $456 million. Higher expenses, related to labor costs, including hiring additional staff ahead of expected population increases, caused net income to be below our forecast. Driven by the gain on the McRae sale, reported net income was $68.3 million, or $0.58 per diluted share, versus our estimate of $72.5 million, or $0.61 per share.
La Palma Update. Ongoing expenses with the La Palma transition impacted 3Q22 but the good news is the transition should now be complete by yearend as opposed to 1Q23. With the ICE contract at La Palma expired, management believes the Company is well positioned to add additional ICE populations at its other Arizona facilities. Overall, CoreCivic is well positioned to accept additional populations, from the Federal government or state governments.
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.
BRENTWOOD, Tenn., Nov. 02, 2022 (GLOBE NEWSWIRE) — CoreCivic, Inc. (NYSE: CXW) (the Company) announced today its financial results for the third quarter of 2022.
Damon T. Hininger, CoreCivic’s President and Chief Executive Officer, said, “We are pleased to continue executing on our capital allocation strategy of reducing debt while also returning capital to shareholders through our share repurchase program. Since the initial repurchase program was authorized by our board earlier this year, we have repurchased over 5% of our outstanding shares, or a total of 6.6 million shares at a cost of $74.5 million, and have authorization under the program to repurchase $150.5 million more in shares of our common stock.
Hininger continued, “The resiliency of our cash flows has allowed us to execute our share repurchase program while reducing our outstanding debt balances by nearly $250 million so far this year, reducing our future interest expense and improving our long-term cost of borrowing. Our financial results for the third quarter were in-line with our expectations, and we continued producing stable financial results in a challenging labor market and while occupancy restrictions implemented during the COVID-19 pandemic remained largely in place. We have increased staffing levels at certain facilities in anticipation of increased occupancy levels, and are poised to accept additional residential populations as such occupancy restrictions are removed. Our financial results also continue to be negatively impacted in the short-term by our La Palma Correctional Center’s transition to a new state contract award that commenced in April 2022. We believe our operating and capital allocation strategies have positioned us well to return to earnings growth once the transition at our La Palma Correctional Center is complete, which we expect to occur near the end of this year, and as the remaining occupancy restrictions caused by the pandemic are removed.”
Financial Highlights – Third Quarter 2022
Total revenue of $464.2 million
CoreCivic Safety revenue of $423.2 million
CoreCivic Community revenue of $26.4 million
CoreCivic Properties revenue of $14.6 million
Net Income of $68.3 million
Diluted earnings per share of $0.58
Adjusted Diluted EPS of $0.08
Funds From Operations per diluted share of $0.28
Normalized Funds From Operations per diluted share of $0.29
Adjusted EBITDA of $68.4 million
Third Quarter 2022 Financial Results Compared With Third Quarter 2021
Net income in the third quarter of 2022 totaled $68.3 million, or $0.58 per diluted share, compared with net income in the third quarter of 2021 of $30.0 million, or $0.25 per diluted share. Adjusted for special items, adjusted net income in the third quarter of 2022 was $9.7 million, or $0.08 per diluted share (Adjusted Diluted EPS), compared with adjusted net income in the third quarter of 2021 of $33.7 million, or $0.28 per diluted share. Special items for each period are presented in detail in the calculation of Adjusted Diluted EPS in the Supplemental Financial Information following the financial statements presented herein, and for the third quarter of 2022 reflect, most notably, a gain on sale of real estate assets of $83.8 million, including $77.5 million for the sale of our McRae Correctional Facility, which was consummated in August 2022.
The decline in adjusted per share amounts was primarily the result of transitioning to a new contract with the state of Arizona at our 3,060-bed La Palma Correctional Center in Arizona, the non-renewal of contracts in 2021 with the United States Marshals Service (USMS) at the 1,033-bed Leavenworth Detention Center in Kansas and the 600-bed West Tennessee Detention Facility, and the expiration of a managed-only contract with Marion County, Indiana at the Marion County Jail, which the County replaced with a newly constructed facility. We expect the transition at the La Palma facility to be complete near the end of 2022. Our renewal rate on owned and controlled facilities remained high at 95% over the previous five years. We believe our renewal rate on existing contracts remains high due to a variety of reasons including the aged and constrained supply of available beds within the U.S. correctional system, our ownership of the majority of the beds we operate, the value our government partners place in the wide range of recidivism-reducing programs we offer to those in our care, and the cost effectiveness of the services we provide.
Earnings before interest, taxes, depreciation and amortization (EBITDA) was $147.9 million in the third quarter of 2022, compared with $95.7 million in the third quarter of 2021. Adjusted EBITDA was $68.4 million in the third quarter of 2022, compared with $100.9 million in the third quarter of 2021. Adjusted EBITDA decreased from the prior year quarter primarily due to the previously mentioned transition of offender populations at our La Palma Correctional Center, which resulted in a reduction in EBITDA of $11.8 million, and the aforementioned non-renewal of contracts at three facilities that collectively resulted in a reduction in EBITDA of $2.7 million from the third quarter of 2021 to the third quarter of 2022. Now that the contract with U.S. Immigration & Customs Enforcement (ICE) at our La Palma Correctional Center has expired, we expect average daily populations from ICE at our other facilities in Arizona to increase in the fourth quarter of 2022, including particularly at our Eloy Detention Center. We also achieved higher staffing levels and incurred $5.6 million more in temporary incentives than in the prior year quarter to attract and retain facility staff in the challenging labor market. We believe these investments in staffing are preparing us to manage the increased number of residents we anticipate at our facilities once the remaining occupancy restrictions caused by the pandemic are removed.
Funds From Operations (FFO) was $33.3 million, or $0.28 per diluted share, in the third quarter of 2022, compared to $54.9 million, or $0.45 per diluted share, in the third quarter of 2021. Normalized FFO, which excludes special items, was $33.9 million, or $0.29 per diluted share, in the third quarter of 2022, compared with $58.6 million, or $0.48 per diluted share, in the third quarter of 2021. Normalized FFO was negatively impacted by the same factors that affected Adjusted EBITDA.
Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share amounts, are measures calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP). Please refer to the Supplemental Financial Information and related note following the financial statements herein for further discussion and reconciliations of these measures to net income, the most directly comparable GAAP measure.
Asset Dispositions
During the second quarter of 2022, we entered into an agreement with the Georgia Building Authority (GBA) to sell our 1,978-bed McRae Correctional Facility located in McRae, Georgia, and reported in our Safety segment, for a sale price of $130.0 million. The sale was completed on August 9, 2022, resulting in a gain on sale of $77.5 million. We currently have a management contract with the Federal Bureau of Prisons (BOP) at the McRae facility, which expires November 30, 2022. As previously disclosed, we do not expect the BOP to renew the contract upon its expiration. In connection with the sale, we entered into an agreement with the GBA to lease the facility through November 30, 2022 to allow us to fulfill our obligations to the BOP.
During July 2022, we sold our Stockton Female Community Corrections Facility and our Long Beach Community Corrections Center, both located in California and reported in our Properties segment. The sale of these properties to a third party generated net sales proceeds of $10.9 million, resulting in a gain on sale of $2.3 million. During July 2022, we also sold an undeveloped parcel of land, generating net proceeds of $4.8 million and resulting in a gain on sale of $4.2 million.
In September 2022, we entered into a Letter of Intent with a third-party for the sale of our Roth Hall Residential Reentry Center and the Walker Hall Residential Reentry Center, both located in Philadelphia, Pennsylvania and reported in our Properties segment, for a gross sales price of $6.3 million. Also in October 2022, we entered into an agreement with a third-party for the sale of our idled Oklahoma City Transitional Center, reported in our Community segment, for a gross sales price of $1.0 million. The buyer intends to redevelop the property for an alternative use. We recognized an impairment charge of $3.5 million during the third quarter of 2022 associated with this facility, based on its estimated net realizable value less costs to sell. These sales are subject to customary closing conditions. If consummated, we expect to use the net proceeds from these sales for general corporate purposes, including for our share repurchase program and/or for additional debt reduction.
Debt Repayments
During the third quarter of 2022, we reduced our debt balance by $109.1 million, net of the change in cash. We purchased $3.6 million of our 4.625% Senior Notes in open market purchases, reducing the outstanding balance of the 4.625% Senior Notes to $166.5 million. The 4.625% Senior Notes mature in May 2023, which we currently expect to repay with cash on hand and capacity under our $250.0 million Revolving Credit Facility, which remains undrawn. We also purchased $33.5 million of our 8.25% Senior Notes in open market purchases, reducing the outstanding balance of the 8.25% Senior Notes to $641.5 million. Beyond the maturity of our 4.625% Senior Notes in May 2023, we have no other maturities until the 8.25% Senior Notes mature in April 2026.
Share Repurchases
On August 2, 2022, our Board of Directors authorized an increase in our share repurchase program of up to an additional $75.0 million in shares of our common stock. As a result of the increased authorization, the aggregate authorization under our share repurchase program increased from the original authorization of up to $150.0 million in shares of our common stock to up to $225.0 million in shares of our common stock. Through November 1, 2022, we have repurchased 6.6 million shares of our common stock at an aggregate purchase price of $74.5 million, excluding fees, commissions and other costs related to the repurchases.
We currently have $150.5 million remaining under the Board authorized share repurchase program. Additional repurchases of common stock will be made in accordance with applicable securities laws and may be made at management’s discretion within parameters set by the Board of Directors from time to time in the open market, through privately negotiated transactions, or otherwise. The share repurchase program has no time limit and does not obligate us to purchase any particular amount of our common stock. The authorization for the share repurchase program may be terminated, suspended, increased or decreased by our Board in its discretion at any time.
2022 Financial Guidance
Based on current business conditions, we are providing the following update to our financial guidance for the full year 2022:
Guidance Full Year 2022
Prior Guidance Full Year 2022
Net Income
$110.1 million – $114.1 million
$106.6 million – $118.2 million
Adjusted Net Income
$55.5 million – $59.5 million
$52.0 million – $60.0 million
Diluted EPS
$0.93 – $0.96
$0.89 – $0.99
Adjusted Diluted EPS
$0.47 – $0.50
$0.44 – $0.50
FFO per diluted share
$1.22 – $1.26
$1.19 – $1.26
Normalized FFO per diluted share
$1.28 – $1.32
$1.25 – $1.32
EBITDA
$375.6 million – $378.1 million
$375.2 million – $386.2 million
Adjusted EBITDA
$301.5 million – $304.0 million
$299.0 million – $305.0 million
During 2022, we expect to invest $82.5 million to $86.0 million in capital expenditures, consisting of $33.5 million to $34.0 million in maintenance capital expenditures on real estate assets, $30.0 million to $32.0 million for capital expenditures on other assets and information technology, and $19.0 million to $20.0 million for facility renovations.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the third quarter of 2022. Interested parties may access this information through our website at http://ir.corecivic.com/ under “Financial Information” of the Investors section. We do not undertake any obligation and disclaim any duties to update any of the information disclosed in this report.
Management may meet with investors from time to time during the fourth quarter of 2022. Written materials used in the investor presentations will also be available on our website beginning on or about November 11, 2022. Interested parties may access this information through our website at http://ir.corecivic.com/ under “Events & Presentations” of the Investors section.
Conference Call, Webcast and Replay Information
We will host a webcast conference call at 10:00 a.m. central time (11:00 a.m. eastern time) on Thursday, November 3, 2022, which will be accessible through the Company’s website at www.corecivic.com under the “Events & Presentations” section of the “Investors” page.
Please note there is a new process to access the live call for those who wish to ask questions. To participate via telephone and join the call live, please register in advance here https://register.vevent.com/register/BId5639495ba264dd3b66eae4d5db8ced1. Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique passcode.
About CoreCivic
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.
Forward-Looking Statements
This press release contains statements as to our beliefs and expectations of the outcome of future events that are “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These include, but are not limited to, the risks and uncertainties associated with: (i) changes in government policy (including the United States Department of Justice, or DOJ, not renewing contracts as a result of President Biden’s Executive Order on Reforming Our Incarceration System to Eliminate the Use of Privately Operated Criminal Detention Facilities, or the Private Prison EO) (two agencies of the DOJ, the United States Federal Bureau of Prisons and the United States Marshals Service utilize our services), legislation and regulations that affect utilization of the private sector for corrections, detention, and residential reentry services, in general, or our business, in particular, including, but not limited to, the continued utilization of our correctional and detention facilities by the federal government, and the impact of any changes to immigration reform and sentencing laws (our company does not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual’s incarceration or detention); (ii) our ability to obtain and maintain correctional, detention, and residential reentry facility management contracts because of reasons including, but not limited to, sufficient governmental appropriations, contract compliance, negative publicity and effects of inmate disturbances; (iii) changes in the privatization of the corrections and detention industry, the acceptance of our services, the timing of the opening of new facilities and the commencement of new management contracts (including the extent and pace at which new contracts are utilized), as well as our ability to utilize available beds; (iv) general economic and market conditions, including, but not limited to, the impact governmental budgets can have on our contract renewals and renegotiations, per diem rates, and occupancy; (v) fluctuations in our operating results because of, among other things, changes in occupancy levels; competition; contract renegotiations or terminations; inflation and other increases in costs of operations, including a continuing rise in labor costs; fluctuations in interest rates and risks of operations; (vi) the duration of the federal government’s denial of entry at the United States southern border to asylum-seekers and anyone crossing the southern border without proper documentation or authority in an effort to contain the spread of COVID-19, a policy known as Title 42 (On April 1, 2022, the Center for Disease Control and Prevention, or CDC, terminated Title 42, and began preparing for a resumption of regular migration at the United States southern border, effective May 23, 2022; however, on April 25, 2022, a judge issued a temporary restraining order blocking the termination of Title 42 and on May 20, 2022, ruled that the administration violated administrative law when it announced that it planned to cease Title 42.); (vii) government and staff responses to staff or residents testing positive for COVID-19 within public and private correctional, detention and reentry facilities, including the facilities we operate; (viii) restrictions associated with COVID-19 that disrupt the criminal justice system, along with government policies on prosecutions and newly ordered legal restrictions that affect the number of people placed in correctional, detention, and reentry facilities, including those associated with a resurgence of COVID-19; (ix) whether revoking our REIT election, effective January 1, 2021, and our revised capital allocation strategy can be implemented in a cost effective manner that provides the expected benefits, including facilitating our planned debt reduction initiative and planned return of capital to shareholders; (x) our ability to successfully identify and consummate future development and acquisition opportunities and realize projected returns resulting therefrom; (xi) our ability to have met and maintained qualification for taxation as a REIT for the years we elected REIT status; and (xii) the availability of debt and equity financing on terms that are favorable to us, or at all. Other factors that could cause operating and financial results to differ are described in the filings we make from time to time with the Securities and Exchange Commission.
CoreCivic takes no responsibility for updating the information contained in this press release following the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events or for any changes or modifications made to this press release or the information contained herein by any third-parties, including, but not limited to, any wire or internet services.
Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO, and, where appropriate, their corresponding per share metrics are non-GAAP financial measures. The Company believes that these measures are important operating measures that supplement discussion and analysis of the Company’s results of operations and are used to review and assess operating performance of the Company and its properties and their management teams. The Company believes that it is useful to provide investors, lenders and security analysts disclosures of its results of operations on the same basis that is used by management.
FFO, in particular, is a widely accepted non-GAAP supplemental measure of performance of real estate companies, grounded in the standards for FFO established by the National Association of Real Estate Investment Trusts (NAREIT). NAREIT defines FFO as net income computed in accordance with GAAP, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate and after adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from operations on the same basis. EBITDA, Adjusted EBITDA, and Normalized FFO are useful as supplemental measures of performance of the Company’s properties because such measures do not take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company’s tax provisions and financing strategies. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), this accounting presentation assumes that the value of real estate assets diminishes at a level rate over time. Because of the unique structure, design and use of the Company’s properties, management believes that assessing performance of the Company’s properties without the impact of depreciation or amortization is useful. The Company may make adjustments to FFO from time to time for certain other income and expenses that it considers non-recurring, infrequent or unusual, even though such items may require cash settlement, because such items do not reflect a necessary or ordinary component of the ongoing operations of the Company. Normalized FFO excludes the effects of such items. The Company calculates Adjusted Net Income by adding to GAAP Net Income expenses associated with the Company’s debt repayments and refinancing transactions, and certain impairments and other charges that the Company believes are unusual or non-recurring to provide an alternative measure of comparing operating performance for the periods presented.
Other companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO differently than the Company does, or adjust for other items, and therefore comparability may be limited. Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO and, where appropriate, their corresponding per share measures are not measures of performance under GAAP, and should not be considered as an alternative to cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of the Company’s operating performance or any other measure of performance derived in accordance with GAAP. This data should be read in conjunction with the Company’s consolidated financial statements and related notes included in its filings with the Securities and Exchange Commission.
Tokens.com Corp is a publicly traded company that invests in Web3 assets and businesses focused on the Metaverse, NFTs, DeFi, and gaming based digital assets. Tokens.com is the majority owner of Metaverse Group, one of the world’s first virtual real estate companies. Hulk Labs, a wholly-owned Tokens.com subsidiary, focuses on investing in play-to-earn revenue generating gaming tokens and NFTs. Additionally, Tokens.com owns and stakes crypto assets to earn additional tokens. Through its growing digital assets and NFTs, Tokens.com provides public market investors with a simple and secure way to gain exposure to Web3.
Joe Gomes, Senior Research Analyst, 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.
Providing an Update. Tokens.com issued a press release yesterday that highlighted the Company’s operations in its three different operations: staking, Metaverse, and crypto gaming. Along with the Company’s main operations, Tokens.com included updates on the domain names the Company currently owns and the current capitalization structure. We expect the Company to release its year-end financial results for the nine months ended in mid-December.
Staking. Management showed the current portfolio of coins the Company has, in which very slight changes occurred from the end of the last quarter ended June 30, 2022. Coins such as Ethereum were sold (from 3,499 to 3,206) although coins like ANKR (from 3.01 million to 3.02 million) and ROSE (6.99 million to 7.23 million) were earned or purchased. Although not many changes have been made in the portfolio since the last quarter, we would not be surprised if the Company were to sell or buy coins for the portfolio during the volatile market.
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.
The Many Factors that Come Into a Fed Rate Decision are Mind Boggling
What do the FOMC members look at as they’re changing interest rates and whipping up new policy stances?
The Federal Open Market Committee, or FOMC, meets eight times a year. There are 12 members; seven are board members of the Federal Reserve System, and five are Reserve Bank presidents, including the president of the Federal Reserve Bank of New York, who serves as president of the committee. The group, as a whole, is arguably among the most powerful entities in the world. What is it that this group, that impacts all of us, focus on? And what specifically will they weigh into their decision at the current meeting?
Labor markets and prices are top on the Fed’s list and specifically part of their mandate. Also feeding into the mandate are contributing factors like housing, growth trends, and risks to monetary policy.
Prices (Inflation Rates)
Inflation remains elevated. In September, the Consumer Price Index (CPI) picked up to 0.4%. Energy prices declined in each month of the third quarter, dropping a cumulative 11.3% since June. The Fed will have to discern if this is sustainable or a function of oil reserve releases that will need replacing. Food prices continued high, although at a slower 0.8% increase during September.
Core CPI inflation (which strips out energy and food) started the third quarter at a somewhat slow pace—increasing just 0.3% in July. The trend went against the Fed as it rose by 0.6% in both August and September. Price growth for services was the largest contributor to an increase in core CPI in the third quarter.
One of the two mandates of the Federal Reserve is to keep inflation at bay. Chairman Powell has said they are targeting a 2% annual inflation level. While nothing that has been reported in price increases since the last meeting has approached that low of a target, the Fed also has to consider their tightening moves do not work to lower demand (especially in food and energy) rapidly.
The Federal Reserve’s preferred measure of inflation is the PCE price index; this is the measure they use with their 2% target. The PCE price index typically shows lower price growth than CPI because it uses a different methodology in its calculation, but the drivers of both measures remain similar. Over the year ending September, the headline PCE price index rose 6.2 percent, while the core PCE price index was up 5.1 percent.
Jobs (Employment and Wages)
Labor markets are still tight. The economy has added an additional 3.8 million jobs this year through September. This includes 1.1 million during the most recent quarter. During the third quarter, the U.S. economy exceeded pre-pandemic employment levels. The unemployment rate hasn’t budged much, and as of September, the rate held at a comfortable 3.5 percent rate.
The broadest measure of unemployment—the U-6 rate is a measure of labor underutilization that includes underemployment and discouraged workers, in addition to the unemployed. The U-6 rate has also remained behaved all year. It stood at 6.7 percent in September, the lowest rate in the history of the series (starting in January 1994).
When the Fed pushes on a lever for one of its mandates, in this case it is tightening to reign in inflation, it has to watch the impact on its other mandate, in this case, the job market. So far, there is nothing that has occurred on the employment side that should tell the Fed they have gone too far too fast.
.In fact, the labor numbers may suggest they should discuss whether they have moved nearly fast enough. Competition for employees continued as the economy added an additional 3.8 million through September 2022 (1.1 million during the third quarter). Notably, during the third quarter, the economy surpassed pre-pandemic employment levels as of August 2022.
Image: FOMC participants meet in Washington, D.C., for a two-day meeting on September 20-21, 2022, Federal Reserve (Flickr).
Housing Markets
Housing demand decreased in the third quarter as affordability (lending rates + prices), with economic uncertainty weighed on homebuyers. During September, 90% of all home sales were of existing homes. This pace declined 1.5 percent over the month (down 23.8 percent on a twelve-month basis). New single-family home sales dropped a large 10.9% in September; this was the seventh monthly decline.
Homes available for sale have now risen from all-time lows; this includes new and existing.
Over the past few years, home prices have increased dramatically; this was fueled by Fed policy. Prices still remain above longer-term trendlines. The Case-Shiller national house price index measures sales prices of existing homes; this was up 13% over the year ending August 2022. For reference, for the 12 months ended August 2021, prices rose 20%. The prior year they had only increased 5.8%.
Housing plays a huge role in economic health. The Fed is well aware of all the housing-related inputs to the 2008 financial crisis and the part easy money plays in market crashes. Orchestrating an orderly slowdown to the boom in housing is certainly critical to the Fed’s success.
Other Risks to Economy
Eight times a year, information related to each of the 12 Federal Reserve districts is gathered and bound in a publication known as theBeige Book. This summary of economic activity throughout the U.S. is provided approximately two weeks before each FOMC meeting, so members have a chance to evaluate economic activity over the diverse businesses the U.S. engages in.
U.S. Inflation can arise from conditions outside of the control of the U.S. For example Russia’s invasion of Ukraine has added upward pressure to inflation this year. This impact may have to be determined and netted out of calculations and policy as the Fed can’t fight this inflation pressure with monetary policy. An example would be the Fed can’t alter global food shortages brought on by war.
Dollar strength or weakness comes from many things. One of the most impactful is the difference in interest rates net of inflation between countries and their native currency. If the Fed raises rates when a competing currency has not, there is a chance there will be more demand for the alternative currency, which would weaken the dollar. Further complicating this for the Federal Resreve is a lower dollar is inflationary as it causes import prices to rise, a stronger dollar can reduce domestic economic activity as exports fall. The U.S. dollar has been rising and is now at its strongest in 20 years.
Commodity Prices were elevated in the first half of this year, mostly by energy. Although there was some relief from gas prices over the summer, energy is expected to rise into the colder months. They may rise further as the U.S. Strategic Petroleum Reserves are used less to control prices, this may be curtailed. The White House’s two goals of sharply reducing Russian revenue and avoiding further disruptions to global energy supplies while at the same time reducing oil use and production within the U.S. are a tanglement the Fed needs to consider. These can be very impactful to costs and economic activity, yet The Fed has no direct levers to impact these economic inputs.
World economies play a part in our own economic pace. If the Fed were to tighen aggressively while the global business is slowing, the impact of the tightening might be more pronounced than if the world economies are booming. Demand for goods and services impacts prices; the U.S. doesn’t live in a vacuum, and demand for our production and our demand for foreign production all must weigh on the Feds outlook for global economic health.
According to the IMF’s latest World Economic Outlook, global growth is expected to slow to 3.2 percent in 2022 and just 2.7 percent in 2023. At the same time, central banks around the world are tightening monetary policy to fight high global rates of inflation. In addition, there has been financial instability in some major world economies. These rising risks to the global growth outlook may feed back into the U.S. outlook by weakening international demand for U.S. goods and service exports. On the positive economic side, China is considering easing its Zero-COVID policy, which could eventually ease the supply chain impact to inflation.
Take Away
The original question was, “What do the FOMC members look at as they’re changing interest rates and whipping up new policy stances?” The answer is they have to look at everything. The recent mix of “everything” shows growth and employment in the U.S. have sustained at an even keel. Will previous rate hikes to calm inflation eventually take their toll? This is probably the big question the FOMC will be evaluating. Other domestic issues, including housing and the financial markets, are certainly to be weighed as well – a market crash of any magnitude could quickly slow economic activity.
The Fed has little control over what goes on overseas but must be aware of and hedge its policy to allow for.
All told, the Federal Reserve has a very difficult job. The report of the new monetary policy stance should hit the wire at 2 pm ET today (November 2).
Looking Back at October and Forward to Year-End 2022
The stock market for October was a home run for many industries. In fact, only a few market sectors were negative, each by less than one percent. After a losing first three quarters in most categories, investors are now asking, are we out of the losing slump? Did I already miss the best plays? There are still two months left in 2022, and there are a number of expected events that could cause high volatility (up/down). If you’ve been a market spectator, you want to know, should I get on the field and maybe take advantage of this streak? If you’ve been involved and are now at a recent high, you may instead consider taking a seat for the last two months.
Let’s look back and then forward as we enter the final two months of the year. Below we look at the month behind us in stocks, gold, and crypto. There is something that may be unfolding is stocks that is worth steering around.
Large industrials, as measured by the Dow 30, had the best comparative performance in October. In fact, the Dow had its best month since 1976. Some investors have been rotating out of large high-tech and into more traditional businesses, like large industrial companies. Another reason it has gotten attention is of the 30 stocks in the Dow Industrials, at least 27 are expected to pay dividends; the lower stock prices from months of decline have raised the expected dividend yields to levels where investors are finding value and doing some reallocating. For example, Dow Chemicals (DOW)with a yield near 5% (plus any appreciations) or Verizon (VZ) at 7% can be appealing, especially for assets of retirees.
The small-cap stocks, as measured by the Russell 2000, weren’t far behind the Dow 30. This group has been lagging for some time and, by many measures, including price/earnings, offers value, while many larger stocks are still considered overpriced. Another thing working in favor of small U.S.-based companies is a likely customer universe that is not hurt by a strong dollar and international trade. In fact, there are small companies that can be shown to have benefitted from a strong native currency and have a competitive advantage with lower borrowing needs. Many analysts expect continued outperformance of the small-cap sector as it offers value and less global disruption.
The top 500 largest stocks, as measured by the S&P 500, had a very good month but are being dragged down by the large weighting of a few huge companies that the market feels have gotten way ahead of where they should be reasonably priced. The Nasdaq 100, shown above as returning only around 3.6%, has been hurt by this index weighting as well. These indexes had once benefitted from these few stocks flying high during the pandemic; the post-pandemic world, as well as global headwinds, are now working against them.
Investors have been taught that index funds and ETFs provide diversification, but that has never been true of Dow-indexed funds (30 stocks). And the S&P and Nasdaq 100, with heavy weightings in a few companies, only give the illusion of broad exposure. The S&P 500 and Nasdaq 100 relative performance during October may cause more investors to consider hand-selecting companies with lower P/Es, lower global exposure, and higher growth potential.
Oil companies regained their lead as they have been a sector detached from other stocks since late 2019. The industrial sector was second and followed by the only other industry above double digits, finance. Most (not all) financial companies benefit from higher interest rates, and those that take deposits (short-term) and lend money (long-term) do best with a steep yield curve.
On the bottom of the list are consumer discretionary companies, which are hurt by the strong dollar and a weakening economy; this sector is followed by communication. Communication is worth a deeper dive as it exemplifies how the weighting of stocks in popular indexes can hurt index returns – some say high-flying, highly weighted stocks are even in a bubble.
Below the chart compares two names in the S&P 500 that are also represented in the communications index. Meta (META) is 17.70% of the index and is down 30% in October. AT&T (T) is 4.70% of the communications index; it returned nearly 20% for the month. The funds weighting methodology that worked to the advantage of index investors, until it didn’t, has worked against some index investors.
There is a rivalry of sorts between larger, more accepted cryptocurrencies and gold. Gold wants to regain its centuries-old place as the hard asset that best represents safety, even in the worst conditions, and Bitcoin or Ether, which is looking for respect, as the alternative asset that represents safety.
Crypto has been loosely moving in the same direction as stocks all year. October was no exception, as its price per dollar rose significantly during the month. Gold, despite much worry in the world, continued a slow downtrend.
Gold and Bitcoin Performance
Source: Koyfin
Take Away
Stock market participants that held on finally got a month where it was hard not to come out ahead. The question now is, do you take the gains and sit tight while the fed tightening, election, war, and global recession settle? Or do you look at the current dynamics and allocate where the highest probability of success lies? Maybe small-cap value stocks or oil and gas companies.
There is one thing investors have been warned about repeatedly over the years by well-respected investors, including Michael Burry. There is a risk inherent in indexes now that a few extremely “overpriced” stocks represent a large percentage of index funds.
Investors evaluating smaller, individual stocks have found the data and analysis on Channelchek to be indispensable. Be sure to sign-up for Channelchek at no cost to receive unbiased research on companies that are less talked about, but may have a place in your portfolio mix.
Tokens.com Corp is a publicly traded company that invests in Web3 assets and businesses focused on the Metaverse, NFTs, DeFi, and gaming based digital assets. Tokens.com is the majority owner of Metaverse Group, one of the world’s first virtual real estate companies. Hulk Labs, a wholly-owned Tokens.com subsidiary, focuses on investing in play-to-earn revenue generating gaming tokens and NFTs. Additionally, Tokens.com owns and stakes crypto assets to earn additional tokens. Through its growing digital assets and NFTs, Tokens.com provides public market investors with a simple and secure way to gain exposure to Web3.
Joe Gomes, Senior Research Analyst, 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.
Getting More Players. On Wednesday, Tokens.com announced the Company’s subsidiary Hulk Labs has integrated over 1,000 players into its network, with the primary focus being in Africa which includes Tanzania, South Africa, and the Democratic Republic of Congo. The waitlist of players to join the network is over 3,000 and the Company expects to add hundreds of players each month, with the target of getting to 10,000 players by the end of 2023. Hulk Labs has initially allocated over USD$100,000 into gaming assets for the network, and its top gaming titles, Crabada and Thetan Arena, are returning 18-24% per month in revenue.
A New Software? A potential addition to revenue, a new software is being tested that will allow investors to connect to players, and the Company will receive a commission based on the revenue earned. We expect the software to be implemented over time, but add to top-line revenue once fully integrated, as investors are already gauging an interest in the software.
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.
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, Senior Research Analyst, 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.
3Q22 Results. GEO once again posted solid operating results for 3Q22. Revenue for the quarter came in at $616.7 million, up from $557.3 million a year ago. Adjusted EBITDA totaled $136.2 million, AFFO was $0.60 per diluted share, EPS was $0.26, and adjusted net income $0.33 per share. In the year ago period, GEO reported $116.0 million, $0.65, $0.24, and $0.35, respectively. We had forecast $605 million, $132 million, $0.55, $0.35, and $0.35, respectively. GEO’s results highlight the resiliency of the business model, in our opinion.
BI Continues to Impress. GEO BI electronic monitoring subsidiary continues to show impressive growth. Segment 3Q22 revenue increased to $137 million up from $121.5 million in 2Q22. Through the first nine months of 2022, electronic monitoring and supervision revenue increased to $346.4 million, up from $278.9 million in all of 2021.
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.
TROY, Mich., Oct. 27, 2022 /PRNewswire/ — Kelly (Nasdaq: KELYA, KELYB), a leading specialty talent solutions provider, will release its third-quarter earnings before the market opens on Thursday, November 10, 2022. In conjunction with its third-quarter earnings release, Kelly will publish a financial presentation on the Investor Relations page of its public website and will host a conference call at 9 a.m. ET.
The call may be accessed in one of the following ways:
Via Telephone: (877) 692-8955 (toll free) or (234) 720-6979 (caller paid) Enter access code 5728672 After the prompt, please enter “#”
A recording of the conference call will be available after 2:30 p.m. ET on November 10, 2022, at (866) 207-1041 (toll-free) and (402) 970-0847 (caller-paid). The access code is 6071439#. The recording will also be available at kellyservices.com during this period.
About Kelly®
Kelly Services, Inc. (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 more than 350,000 people around the world, and we 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.
BRENTWOOD, Tenn. , Oct. 26, 2022 (GLOBE NEWSWIRE) — CoreCivic, Inc. (NYSE: CXW) (the Company) announced today that it will release its 2022 third quarter financial results after the market closes on Wednesday, November 2, 2022. A live broadcast of CoreCivic’s conference call will begin at 10:00 a.m. central time (11:00 a.m. eastern time) on Thursday, November 3, 2022.
Please note there is a new process to access the live call for those who wish to ask questions. To participate via telephone and join the call live, please register in advance here https://register.vevent.com/register/BId5639495ba264dd3b66eae4d5db8ced1. Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique passcode.
Participants may access the audio-only webcast of the conference call from the Company’s website at www.corecivic.com under the “Events & Presentations” section of the “Investors” page. A replay of the webcast will be available for seven days.
About CoreCivic
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.
If the U.S. Was in a Recession, This Week’s Numbers May Show It Has grown Out of It
A big focus of traders this week will be positioning for the FOMC meeting next week and its announcement on Wednesday, November 2nd. Members of the committee that have commented in recent weeks have left little doubt that the Federal Reserve’s fight against inflation is continuing, and a 75 bp hike can be expected. Additional comments on monetary policy from Fed governors aren’t expected this week as there is a communications blackout period in effect (midnight Saturday, October 22nd through midnight Thursday, October 27th).
There will be global interest rate commotion as more rate hikes outside the U.S. are likely. The first is on Wednesday by the Bank of Canada, followed on Thursday by the European Central Bank. The forecast consensus for each is 75bp upward.
The conversation on Thursday may move from “is the U.S. going into a recession to, has the U.S. just come out of a recession?” While the first two-quarters of receding growth have never officially been declared a recession, the first look at GDP for the third quarter is out on Thursday, and it is expected to show growth during the quarter. If this occurs markets, the stock market could trade, either way, a sigh of relief that the economy is growing or fear that the Fed now has the room it needs to keep applying the interest rate brakes.
What’s on Tap for investors:
Monday 10/24
• At 9:45 AM Purchasing Managers Index (PMI) flash report will be released. Expectations are for the number to come in around 51.2. This leading indicator of economic activity is an early estimate of private sector output. It contains information from surveys of around 1,000 manufacturing and service sector companies. The flash data are released ten days ahead of the final report and are based on 85 percent of the full survey.
Tuesday 10/25
• At 10:00 AM, the Consumer Confidence survey will be released. Expectations are for a decline of 2.0 points to 106.0 in October, this would be after it exceeded expectations in September and August.
• At 10 AM, the Richmond Fed Manufacturing Index will be reported. The consensus is -3. Last month the report came in at 0.0, which was above the consensus estimates. The headline index number is a composite of the new orders, shipments, and employment indexes in the Richmond Fed’s manufacturing sector. It provides insight into the state of the manufacturing sector.
• At 1 PM, U.S. Money Supply is released for September. During August M2 rose by $1.8 billion.
• Noble Capital Markets will host a roadshow in St. Louis with Harte Hanks (HHS). Qualified Investors of all levels, including registered representatives, are welcome to attend at no cost, and with no obligation to invest. More information here.
Wednesday 10/26
• At 8:30 AM, International Trade in Goods (advance) will be reported. The consensus is for a U.S. trade deficit of 87.8 billion. This would represent a widening of more dollars spent purchasing goods from abroad than goods purchased from the U.S. The numbers may offer insight into the impact that the strong dollar has had on reducing demand for U.S.-made products.
• At 8:30 AM, Wholesale Inventories (Advance) for September are expected to have shown an increase of 1.1%. If inventories are growing fast relative to GDP, then both production and employment may have to slow down the road. And if inventories are lagging behind growth, there may be an undersupply to be made up for later.
• At 10:00 PM, New Home Sales are expected to show a rate of 585 thousand during September. This number surprised to the upside the previous period. The report is important to those trading securities as it indicates economic momentum, future demand for goods, and confidence in the ability to afford a big expense. New home sales multiply through other areas of the economy as new homeowners set their homes with furniture, appliances, and services.
Thursday 10/27
• At 8:30 AM, investors will get their first look at GDP for the third quarter. The number is supposed to show the first sign of growth in 2022. Consensus expectations are for growth of 2.3% during the third quarter. Stock market investors may wrestle with whether the good news is bad news or bad news is good news as the market finds a direction after this report and ahead of a rate decision the following week.
• At 8:30 AM, Durable Goods Orders are released. The consensus is for a .6% increase in the headline number and .2% ex-transportation. Durable goods are new orders placed with U.S. manufacturers for factory hard goods. The report also contains information on shipments, unfilled orders, and inventories. Investors get insight into how busy factories will be in the coming months. This is a leading indicator with direct implications for economic growth
• At 8:30 AM Jobless Claims are reported for the week ending 10/22/22. The expectations are for there to be 223,000 new claims. Surprises on one side or the other are important as healthy employment is one the Federal Reserve mandates.
• At 10:30 AM, The U.S. Energy Information Administration (EIA) releases its weekly report on natural gas. Energy supply and demand balance impact prices of fuel that can ripple through the entire economy.
Friday 10/28
• At 8:30 AM, Personal Income and Outlays are reported. This report includes the PCE Price index that is considered to be the Feds preferred inflation indicator. The consensus for Personal Income is +.3%. The consensus for the PCE gauge is +.3% which would equate to a year-over-year inflation rate of +6.3%.
• At 10:00 AM, Consumer Sentiment is expected to come in at 59.7; the previous month the number reported was 59.8. Consumer spending accounts for 66% of the economy. Consumer appetite is a big influencer on investments. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation.
What Else
It’s earnings season, and big market moves can occur should closely watch names miss their expected earnings numbers. On Tuesday this could include GE, Microsoft, and GM. Wednesday Ford reports, Thursday MacDonalds, Merck, Mastercard, and U.S. Steel. On Friday Exxon and Alliance Bernstein will make public their third quarter earnings.
Floridians Can Soon Stop at Convenience Stores for Milk, Bread, and Cannabis
Do you use Circle K as a convenience store or a gas station? How about marijuana dispensary?
There is something new afoot at the Circle Ks in Florida, and it may forever change the medical marijuana dispensary, business model. Today, Green Thumb (GTBIF), a national cannabis consumer goods company, announced plans to expand its medical, retail footprint in Florida. It’s doing this through a lease agreement with Circle K convenience stores, where it expects to launch and test its RISE Express dispensary brand at ten Florida locations.
Green Thumb Founder and CEO Ben Kovler is very positive about the potential, “The opening of RISE Express stores at Circle K locations is a game-changer. Convenience is a strong channel in retail, and people want more access to cannabis,” said Kovler. “The new RISE Express model is a huge step forward in making it easier and more efficient for patients to purchase high-quality cannabis as part of their everyday routine when stopping by their local convenience store.”
The products available at these retail stores will come from the company’s new 28-acre cultivation facility in Ocala, FL. Green Thumb entered the Florida market in 2018 and currently owns and operates medical cannabis retail stores in many parts of the state.
Potential for Growth
Florida state marijuana laws allow for use with a medical marijuana card but prohibit recreational use. According to the Florida Department of Health, over 700,000 Floridians are currently registered active cardholders in the state’s medical marijuana program.
The deal is a first of its kind, given that legal marijuana has only been legally available in stand-alone dispensaries in the US and within pharmacies in countries such as Uruguay and Germany. This could help mainstream the substance as people stop as part of their normal routines to buy staples and daily necessities. No additional stop will be needed if you’re getting milk, bread, gas or other drugs like Tylenol.
Some Circle K locations have already ventured into cannabis-derived products that have recently become mainstream. This includes CBD oils and products and Delta-8 items, which can give consumers a mind-altering high, but currently fall through a legal loophole because it is derived from hemp.
Take Away
It was not long ago cannabinoids such as CBD could only be found at vape shops and other mom-and-pop locations. Today, we expect them to be carried in convenience stores and even at our local chain grocery.
Will medical marijuana also become widely available, so consumers don’t have to make a separate stop in their daily routines? Green Thumb and Circle K will be breaking new ground on this front beginning next year.
