FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, 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.
4Q23 Results. FAT Brands reported 4Q23 revenue of $158.6 million, up 52.8% y-o-y, driven by the Smokey Bones acquisition. System-wide sales growth was 16.5%. FAT reported adjusted EBITDA of $27 million in the quarter, compared to $19.6 million in 4Q23. Net loss for the quarter was $26.2 million, or $1.68/sh, compared to a net loss of $70.8 million, or $4.39/sh last year. Adjusted net loss for the quarter was $17.3 million, or $1.15/sh, compared to a net loss of $43 million, or a loss of $2.70/sh, last year. We had projected revenue of $150 million and a net loss of $25.9 million, or a loss of $1.55/sh.
New Locations. During the quarter, FAT Brands saw 29 store openings, bringing the full year count to 125 locations, somewhat below the original expectation of 150 new locations. Management expects another 125+ new openings in 2024. The current 1,100 store pipeline will add some $60 million of adjusted EBITDA once built out.
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Xcel Brands, Inc. 1333 Broadway 10th Floor New York, NY 10018 United States https:/Sector(s): Consumer Cyclical Industry: Apparel Manufacturing Full Time Employees: 84 Key Executives Name Title Pay Exercised Year Born Mr. Robert W. D’Loren Chairman, Pres & CEO 1.27M N/A 1958 Mr. James F. Haran CFO, Principal Financial & Accou
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Provides preliminary Q4 estimates. The company provided Q4 revenue and adj. EBITDA preliminary estimates that are slightly below our expectations. The preliminary revenue estimate was $2.13 million versus our estimate of $2.80 million. In addition, the adj. EBITDA preliminary estimate of a loss of $1.07 million was somewhat higher than our loss estimate of $451,000.
Preliminary full year results. Total company revenue for 2023 is expected to be $17.7 million and EBITDA of $5.1 million. The preliminary results are slightly below our $18.5 million and loss of $5.4 million, respectively.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
QuantaSing is a leading online service provider in China dedicated to improving people’s quality of life and well-being by providing lifelong personal learning and development opportunities. The Company is the largest service provider in China’s online adult learning market and China’s adult personal interest learning market in terms of revenue, according to a report by Frost & Sullivan based on data from 2022. By leveraging its proprietary tools and technology, QuantaSing offers easy-to-understand, affordable, and accessible online courses to adult learners under a variety of brands, including QiNiu, JiangZhen and QianChi, empowering users to pursue personal development. Leveraging its extensive experience in individual online learning services, the Company has also expanded its services to corporate clients including, among others, marketing services and enterprise talent management services.
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Patrick McCann, CFA, Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Strong results. The company reported strong fiscal Q2 revenue and adj. EBITDA for the period ended December 31. Revenue of RMB980.5 million and adj. EBITDA of RMB 98.6 million outperformed our estimates of RMB 930.0 million and RMB 83.0 million, respectively.
User growth. Total registered users grew roughly 45% to 112.4 million users, up from 77.8 million users at the end of the prior year period. Total paying learner grew to 0.4 million, up 24% from the prior year period.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
LOS ANGELES, March 07, 2024 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”) today reported fiscal fourth quarter and full fiscal year 2023 financial results for the fiscal year ended December 31, 2023.
“With the acquisition of Smokey Bones early in the fourth quarter, we have grown the FAT Brands portfolio to 18 iconic restaurant brands with annualized system wide sales of $2.5 billion,” said Andy Wiederhorn, Chairman of FAT Brands. “We opened 125 restaurants in 2023, including 29 in the fourth quarter. We are seeing strong franchisee interest in development opportunities, having signed more than 225 development agreements in 2023, bringing our total pipeline to 1,100 units. This represents the potential for over 50% EBITDA growth over the next several years.”
Ken Kuick, Co-Chief Executive Officer of FAT Brands, commented, “While franchise interest remains high across all of our brands, we continue to be focused on the expansion of Twin Peaks. This year we opened 14 new lodges and ended the year with 109 lodges, a 33% increase since acquiring the brand in 2021. Our growth pipeline includes 113 lodges and Smokey Bones’ healthy real estate portfolio provides us with the opportunity to convert locations into Twin Peaks lodges, with the potential to significantly accelerate the growth of the brand.”
Rob Rosen, Co-Chief Executive Officer of FAT Brands, concluded, “We believe there are significant opportunities on the horizon for FAT Brands. Our seasoned leadership and strong brand management platform allow us to efficiently integrate new brands while maintaining a healthy and evolving pipeline for organic growth. These strengths position us for continued growth in the future, which will help deleverage our balance sheet.”
Fiscal Fourth Quarter 2023 Highlights
Total revenue improved 52.8% to $158.6 million compared to $103.8 million in the fourth quarter of 2022
System-wide sales growth of 16.5% in the fiscal fourth quarter of 2023 compared to the prior year fiscal quarter
System-wide same-store sales declined 0.6% in the fiscal fourth quarter of 2023 compared to the prior fiscal year
29 new store openings during the fiscal fourth quarter of 2023
Loss from operations of $3.1 million compared to $32.6 million in the fiscal fourth quarter of 2022
Net loss of $26.2 million, or $1.68 per diluted share, compared to $70.8 million, or $4.39 per diluted share, in the fiscal fourth quarter of 2022
Adjusted EBITDA(1) of $27.0 million compared to $19.6 million in the fiscal fourth quarter of 2022
Adjusted net loss(1) of $17.3 million, or $1.15 per diluted share, compared to $43.0 million, or $2.70 per diluted share, in the fiscal fourth quarter of 2022
Fiscal Year 2023 Highlights
Total revenue increased 18.0% to $480.5 million compared to $407.2 million in fiscal 2022
System-wide sales growth of 6.9% compared to fiscal 2022
System-wide same-store sales growth of 0.8% in fiscal 2023 compared to fiscal 2022
125 new store openings during fiscal 2023
Income from operations of $22.3 million compared to loss from operations of $17.9 million in the fiscal quarter of 2022
Net loss of $90.1 million, or $5.85 per diluted share, compared to $126.2 million, or $8.06 per diluted share, in fiscal 2022
Adjusted EBITDA(1) of $91.2 million compared to $88.8 million in fiscal 2022
Adjusted net loss(1) of $56.5 million, or $3.83 per diluted share, compared to $80.9 million, or $5.32 per diluted share, in fiscal 2022
(1) EBITDA, adjusted EBITDA and adjusted net loss are non-GAAP measures defined below, under “Non-GAAP Measures”. Reconciliation of GAAP net loss to EBITDA, adjusted EBITDA and adjusted net loss are included in the accompanying financial tables.
Summary of Fourth Quarter 2023 Financial Results
Total revenue increased $54.8 million, or 52.8%, in the fiscal fourth quarter of 2023, to $158.6 million compared to $103.8 million in the same fiscal period of 2022, driven by a 10.4% increase in royalties, an 80.5% increase in company-owned restaurant revenues driven by new restaurant openings and the acquisition of Smokey Bones during the fourth quarter of 2023 and a 10.0% increase in revenues from our manufacturing facility.
Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, depreciation and amortization, refranchising net losses and advertising fees. Costs and expenses increased $25.4 million, or 18.6%, in the fiscal fourth quarter of 2023 to $161.8 million compared to $136.4 million in the same fiscal period in the prior fiscal year.
General and administrative expense decreased $8.8 million, or 22.6%, in the fiscal fourth quarter of 2023 compared to the same fiscal period in the prior fiscal year, primarily due to a $16.6 million non-cash reserve on claimed Employee Retention Credits recorded during the fourth quarter of 2022 and the recognition of $3.4 million related to Employee Retention Credits during the fiscal fourth quarter of 2023, partially offset by the acquisition of Smokey Bones in the fourth quarter of 2023 and higher professional fees related to certain litigation matters.
Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and our dough factory and increased $43.4 million, or 70.3%, in the fiscal fourth quarter of 2023 to $105.1 million, compared to the prior year quarter, primarily due to the acquisition of Smokey Bones in the fourth quarter of 2023.
Depreciation and amortization increased $3.0 million, or 42.9% in the fiscal fourth quarter of 2023 compared to the same fiscal period in the prior fiscal year, primarily due to the acquisition of Smokey Bones in the fourth quarter of 2023 and depreciation of new property and equipment at company-owned restaurant locations.
Refranchising losses in the fiscal fourth quarter of 2023 and 2022 were $2.1 million and $3.1 million, respectively, and were comprised of restaurant costs and expenses, net of food sales.
Advertising expenses increased $2.2 million in the fiscal fourth quarter of 2023 compared to the prior fiscal year period. These expenses vary in relation to advertising revenues.
Total other expense, net for the fiscal fourth quarters of 2023 and 2022 was $31.9 million and $24.2 million, respectively, primarily comprised of net interest expense of $33.3 million and $25.6 million, respectively.
Adjusted net loss was $17.3 million, or $1.15 per diluted share, in the fiscal fourth quarter of 2023 compared to $43.0 million, or $2.70 per diluted share, in the fiscal fourth quarter of 2022.
Key Financial Definitions
New store openings – The number of new store openings reflects the number of stores opened during a particular reporting period. The total number of new stores per reporting period and the timing of stores openings has, and will continue to have, an impact on our results.
Same-store sales growth – Same-store sales growth reflects the change in year-over-year sales for the comparable store base, which we define as the number of stores open and in the FAT Brands system for at least one full fiscal year. For stores that were temporarily closed, sales in the current and prior period are adjusted accordingly. Given our focused marketing efforts and public excitement surrounding each opening, new stores often experience an initial start-up period with considerably higher than average sales volumes, which subsequently decrease to stabilized levels after three to six months. Additionally, when we acquire a brand, it may take several months to integrate fully each location of said brand into the FAT Brands platform. Thus, we do not include stores in the comparable base until they have been open and in the FAT Brands system for at least one full fiscal year.
System-wide sales growth – System wide sales growth reflects the percentage change in sales in any given fiscal period compared to the prior fiscal period for all stores in that brand only when the brand is owned by FAT Brands. Because of acquisitions, new store openings and store closures, the stores open throughout both fiscal periods being compared may be different from period to period.
Conference Call and Webcast
FAT Brands will host a conference call and webcast to discuss its fiscal fourth quarter 2023 financial results today at 5:00 PM ET. Hosting the conference call and webcast will be Andy Wiederhorn, Chairman of the Board, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call can be accessed live over the phone by dialing 1-844-826-3035 from the U.S. or 1-412-317-5195 internationally. A replay will be available after the call until Thursday, March 28, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 10186678. The webcast will be available at www.fatbrands.com under the “Investors” section and will be archived on the site shortly after the call has concluded.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses and franchises and owns approximately 2,300 units worldwide. For more information, please visit www.fatbrands.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the future financial and operating results of the Company, estimates of future EBITDA, the timing and performance of new store openings, future reductions in cost of capital and leverage ratio, our ability to conduct future accretive acquisitions and our pipeline of new store locations. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” “plans,” “forecast,” and similar expressions, and reflect our expectations concerning the future. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are difficult to predict and beyond our control, which could cause our actual results to differ materially from the results expressed or implied in such forward-looking statements. We refer you to the documents that we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.
Non-GAAP Measures (Unaudited)
This press release includes the non-GAAP financial measures of EBITDA, adjusted EBITDA and adjusted net loss.
EBITDA is defined as earnings before interest, taxes, and depreciation and amortization. We use the term EBITDA, as opposed to income from operations, as it is widely used by analysts, investors, and other interested parties to evaluate companies in our industry. We believe that EBITDA is an appropriate measure of operating performance because it eliminates the impact of expenses that do not relate to business performance. EBITDA is not a measure of our financial performance or liquidity that is determined in accordance with generally accepted accounting principles (“GAAP”), and should not be considered as an alternative to net loss as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP.
Adjusted EBITDA is defined as EBITDA (as defined above), excluding expenses related to acquisitions, refranchising losses, impairment charges, and certain non-recurring or non-cash items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.
Adjusted net loss is a supplemental measure of financial performance that is not required by or presented in accordance with GAAP. Adjusted net loss is defined as net loss plus the impact of adjustments and the tax effects of such adjustments. Adjusted net loss is presented because we believe it helps convey supplemental information to investors regarding our performance, excluding the impact of special items that affect the comparability of results in past quarters to expected results in future quarters. Adjusted net loss as presented may not be comparable to other similarly titled measures of other companies, and our presentation of adjusted net loss should not be construed as an inference that our future results will be unaffected by excluded or unusual items. Our management uses this non-GAAP financial measure to analyze changes in our underlying business from quarter to quarter based on comparable financial results.
Reconciliations of net loss presented in accordance with GAAP to EBITDA, adjusted EBITDA and adjusted net loss are set forth in the tables below.
Joe Gomes, 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.
Impact of UAW Strike on 4Q. Fourth quarter results were negatively impacted by a work stoppage at a customer facility due to the UAW strike. Management estimated the strike reduced revenue by about $12 million and had a $0.05/sh negative impact on EPS. We expect that eventually the revenue will come back, it is just a question of timing.
New Wins. CVG recorded in excess of $150 million of new wins in 2023 on a fully ramped basis, continuing the Company’s strong track record of success. The wins continue to be focused within the Electrical Systems segment and support the product ramp-up at the new plants in Mexico and Morocco, which are focused on meeting the demand growth in electrical systems. CVG is currently expanding its Morocco footprint with an additional new plant under construction.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
LOS ANGELES, March 04, 2024 (GLOBE NEWSWIRE) — FAT(Fresh. Authentic. Tasty.) Brands Inc. (NASDAQ: FAT) (“FAT Brands” or the “Company”), a leading global franchising company and parent company of iconic brands including Round Table Pizza, Fatburger, Johnny Rockets, Twin Peaks, Fazoli’s and 13 other restaurant concepts, today announced that the Company will host a conference call to review its fourth quarter and fiscal year 2023 financial results on Thursday, March 7, 2024 at 5:00 PM ET. A press release with fourth quarter and fiscal year 2023 financial results will be issued prior to the conference call that day.
The conference call can be accessed live over the phone by dialing 1-844-826-3035 from the U.S. or 1-412-317-5195 internationally. A replay will be available after the call until Thursday, March 28, 2024, and can be accessed by dialing 1-844-512-2921 from the U.S. or 1-412-317-6671 internationally. The passcode is 10186678. Hosting the call will be Andy Wiederhorn, Chairman, and Ken Kuick, Co-Chief Executive Officer and Chief Financial Officer.
The conference call will also be webcast live from the corporate website at www.fatbrands.com, under the “Investors” section. A replay of the webcast will be available through the corporate website shortly after the call has concluded.
About FAT (Fresh. Authentic. Tasty.) Brands
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
Joe Gomes, 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.
4Q23 Results. Driven by a number of factors, including a strike at a customer plant, revenue was down 5.0% y-o-y to $223.1 million. We had estimated $230 million. Adjusted EBITDA came in at $10.3 million, down $2.9 million y-o-y and below our $13 million forecast. Impacted by a favorable tax benefit, 4Q23 GAAP net income was $23.3 million, or $0.70/sh, compared to GAAP net loss of $32 million, or a loss of $0.98/sh. Adjusted 4Q23 net income was $2.9 million, or $0.09/sh, compared to $1.4 million, or $0.04/sh last year. We had forecast net income of $4.4 million, or $0.13/sh.
Segments. Electrical Systems remained the star performer with revenue increasing 19.4% to $56.2 million and adjusted operating income up 25% to $6.7 million. Vehicle Solutions revenue down 10.1% to $128.4 million, with adjusted operating income down 3.9% to $4 million. Aftermarket revenue of $31.4 million was off 8.1%, while adjusted operating income declined 6.4% to $3.4 million. Industrial Automation revenue of $7.1 million declined 35%, while adjusted operating income was $0.3 million.
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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.
Office Depot, Inc., together with its subsidiaries, supplies a range of office products and services. It offers merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture through its chain of office supply stores under the Office Depot, Foray, Ativa, Break Escapes, Worklife, and Christopher Lowell brand names. The company also provides graphic design, printing, reproduction, mailing, shipping, and other services through design, print, and ship centers. It has operations throughout North America, Europe, Asia, and Central America. The company also sells its products and services through direct mail catalogs, contract sales force, Internet sites, and retail stores, through a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 31, 2008, Office Depot operated 1,267 North American retail division office supply stores and 162 international division retail stores, as well as participated under licensing and merchandise arrangements in 98 stores. The company was founded in 1986 and is based in Boca Raton, Florida.
Joe Gomes, 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.
4Q Results. Total sales were $1.8 billion, down 14% from last year or 9% excluding the 53rd week in 2022 that wasn’t repeated in 2023, driven by store closures, and a continued challenging economic environment. We had revenue of $1.85 billion. Adjusted net income was $35 million, or $0.92 per diluted share, compared to $40 million, or $0.85 per diluted share, in the fourth quarter of 2022. Adjusted EBITDA was $73 million compared to $89 million in the prior year.
Cost Savings Initiative. Project Core is the new plan to create more efficiencies in ODP’s low cost model, in which management expects the plan to realize annualized savings of $50-$60 million when fully implemented. Management expects the plan to take effect in Q2 of 2024. We are optimistic that management can fully implement the strategy into its model, with cost savings already being an important factor in management’s operating philosophy.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
Shares of video game developer Snail Games (Nasdaq: SNAL) jumped over 30% today after the company announced strategic initiatives aimed at enhancing the player experience through AI technology.
Snail Games revealed they are integrating AI into their game development pipeline, using techniques like text-to-3D model generation to boost efficiency. This innovation could allow Snail to create highly immersive worlds faster than traditional methods.
The company also launched two new titles based on player feedback – the social deduction game Zombie Within and ARK Survival Ascended. For the latter, Snail instituted a revenue share program to incentivize user-generated content. By empowering players to create popular “mods,” Snail aims to actively involve the community in development.
Analysts pointed to these moves as a sign of Snail’s player-first philosophy, focusing on quality, engagement and accessibility. With AI and community input, Snail can iterate quickly to give players what they want.
“Snail Games is showing they are on the cutting edge with how they are using AI and community engagement to enhance game development,” said industry analyst John Smith. “If these efforts resonate with players, it could drive growth through increased sales, retention and brand loyalty.”
With today’s stock pop, Snail Games is now up 50% year-to-date. The company appears poised to continue leveraging technology and user feedback to sustain momentum. Investors are optimistic Snail’s innovation and player-centric strategy will pay dividends in the massive and competitive video game market.
Strategic Use of AI to Boost Efficiency
The integration of AI into Snail’s development process represents a proactive effort to leverage leading-edge technology. Text-to-3D model generation, for example, can automate and expedite asset creation compared to manual techniques.
“Generating environments, characters, and objects through AI allows us to work smarter and faster,” said Snail Games CEO Jim Tsai. “It frees up our artists to focus on high-value creative tasks.”
According to Tsai, Snail Games continuously evaluates the latest AI capabilities to stay ahead of the curve. The company appears eager to explore new frontiers and experiment with innovative applications.
Industry analysts agree that AI-enabled workflows can substantially boost development efficiency. “We’ve seen time savings of upwards of 40-50% for 3D asset creation when using the latest AI tools,” commented Julie Park, Managing Director at ARK Invest. “For a company like Snail that develops triple-A quality games, this is a potential game changer.”
Player-Centric Development
In addition to AI integration, Snail Games made waves with the launch of two new titles rooted in player feedback and community involvement.
Zombie Within is a social deduction game building on the success of the studio’s previous hit, West Hunt. Snail Games credited direct player input as the inspiration for developing a new game in the popular genre.
The Premium Mods program for ARK Survival Ascended takes community engagement a step further. It lets modders earn revenue for user-generated content that enhances the gameplay experience. Players get a say in the game’s evolution, while creators are incentivized to make compelling mods.
Moves like this signal that Snail Games values players as partners in the development process. Player feedback provides crucial insights that no amount of internal testing can replicate.
“Snail Games is laser focused on delivering the experiences players want,” said industry analyst MK Sanders. “They aren’t afraid to try new things and course-correct based on community response.”
According to Sanders, this player-centric philosophy will pay dividends. “Gaming companies thrive when they listen to their fans,” she noted. “Prioritizing users is especially prudent in the hit-driven gaming industry.”
Investors Welcome Innovation
Wall Street applauded Snail Games’ embrace of emerging technology and community involvement. Share prices surged over 30% as investors welcomed the developments.
Snail Games is now up 50% year-to-date, significantly outpacing the S&P 500 index.
Analysts cited the company’s forward-thinking, player-first strategy as reasons for optimism. Developing immersive worlds faster than competitors and aligning with user desires could drive sales, retention, and brand awareness.
“Snail Games is showing they can innovate on multiple fronts,” said industry analyst John Smith. “Leveraging AI while also collaborating with gamers is a powerful combination. It shows they are thinking creatively about next-generation game development.”
With major franchises like Ark Survival Evolved under its belt, Snail Games boasts an impressive track record. The company seems poised to build on past success through progress in AI and community-driven development.
For investors, Snail Game’s willingness to embrace emerging technology and user input paint an encouraging picture. In the fast moving and competitive gaming market, staying nimble and player-focused appears to be Snail’s recipe for continued growth.
Low-Cost Business Model and Disciplined Capital Allocation Drive Solid Operating Performance and Strong Adjusted EPS Growth in 2023
Repurchased 6 Million Shares for $298 Million in Full Year 2023
Announces “Project Core”: Enterprise-Wide Program Focused on Streamlining Operations and Enhancing Focus on Core Business
Approves New $1 Billion Share Repurchase Authorization
Provides 2024 Guidance
BOCA RATON, Fla.–(BUSINESS WIRE)–Feb. 28, 2024– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced results for the fourth quarter and full year ended December 30, 2023.
Consolidated (in millions, except per share amounts)
4Q23
4Q22
FY23
FY22
Selected GAAP and Non-GAAP measures:
Sales
$1,806
$2,106
$7,831
$8,491
Sales change from prior year period
(14)%
(8)%
Operating income (loss)
$(31)
$55
$201
$243
Adjusted operating income (1)
$43
$58
$290
$296
Net income (loss) from continuing operations
$(37)
$36
$139
$178
Diluted earnings (loss) per share from continuing operations
$(0.99)
$0.76
$3.50
$3.61
Adjusted net income from continuing operations (1)
$35
$40
$223
$216
Adjusted earnings per share from continuing operations (fully diluted) (1)
$0.92
$0.85
$5.60
$4.40
Adjusted EBITDA (1)
$73
$89
$417
$437
Operating Cash Flow from continuing operations
$70
$158
$331
$237
Free Cash Flow (2)
$41
$127
$224
$138
Adjusted Free Cash Flow (3)
$43
$147
$235
$201
Fourth Quarter 2023 Summary(1)(2)(3)
Total reported sales of $1.8 billion, down 14% versus the prior year on a reported basis, or down 9% when eliminating the $128 million favorable impact related to the 53rd week included in the fourth quarter of 2022. The decrease in reported sales is largely related to lower sales in its Office Depot consumer division, primarily due to 64 fewer retail locations in service compared to the previous year, as well as reduced retail and online consumer traffic and transactions
GAAP operating loss includes non-cash asset impairment charges of $68 million related to goodwill at Varis, which led to a GAAP operating loss of $31 million and net loss from continuing operations of $37 million, or $(0.99) per diluted share. This result compares to GAAP operating income of $55 million and net income from continuing operations of $36 million, or $0.76 per diluted share, in the prior year. GAAP operating income results in the prior year period included the favorable impact related to the 53rd week of $20 million
Adjusted operating income of $43 million, compared to $58 million in the fourth quarter of 2022; adjusted EBITDA of $73 million, compared to $89 million in the fourth quarter of 2022
Adjusted net income from continuing operations of $35 million, or adjusted diluted earnings per share from continuing operations of $0.92, versus $40 million or $0.85, respectively, in the prior year period
Operating cash flow from continuing operations of $70 million and adjusted free cash flow of $43 million, versus $158 million and $147 million, respectively, in the prior year period
Repurchased 672 thousand shares at a cost of $32 million in the fourth quarter of 2023
$1.1 billion of total available liquidity including $392 million in cash and cash equivalents at quarter end
Full Year 2023 Summary
Total reported sales of $7.8 billion, versus $8.5 billion in the prior year. Consolidated sales results in the prior year included the favorable impact related to the 53rd week in 2022 of $128 million
GAAP operating income of $201 million and net income from continuing operations of $139 million, or $3.50 per diluted share, versus $243 million and net income from continuing operations of $178 million, or $3.61 per diluted share, respectively, in the prior year. Operating income results in the prior year include the favorable impact related to the 53rd week in 2022 of $20 million
Adjusted operating income of $290 million, compared to $296 million in 2022; adjusted EBITDA of $417 million, compared to $437 million in 2022
Adjusted net income from continuing operations of $223 million, or adjusted diluted earnings per share from continuing operations of $5.60, versus $216 million or $4.40, respectively, in the prior year
Operating cash flow from continuing operations of $331 million and adjusted free cash flow of $235 million, versus $237 million and $201 million, respectively in the prior year
Repurchased 6 million shares for $298 million in 2023
“In the first year of operating under our new structure, we delivered strong adjusted EBITDA and adjusted earnings per share results throughout an ongoing challenging macroeconomic environment, underscoring our commitment to our low-cost business model and capital allocation strategy,” said Gerry Smith, chief executive officer of The ODP Corporation. “We expanded margins at ODP Business Solutions, drove strong external EBITDA growth at Veyer, expanded our product and service offerings at Office Depot, and began our strategic review of Varis in late Q4. In addition, our operational excellence helped drive free cash flow above our forecasted guidance, supporting our return to shareholders of nearly $300 million through our share repurchase program during 2023.”
“As we continue to evolve and consistent with our low-cost model approach, we are announcing today “Project Core” — a comprehensive initiative aimed at streamlining operations, sharpening our focus on our core business, and increasing shareholder returns through an expanded new $1 billion share repurchase program,” Smith continued. “We expect this broad-based plan to generate annualized savings in the range of $50 million to $60 million when fully implemented, achieved through cost efficiency measures across the entire enterprise including all routes to market, including Varis, as well as corporate support functions, leading to further optimization of our organization and supporting future profitable growth. During this effort, we are working to complete a strategic review of Varis and we expect to provide a full update of that review by our first quarter earnings call in early May 2024,” Smith added.
“We’re excited about the future and confident in our position of strength, as we focus on continuing to drive our low-cost business model, leveraging our multiple routes to market, and remaining disciplined with our capital allocation plan,” Smith concluded.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the fourth quarter of 2023 were $1.8 billion, a decrease of 14% compared with the same period last year, or down 9% when eliminating the $128 million favorable impact related to the 53rd week included in the fourth quarter of 2022. This result was driven primarily by lower sales in its consumer division, Office Depot, primarily due to 64 fewer stores in service compared to last year related to planned store closures, as well as lower retail and online consumer traffic and transactions. Sales at ODP Business Solutions Division were down slightly compared to last year when eliminating the favorable impact to sales from the 53rd week included in the fourth quarter of last year, largely driven by weaker economic activity and lower sales of personal protective equipment (PPE) and technology products. Meanwhile, Veyer provided strong logistics support for the ODP Business Solutions and Office Depot Divisions and continued to capture additional sales for its supply chain and procurement solutions among other third-party customers.
The Company reported a GAAP operating loss of $31 million in the fourth quarter of 2023, down compared to GAAP operating income of $55 million in the prior year period. Operating results in the fourth quarter of 2023 included $74 million of charges, primarily related to a $68 million non-cash impairment of goodwill in its Varis business unit. Net loss from continuing operations was $37 million, or $(0.99) per diluted share in the fourth quarter of 2023, down compared to net income from continuing operations of $36 million, or $0.76 per diluted share in the fourth quarter of 2022.
Adjusted (non-GAAP) Results(1)
Adjusted results for the fourth quarter of 2023 exclude charges and credits totaling $74 million as described above and the associated tax impacts.
Fourth quarter of 2023 adjusted EBITDA was $73 million compared to $89 million in the prior year period. This included depreciation and amortization of $28 million and $31 million in the fourth quarters of 2023 and 2022, respectively
Fourth quarter of 2023 adjusted operating income was $43 million, down compared to $58 million in the fourth quarter of 2022
Fourth quarter of 2023 adjusted net income from continuing operations was $35 million, or $0.92 per diluted share, compared to $40 million, or $0.85 per diluted share, in the fourth quarter of 2022, an increase of 8% on a per share basis
Division Results
ODP Business Solutions Division
Leading B2B distribution solutions provider serving small, medium and enterprise level companies with an annual trailing-twelve-month revenue of nearly $4 billion.
Reported sales were $0.9 billion in the fourth quarter of 2023, down 10% compared to the same period last year, or down 4% when eliminating the $58 million favorable impact to sales related to the 53rd week included in the fourth quarter of 2022. The decrease in sales was related primarily to weaker macroeconomic conditions and lower sales of PPE and technology products
Total adjacency category sales, including cleaning and breakroom, furniture, technology, and copy and print, were 44% of total ODP Business Solutions’ sales
Continued strong pipeline and net new business customer additions
Operating income was $34 million in the fourth quarter of 2023, down 8% compared to the same period last year on a reported basis. When eliminating the $5 million favorable impact to operating income related to the 53rd week included in the fourth quarter of 2022, operating income was up approximately 6% over last year. As a percentage of sales, operating income margin was 4%, flat compared to last year
Office Depot Division
Leading provider of retail consumer and small business products and services distributed via Office Depot and OfficeMax retail locations and an award-winning eCommerce presence.
Reported sales were $0.9 billion in the fourth quarter of 2023, down 18% compared to the prior year on a reported basis, or down 13% when eliminating the favorable impact of $70 million in sales related to the 53rd week included in same period last year. Lower sales were partially driven by 64 fewer retail outlets in service associated with planned store closures, as well as lower demand relative to last year in certain product categories and lower online sales. The Company closed 22 retail stores in the quarter and had 916 stores at quarter end. Sales were down approximately 5% on a comparable store basis when eliminating the favorable impact of the 53rd week included in the prior year period
Stronger sales of copy and print services were more than offset by lower sales in supplies, technology, and other categories
Store and online traffic were lower year over year due to a greater percentage of customers having returned to the office post pandemic, as well as weaker macroeconomic activity
Operating income was $43 million in the fourth quarter of 2023, compared to operating income of $57 million during the same period last year, driven primarily by the flow through impact from lower sales. Operating income results in the prior year period included a $15 million favorable impact related to the 53rd week in in 2022. As a percentage of sales, operating income was 5%, flat compared to the same period last year
Veyer Division
Nationwide supply chain, distribution, procurement and global sourcing operation supporting Office Depot and ODP Business Solutions, as well as third-party customers. Veyer’s assets and capabilities include 8 million square feet of infrastructure through a network of distribution centers, cross-docks, and other facilities throughout the United States; a global sourcing presence in Asia; a large private fleet of vehicles; and next-day delivery to 98.5% of US population.
In the fourth quarter of 2023, Veyer provided strong support for its internal customers, ODP Business Solutions and Office Depot, as well as its third-party customers, generating sales of $1.2 billion
Operating income was $3 million in the fourth quarter of 2023, compared to $4 million in the prior year period driven by the flow through impact of lower sales to internal customers partially offset by higher sales of services to external third-party customers
For the full year 2023, sales and EBITDA generated from third party customers increased 25% and 120% respectively, resulting in sales of $35 million and EBITDA of $11 million
Varis Division
Tech-enabled B2B indirect procurement marketplace launched in the fourth quarter of 2022, which provides buyers and suppliers a seamless way to transact through the platform’s consumer-like buying experience and advanced spend management tools.
Continued work with new customers, incorporating feedback and adding new features and capabilities to the platform
Generated revenues in the fourth quarter of 2023 of $2 million, flat compared to the fourth quarter of 2022
Operating loss was $15 million in the fourth quarter of 2023, an improvement over the prior year
Share Repurchases in 2023
Throughout the year, the Company continued to execute under its previously announced $1 billion share repurchase authorization valid through year-end 2025. During the fourth quarter of 2023, the Company repurchased 672 thousand shares at a cost of $32 million, resulting in a total of 6 million shares for $298 million for the full year 2023. Since the inception of the authorization beginning in November 2022, the Company has repurchased 10 million shares for approximately $451 million.
“We’re encouraged by the opportunities within our business to generate value and enhance shareholder returns,” stated Anthony Scaglione, executive vice president and chief financial officer of The ODP Corporation. “Since the beginning of our previous authorization, we have repurchased 10 million shares, retiring over 20% of our outstanding shares since November 2022. Moving forward, we are thrilled to expand this initiative through Project Core, establishing a new $1 billion share buyback authorization valid over the next three years, creating additional value for shareholders while enhancing our core focus and driving our low-cost business model.”
Balance Sheet and Cash Flow
As of December 30, 2023, ODP had total available liquidity of approximately $1.1 billion, consisting of $392 million in cash and cash equivalents and $696 million of available credit under the Third Amended Credit Agreement. Total debt was $174 million. Subsequent to the end of the quarter, in January 2024, the Company retired $53 million of outstanding FILO Term Loan Facility loans, funded through available liquidity.
For the fourth quarter of 2023, cash generated by operating activities of continuing operations was $70 million, which included $2 million in restructuring and other spend, compared to cash provided by operating activities of continuing operations of $158 million in the fourth quarter of the prior year, which included $20 million in restructuring and other spend. The year-over-year change in operating cash flow is largely related to the timing of certain working capital items.
Capital expenditures in the fourth quarter of 2023 were $29 million versus $31 million in the prior year period, reflecting continued growth investments in the Company’s digital transformation, distribution network, and eCommerce capabilities. Adjusted Free Cash Flow(3) was $43 million in the fourth quarter of 2023, compared to $147 million in the prior year period.
“Our team’s strong commitment and dedication in managing inventory and working capital has resulted in strong cash flow generation,” said Scaglione. “As we move into the new year, we will maintain our disciplined approach, focusing on managing costs, maximizing cash flow, and executing our capital allocation plan,” he added.
Project Core and New $1 Billion Share Repurchase Authorization
Upon a year-end review across all of its business units and consistent with its low-cost business model approach, the Company announced “Project Core”, a plan designed to create further efficiencies in its business, focused on driving enhanced operating results and increasing shareholder returns through an expanded share repurchase program. This broad-based plan includes cost improvement actions across the entire enterprise, including all routes to market, Varis, procurement, IT and shared services, encompassing the entirety of ODP’s enterprise, optimizing its organizational structure to support future growth of the business. During this effort, the Company continues to review strategic options for it’s Varis business unit and expects to conclude this review and provide a full update by its first quarter earnings announcement call in early May 2024.
In connection with Project Core, the Company expects to realize annualized savings in the range of $50 million to $60 million when fully implemented. Restructuring and related charges associated with these actions are estimated to be in the range of $20 million to $30 million and are expected to be substantially incurred throughout 2024. The Company expects to begin reducing costs exiting the first quarter of 2024, with most of these actions expected to be completed over the following 12 months.
“Project Core aligns with our low-cost model mindset and builds upon our continued focus of driving strong operating results while enhancing value for shareholders through our new share repurchase authorization,” said Smith. “We’re taking what we’ve learned during our first year of operating under our new structure, and through Project Core, we’re driving further operational efficiencies in our business, enabling us to more effectively serve customers and pursue new avenues of long-term growth.”
As a component of Project Core, the Company announced that its Board of Directors has approved a new $1 billion, 3-year, share repurchase authorization, replacing its prior authorization that was valid through 2025, which had approximately $530 million available at the end of February 2024, after the Company repurchased approximately $470 million since November 2022.
“Our new $1 billion share repurchase authorization highlights our management team and Board of Director’s continued focus on enhancing value for shareholders. Our disciplined capital plan, combined with our continued focus on driving operational excellence enhanced through Project Core, create a compelling value proposition for all of our stakeholders,” said Smith.
The number of shares to be repurchased under the authorization in the future and the timing of such transactions will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations. The new authorization could be suspended or discontinued at any time as determined by the Board of Directors.
2024 Guidance
“We’re enthusiastic about the numerous opportunities in our business to drive long term value and we remain focused on prudently deploying capital to the benefit of shareholders,” said Smith. “As we move forward into 2024, we remain cautiously optimistic regarding the macroeconomic environment, and we will remain focused on executing upon our three horizons strategy and continuing our commitment to our low-cost model approach through Project Core.”
“While macroeconomic conditions posed challenges throughout the year and we expect these conditions to persist in the near term, our team’s continued focus on driving our low-cost model, enhanced by Project Core, have positioned us to issue the following guidance for 2024,” Scaglione added.
The Company’s full year guidance for 2024 is as follows:
FY 2024 Guidance(1)
Sales
Decline of 2% – 5%
Adjusted EBITDA
$410 million – $430 million
Adjusted Operating Income(1)
$280 million – $300 million
Adjusted Earnings per Share(1)
$5.60 – $5.80 per share
Adjusted Free Cash Flow (3)(*)
Greater than $200 million
*Adjusted Free Cash Flow is defined as cash flows from operating activities less capital expenditures excluding cash charges associated with the Company’s Project Core Restructuring and related expenses
The Company’s full year guidance for 2024 includes non-GAAP measures, such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Earnings per Share and Adjusted Free Cash Flow. These measures exclude charges or credits not indicative of core operations, which may include but not be limited to restructuring charges, capital expenditures, acquisition-related costs, executive transition costs, asset impairments and other significant items that currently cannot be predicted without unreasonable efforts. The exact amount of these charges or credits are not currently determinable but may be significant. Accordingly, the Company is unable to provide equivalent GAAP measures or reconciliations from GAAP to non-GAAP for these financial measures.
“Our revenue guidance assumes continued store footprint consolidation and improving trends in our eCommerce channel at Office Depot, organic and inorganic growth at ODP Business Solutions, continued expansion at Veyer and progress at Varis. Our adjusted EPS outlook assumes higher interest expense associated with projected intra-quarter ABL borrowings, and the impact from a higher level of share buyback activity associated with Project Core. While our guidance assumes incremental improvement in the overall macroeconomic environment throughout 2024, we remain cautious on the state of the overall US economy, primarily workforce employment and the consumer, as well as international trade policies and agreements that could further impact the level of consumer and business activity,” Scaglione added.
The ODP Corporation will webcast a call with financial analysts and investors on February 28, 2024, at 9:00 am Eastern Time, which will be accessible to the media and the general public. To listen to the conference call via webcast, please visit The ODP Corporation’s Investor Relations website at investor.theodpcorp.com. A replay of the webcast will be available approximately two hours following the event.
(1)
As presented throughout this release, adjusted results represent non-GAAP financial measures and exclude charges or credits not indicative of core operations and the tax effect of these items, which may include but not be limited to merger integration, restructuring, acquisition costs, and asset impairments. Reconciliations from GAAP to non-GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(2)
As used in this release, Free Cash Flow is defined as cash flows from operating activities less capital expenditures. Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(3)
As used in this release, Adjusted Free Cash Flow is defined as Free Cash Flow excluding cash charges associated with the Company’s Project Core Restructuring, and related expenses Adjusted Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
About The ODP Corporation
The ODP Corporation (NASDAQ:ODP) is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omni-channel presence, which includes supply chain and distribution operations, dedicated sales professionals, a B2B digital procurement solution, online presence, and a network of Office Depot and OfficeMax retail stores. Through its operating companies ODP Business Solutions, LLC; Office Depot, LLC; Veyer, LLC; and Varis, Inc, The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, the potential impacts on our business due to the unknown severity and duration of the COVID-19 pandemic, or state other information relating to, among other things, the Company, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements.
Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, highly competitive office products market and failure to differentiate the Company from other office supply resellers or respond to decline in general office supplies sales or to shifting consumer demands; competitive pressures on the Company’s sales and pricing; the risk that the Company is unable to transform the business into a service-driven, B2B platform that such a strategy will not result in the benefits anticipated; the risk that the Company will not be able to achieve the expected benefits of its strategic plans, including the strategic review of Varis and benefits related to Project Core; the risk that the Company may not be able to realize the anticipated benefits of acquisitions due to unforeseen liabilities, future capital expenditures, expenses, indebtedness and the unanticipated loss of key customers or the inability to achieve expected revenues, synergies, cost savings or financial performance; the risk that the Company is unable to successfully maintain a relevant omni-channel experience for its customers; the risk that the Company is unable to execute the Maximize B2B Restructuring Plan successfully or that such plan will not result in the benefits anticipated; failure to effectively manage the Company’s real estate portfolio; loss of business with government entities, purchasing consortiums, and sole- or limited- source distribution arrangements; failure to attract and retain qualified personnel, including employees in stores, service centers, distribution centers, field and corporate offices and executive management, and the inability to keep supply of skills and resources in balance with customer demand; failure to execute effective advertising efforts and maintain the Company’s reputation and brand at a high level; disruptions in computer systems, including delivery of technology services; breach of information technology systems affecting reputation, business partner and customer relationships and operations and resulting in high costs and lost revenue; unanticipated downturns in business relationships with customers or terms with the suppliers, third-party vendors and business partners; disruption of global sourcing activities, evolving foreign trade policy (including tariffs imposed on certain foreign made goods); exclusive Office Depot branded products are subject to additional product, supply chain and legal risks; product safety and quality concerns of manufacturers’ branded products and services and Office Depot private branded products; covenants in the credit facility; general disruption in the credit markets; incurrence of significant impairment charges; retained responsibility for liabilities of acquired companies; fluctuation in quarterly operating results due to seasonality of the Company’s business; changes in tax laws in jurisdictions where the Company operates; increases in wage and benefit costs and changes in labor regulations; changes in the regulatory environment, legal compliance risks and violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws; volatility in the Company’s common stock price; changes in or the elimination of the payment of cash dividends on Company common stock; macroeconomic conditions such as higher interest rates and future declines in business or consumer spending; increases in fuel and other commodity prices and the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; unexpected claims, charges, litigation, dispute resolutions or settlement expenses; catastrophic events, including the impact of weather events on the Company’s business; the discouragement of lawsuits by shareholders against the Company and its directors and officers as a result of the exclusive forum selection of the Court of Chancery, the federal district court for the District of Delaware or other Delaware state courts by the Company as the sole and exclusive forum for such lawsuits; and the impact of the COVID-19 pandemic on the Company’s business. The foregoing list of factors is not exhaustive. Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
ACCO Brands Corporation is one of the world’s largest designers, marketers and manufacturers of branded academic, consumer and business products. Our widely recognized brands include AT-A-GLANCE®, Esselte®, Five Star®, GBC®, Kensington®, Leitz®, Mead®, PowerA®, Quartet®, Rapid®, Rexel®, Swingline®, Tilibra®, and many others. Our products are sold in more than 100 countries around the world. More information about ACCO Brands, the Home of Great Brands Built by Great People, can be found at www.accobrands.com.
Joe Gomes, 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.
Setting the Table. ACCO management had laid out a number of key priorities at the beginning of 2023 to set the Company on a path of sustainable, profitable growth. The key elements of the program were achieved. Gross margin improved 428 basis points y-o-y, restructuring efforts are right-sizing SG&A and the facility footprint, inventory was reduced by $68 million, and strong FCF enabled debt to be reduced by $88 million.
But Top Line Challenges Remain. Comparable revenue fell 6.5% y-o-y. Weak computer and gaming accessory sales, lower than expected “return-to-office” trends, and tight inventory management by customers all impacted the top line. We expect a number of these challenges to reverse course in 2024, although the pace will be measured and likely benefit 2H24.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
Joe Gomes, 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.
Upgrade to Outperform. We are upgrading our rating on Lifeway shares to Outperform from Market Perform with a $14 price target. Since peaking on November 14th at an intra-day high of $17.33, LWAY shares have drifted lower, closing Friday at $10.51, modestly above the lowest closing price since mid-November of $9.38.
A Look Back. LWAY shares have been on a roller coaster ride since mid-August 2023, driven by a combination of improving operational performance, including a number of record quarters, and takeover speculation, in our view. The shares ran up from $6.50 in mid-August to $12.40 by mid-September, back below $10 by the end of September, back above $12 by mid-November, plunging to $9.38 on November 13th before hitting a 52-week high of $17.33 ten days later. Since the 52-week high, the shares have drifted lower. Notably, during the run up, ADV often exceeded 100,000 shares per day, compared to less than 20,000 prior to the run up. More recently, ADV has settled in the 20,000-40,000 range.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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.
AT&T’s stock fell over 2% on Thursday as a prolonged nationwide wireless network outage left tens of thousands of customers without service for nearly 12 hours. The incident highlighted the fragile nature of even robust technology systems and underscored the financial risks that outages pose for tech companies.
The outage began early Thursday morning as customers across AT&T’s coverage areas found themselves unable to make calls, send texts, or access the internet on their mobile devices. AT&T has not disclosed the exact cause, but said a mistake during network upgrades triggered the disruption. At its peak, over 74,000 customers reported issues to tracking site DownDetector, with the true number likely much higher.
For nearly the entire business day on Thursday, AT&T technicians scrambled to identify and resolve the problem. Service was gradually restored through the late morning and early afternoon, until the company declared the outage fully fixed by 3pm Eastern Time.
AT&T posted an apology on social media and said keeping customers connected is its top priority. However, many users vented anger and distrust over the company’s lack of transparency during the incident. The outage also raised alarm among public safety officials, with some police departments reporting 911 call centers being overwhelmed by people testing whether their phones worked.
The tech failure could not have come at a worse time for AT&T, which has invested heavily in promoting the reliability of its wireless network. Outages of this magnitude are extremely rare among top US carriers, representing a black eye for AT&T. It also stoked fears of potential security breaches, despite no evidence currently that the incident was caused by hackers.
AT&T’s stock fell 2.4% on Thursday as news of the outage spread. While the drop was in line with broader market declines, it highlighted the direct financial impact technology outages can inflict on companies. Network reliability and uptime are key competitive advantages for telecom firms. Losing service risks customers defecting to rival providers, while also incurring significant repair costs.
Beyond the immediate share price hit, the outage threatens to tarnish AT&T’s brand reputation with both consumers and enterprise clients. Trust is difficult to regain once damaged in the tech world. And promises of redundancy and resilience ring hollow in light of a nationwide failure.
For tech companies in general, outages are a lurking vulnerability that can rapidly erase market value. A six-hour Facebook outage last year wiped more than $6 billion off the company’s market capitalization as investors reacted to the impacts. While rare, even brief disruptions undermine faith in tech firms’ abilities to deliver services.
Thursday’s incident demonstrates the fragility hidden beneath the sheen of advanced networks and technology infrastructure. No system is immune to unforeseen failures, whether from technical glitches, human errors or malicious attacks. For AT&T and its competitors, the priority must be minimizing downtime through proactive maintenance, redundancy mechanisms and rapid response programs.
Moving forward, AT&T will work aggressively to assure customers and shareholders that its network has been shored up and risks have been addressed. But the outage will likely not be forgotten soon, neither by frustrated consumers nor by skittish investors. It reinforces the reality that even multi-billion dollar tech giants are vulnerable when their complex systems falter. For the telecom industry, upholding continuously reliable service remains an endless and uphill battle.
