Conference Call and Webcast Today, May 8, 2024 at 11:00 a.m. ET 877-407-4018 or 201-689-8471, conference ID 13746158 or www.bbgi.com
Replay information provided below
NAPLES, Fla., May 08, 2024 (GLOBE NEWSWIRE) — Beasley Broadcast Group, Inc. (Nasdaq: BBGI) (“Beasley” or the “Company”), a multi-platform media company, today announced operating results for the three-month period ended March 31, 2024. For further information, the Company has posted a presentation to its website regarding the first quarter highlights and accomplishments that management will review on today’s conference call.
First Quarter Financial Highlights
In millions, except per share data
Three Months Ended March 31,
2024
2023
Net revenue
$54.4
$57.8
Operating income (loss)
(1.1
)
0.4
Net income (loss)1
0.0
(3.5
)
Net income (loss) per diluted share1
$0.00
($0.12
)
Adjusted EBITDA (non-GAAP)
0.7
2.6
1 Net income (loss) and net income (loss) per diluted share in the three months ended March 31, 2024 include a $6.0 million gain on sale of an investment in Broadcast Music, Inc.
Net revenue during the three months ended March 31, 2024 decreased 5.9% to $54.4 million, primarily reflecting a year-over-year decline in audio advertising and other revenue due to Beasley’s Wilmington station and esports divestitures as well as ongoing softness in the commercial advertising business, partially offset by growth in digital and political advertising revenue.
Beasley reported an operating loss of $1.1 million in the first quarter of 2024 compared to operating income of $0.4 million in the first quarter of 2023, largely reflecting the year-over-year decrease in net revenue.
Beasley reported net income of approximately $8,000, or $0.00 per diluted share, in the three months ended March 31, 2024, compared to a net loss of $3.5 million, or $0.12 per diluted share, in the three months ended March 31, 2023. The year-over-year improvement was primarily due to the $6.0 million gain on sale of an investment in Broadcast Music, Inc. holdings and lower interest expense.
Adjusted EBITDA (a non-GAAP financial measure) was $0.7 million in the first quarter of 2024 compared to $2.6 million in the first quarter of 2023. The year-over-year decrease is primarily attributable to lower net revenue compared to the prior year period.
Please refer to the “Calculation of Adjusted EBITDA” and “Reconciliation of Net Income (Loss) to Adjusted EBITDA” tables at the end of this release.
Commenting on the financial results, Caroline Beasley, Chief Executive Officer, said, “Beasley continues to advance our core initiatives, which are focused on driving revenue and cash flow, including our digital transformation, revenue diversification and expense management initiatives. We expect digital to account for between 20% and 25% of total revenue in 2024, driven by the ongoing growth and success of our premium content creation and digital services. On the new business front, our dedicated sales teams are leveraging the tremendous audience reach and engagement of our platform to attract new advertisers.
“In summary, Beasley’s underlying fundamentals—mainly, our local audio and digital platforms and audience engagement—remain strong. We are proud of our teams’ steadfast commitment to delivering exceptional content and services to our listeners, advertisers, online users and sports fans, and remain confident that the actions we are taking to transform our company and strengthen our balance sheet, are laying the foundation for future growth and success.”
First Quarter 2024 Highlights
Revenue from new customers grew 53% year over year
Generated $548,000 in political revenue
Local revenue, including digital packages sold locally, accounted for 69% of Total Revenue
Digital revenue grew 10% year-over-year, or 20% year-over-year on a same station basis, to $11,000,000
Digital revenue accounted for 20% of total company revenue
38% of our total audience listens via the company’s digital platforms
Conference Call and Webcast Information The Company will host a conference call and webcast today, May 8, 2024, at 11:00 a.m. ET to discuss its financial results and operations. To access the conference call, interested parties may dial 877-407-4018 or 201-689-8471, conference ID 13746158 (domestic and international callers). Participants can also listen to a live webcast of the call at the Company’s website at www.bbgi.com. Please allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the webcast can be accessed for five days on the Company’s website, www.bbgi.com.
Questions from analysts, institutional investors and debt holders may be e-mailed to ir@bbgi.com at any time up until 9:00 a.m. ET on Wednesday, May 8, 2024. Management will answer as many questions as possible during the conference call and webcast (provided the questions are not addressed in their prepared remarks).
About Beasley Broadcast Group Beasley Broadcast Group, Inc. (www.bbgi.com) was founded in 1961 by George G. Beasley and owns 57 AM and FM stations in 13 large- and mid-size markets in the United States. Beasley radio stations reach over 30 million unique consumers weekly over-the-air, online and on smartphones and tablets, and millions regularly engage with the Company’s brands and personalities through digital platforms such as Facebook, Twitter, text, apps and email. For more information, please visit www.bbgi.com.
For further information, or to receive future Beasley Broadcast Group news announcements via e-mail, please contact Beasley Broadcast Group, at 239-263-5000 or email@bbgi.com, or Joseph Jaffoni, JCIR, at 212-835-8500 or bbgi@jcir.com.
Definitions EBITDA is defined as net income (loss) before interest income or expense, income tax expense or benefit, depreciation, and amortization.
Adjusted EBITDA is defined as EBITDA further adjusted to exclude certain, non-operating or other items that we believe are not indicative of the performance of our ongoing operations, such as impairment losses, other income or expense, or equity in earnings of unconsolidated affiliates. See “Reconciliation of Net Income (Loss) to Adjusted EBITDA” for additional information.
Adjusted EBITDA can also be calculated as net revenue less operating and corporate expenses. We define operating expenses as cost of services and selling, general and administrative expenses. Corporate expenses include general and administrative expenses and certain other income and expense items not allocated to the operating segments.
Adjusted EBITDA is a measure widely used in the media industry. The Company recognizes that because Adjusted EBITDA is not calculated in accordance with GAAP, it is not necessarily comparable to similarly titled measures employed by other companies. However, management believes that Adjusted EBITDA provides meaningful information to investors because it is an important measure of how effectively we operate our business and assists investors in comparing our operating performance with that of other media companies.
Same station revenue excludes revenue from all divestitures and other operations that were exited in the prior 12 months.
New business revenue is defined as revenue from an advertiser that has not advertised in the prior 13 months before the start of the current quarter.
Note Regarding Forward-Looking Statements Statements in this release that are “forward-looking statements” are based upon current expectations and assumptions and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as “looking ahead,” “intends,” “believes,” “expects,” “seek,” “will,” “should” or variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. Key risks are described in the Company’s reports filed with the Securities and Exchange Commission (“SEC”) including its annual report on Form 10-K and quarterly reports on Form 10-Q. Readers should note that forward-looking statements are subject to change and to inherent risks and uncertainties and may be impacted by several factors, including:
our ability to comply with the continued listing standards of the Nasdaq Capital Market;
risk from social and natural catastrophic events;
external economic forces and conditions that could have a material adverse impact on our advertising revenues and results of operations;
the ability of our stations to compete effectively in their respective markets for advertising revenues;
our ability to develop compelling and differentiated digital content, products and services;
audience acceptance of our content, particularly our audio programs;
our ability to respond to changes in technology, standards and services that affect the audio industry;
our dependence on federally issued licenses subject to extensive federal regulation;
actions by the FCC or new legislation affecting the audio industry;
increases to royalties we pay to copyright owners or the adoption of legislation requiring royalties to be paid to record labels and recording artists;
our dependence on selected market clusters of stations for a material portion of our net revenue;
credit risk on our accounts receivable;
the risk that our FCC licenses and/or goodwill could become impaired;
our substantial debt levels and the potential effect of restrictive debt covenants on our operational flexibility and ability to pay dividends;
the potential effects of hurricanes on our corporate offices and stations;
the failure or destruction of the internet, satellite systems and transmitter facilities that we depend upon to distribute our programming;
disruptions or security breaches of our information technology infrastructure and information systems;
the loss of key personnel;
our ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto and their impact on our financial condition and results of operations;
the fact that our Company is controlled by the Beasley family, which creates difficulties for any attempt to gain control of our Company; and
other economic, business, competitive, and regulatory factors affecting our businesses, including those set forth in our filings with the SEC.
Our actual performance and results could differ materially because of these factors and other factors discussed in our SEC filings, including but not limited to our annual reports on Form 10-K or quarterly reports on Form 10-Q, copies of which can be obtained from the SEC, www.sec.gov, or our website, www.bbgi.com. All information in this release is as of May 8, 2024, and we undertake no obligation to update the information contained herein to actual results or changes to our expectations, except as required by law.
First Quarter Revenue of $1.9 Billion with GAAP EPS of $0.40; Adjusted EPS of $1.05
GAAP Operating Income of $18 Million; Net Income of $15 Million; Adjusted EBITDA of $82 Million
Accelerating Project Core to Maximize In-Year Cost Savings with Future Annualized Run-Rate Cost Savings in Excess of $100 Million
Driving Operational Excellence and Remaining On-Track to Meet 2024 Guidance Despite Challenging Macroeconomic and Business Environment Impacting Top-Line Results
Board of Directors Approved Held-For-Sale Plan for Varis Business Unit
Company Repurchased Approximately $90 Million of Shares Year to Date
BOCA RATON, Fla.–(BUSINESS WIRE)–May 8, 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 first quarter ended March 30, 2024.
Consolidated (in millions, except per share amounts)
1Q24
1Q23
Selected GAAP and Non-GAAP measures:
Sales
$1,871
$2,108
Sales change from prior year period
(11)%
Operating income
$18
$95
Adjusted operating income (1)
$51
$99
Net income from continuing operations
$15
$72
Diluted earnings per share from continuing operations
$0.40
$1.71
Adjusted net income from continuing operations (1)
$40
$75
Adjusted earnings per share from continuing operations (fully diluted) (1)
$1.05
$1.78
Adjusted EBITDA (1)
$82
$131
Operating Cash Flow from continuing operations
$38
$157
Free Cash Flow (2)
$3
$128
Adjusted Free Cash Flow (3)
$7
$133
First Quarter 2024 Summary(1)(2)(3)
Total reported sales of $1.9 billion, down 11% versus the prior year on a reported basis. The decrease in reported sales is largely related to lower sales in its Office Depot Division, primarily due to 56 fewer retail locations in service compared to the previous year and reduced transactions, as well as lower sales in its ODP Business Solutions Division
GAAP operating income of $18 million and net income from continuing operations of $15 million, or $0.40 per diluted share, versus $95 million and $72 million, respectively, or $1.71 per diluted share, in the prior year
Adjusted operating income of $51 million, compared to $99 million in the first quarter of 2023; adjusted EBITDA of $82 million, compared to $131 million in the first quarter of 2023
Adjusted net income from continuing operations of $40 million, or adjusted diluted earnings per share from continuing operations of $1.05, versus $75 million or $1.78, respectively, in the prior year period
Operating cash flow from continuing operations of $38 million and adjusted free cash flow of $7 million, versus $157 million and $133 million, respectively, in the prior year period
Repurchased 957 thousand shares at a cost of $50 million in the first quarter of 2024; Repurchased a total of approximately $90 million of shares when including purchases in quarter and post quarter through the current date
$971 million of total available liquidity including $282 million in cash and cash equivalents at quarter end
“This quarter, we launched and are accelerating our Project Core initiatives positioning us to offset the impact of an ongoing challenging macroeconomic and business environment,” said Gerry Smith, chief executive officer of The ODP Corporation. “Despite our slower than expected start to the year, we remain confident in our operational excellence approach and committed to achieving our guidance for the full year 2024, as we utilize our strong foundation and accelerate the broad execution of Project Core.”
“During the quarter, more cautious spending activity and ongoing delays in the onboarding of new customers at ODP Business Solutions impacted their performance, while reduced consumer activity affected Office Depot’s revenue results. Despite this, we remain encouraged by our ongoing success in winning new enterprise customers through the flexibility of our service platform and strength of our balance sheet. Additionally, Veyer demonstrated continued momentum by attracting new third-party customers and continuing to drive growth in external EBITDA. Furthermore, we maintained our focus on capital allocation and increased the pace of share repurchases, buying back approximately $90 million of our stock since the beginning of the year. We expect to execute under this plan at similar levels or higher as we move through the balance of the year,” added Smith.
“Given the slower than expected start to the year and our continued commitment to our low-cost business model, we are accelerating our plans for Project Core throughout the balance of the year, generating higher in-year cost savings and future annualized run-rate savings in excess of $100 million. Additionally, we have arrived at the strategic decision to pursue a sale of Varis, which our Board of Directors have approved. Concurrently, we have reduced the operating cost of Varis to further refine their focus, while continuing to support new and existing customers. Through the acceleration of Project Core, the additional cost efficiencies we are driving now and in the second half of the year have positioned us to increase guidance for adjusted EBITDA and adjusted EPS,” Smith continued.
“Despite the top-line challenges, we remain encouraged about the future and we’re confident in our operational excellence approach and position of strength. We will continue to focus on driving our low-cost business model, leveraging our multiple routes to market, and executing on our capital allocation plan,” Smith concluded.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the first quarter of 2024 were $1.9 billion, a decrease of 11% compared with the same period last year. This result was driven primarily by lower sales in its consumer division, Office Depot, primarily due to 56 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 also down compared to last year, largely driven by weaker economic activity and more cautious spending among business customers, as well as continued challenges related to the pace of onboarding new customers. 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 GAAP operating income of $18 million in the first quarter of 2024, down compared to GAAP operating income of $95 million in the prior year period. Operating results in the first quarter of 2024 included $33 million of charges, primarily related to $27 million in net merger and restructuring expenses and $6 million non-cash asset impairment primarily related to the operating lease right-of-use (ROU) assets associated with the Company’s retail store locations. Net income from continuing operations was $15 million, or $0.40 per diluted share in the first quarter of 2024, down compared to net income from continuing operations of $72 million, or $1.71 per diluted share in the first quarter of 2023.
Adjusted (non-GAAP) Results(1)
Adjusted results for the first quarter of 2024 exclude charges and credits totaling $33 million as described above and the associated tax impacts.
First quarter 2024 adjusted EBITDA was $82 million compared to $131 million in the prior year period. This included depreciation and amortization of $29 million and $30 million in the first quarter of 2024 and 2023, respectively
First quarter 2024 adjusted operating income was $51 million, down compared to $99 million in the first quarter of 2023
First quarter 2024 adjusted net income from continuing operations was $40 million, or $1.05 per diluted share, compared to $75 million, or $1.78 per diluted share, in the first quarter of 2023, a decrease of 41% 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 $3.8 billion.
Reported sales were $0.9 billion in the first quarter of 2024, down 8% compared to the same period last year. The decrease in sales was related primarily to weaker macroeconomic conditions, more cautious business spending, and lower sales of technology products and supplies
Total adjacency category sales, including cleaning and breakroom, furniture, technology, and copy and print, were 43% of total ODP Business Solutions’ sales
Continued strong pipeline and new customer additions
Operating income was $30 million in the first quarter of 2024, down 23% compared to the same period last year on a reported basis. As a percentage of sales, operating income margin was 3%, down 60 basis points compared to the same period 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 first quarter of 2024, down 14% compared to the prior year on a reported basis. Lower sales were partially driven by 56 fewer retail outlets in service associated with planned store closures, as well as lower demand relative to last year in major product categories and lower online sales. Additionally, certain interruptions related to inclement weather further impacted sales during the back-to-business season. The Company closed 13 retail stores in the quarter and had 903 stores at quarter end. Sales were down 10% on a comparable store basis
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 $50 million in the first quarter of 2024, compared to operating income of $85 million during the same period last year, driven primarily by the flow through impact from lower sales. As a percentage of sales, operating income was 5%, down 240 basis points 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 first quarter of 2024, 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 $9 million in the first quarter of 2024, compared to $15 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
In the first quarter of 2024, sales and EBITDA generated from third party customers increased 29% and 40% respectively, resulting in sales of $9 million and EBITDA of $3 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 customers, incorporating feedback and adding new features and capabilities to the platform
Generated revenues in the first quarter of 2024 of $2 million, flat compared to the first quarter of 2023
Operating loss was $14 million in the first quarter of 2024, an improvement over the prior year, with further run-rate savings after cost actions implemented since the beginning of the year
Share Repurchases
The Company continued to execute under its previously announced $1 billion share repurchase authorization valid through March 31, 2027. During the first quarter of 2024, the Company repurchased 957 thousand shares at a cost of $50 million. Since the end of the first quarter 2024, the Company repurchased additional shares for approximately $40 million.
“Through our balanced capital allocation strategy, we are investing in the future of our business while continuing to enhance value for shareholders by accelerating the pace of share repurchases under our buyback authorization,” stated Anthony Scaglione, executive vice president and chief financial officer of The ODP Corporation. “We have come out of the gate strong, repurchasing approximately $90 million of our stock, and moving forward, we expect to maintain or increase this pace of share repurchases in the near term, while also enhancing our focus and driving our low-cost business model through Project Core.”
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.
Balance Sheet and Cash Flow
As of March 30, 2024, ODP had total available liquidity of approximately $971 million, consisting of $282 million in cash and cash equivalents and $689 million of available credit under the Third Amended Credit Agreement. Total debt was $125 million.
For the first quarter of 2024, cash generated by operating activities of continuing operations was $38 million, which included $4 million in restructuring spend, compared to cash provided by operating activities of continuing operations of $157 million in the first quarter of the prior year, which included $5 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 first quarter of 2024 were $35 million versus $27 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 $7 million in the first quarter of 2024, compared to $133 million in the prior year period.
Accelerating Project Core and Maximizing In-Year and Run-Rate Savings
As the Company previously announced, Project Core is 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. As part of this effort, the Company conducted a thorough review of strategic options for its Varis business unit. As a result, its Board of Directors has approved a plan to sell the Varis business, with activities commencing immediately.
The Company is accelerating its efforts under Project Core, working to maximize the in-year and full year run-rate savings enhancing its future operating position. Considering the acceleration of Project Core, the Company now expects to realize in year savings of approximately $50 million, excluding Varis, and annualized savings of over $100 million when fully implemented. Restructuring and related charges associated with these actions, excluding Varis, are now estimated to be in the range of $40 million to $50 million and are expected to be substantially incurred throughout 2024. The Company expects to begin reducing costs in the second quarter of 2024, with most of these actions expected to be completed over the following 12 months.
“Aligned with our low-cost business model mindset, our decision to accelerate Project Core will enable us to maximize in-year and future run-rate cost savings,” said Smith.
2024 Guidance
“Despite our slow start to the year, we remain confident in our operational excellence approach and enthusiastic about the opportunities in our business to drive long-term value while remaining focused on prudently deploying capital to the benefit of shareholders,” said Smith. “As we continue to move forward into 2024, we remain cautious regarding the macroeconomic and business environment, and we will remain focused on executing upon our strategy through Project Core, meeting our near term commitments, and positioning ODP for long-term success.”
“While macroeconomic and general business conditions posed challenges in the quarter and we expect these conditions to persist in the near term, our team’s continued focus on driving our low-cost model, enhanced by our acceleration and focused nature of Project Core, have positioned us to update our operational guidance for 2024,” Scaglione added.
The Company is updating its full year guidance for 2024 as follows:
Previous FY 2024 Guidance(1)
Updated FY 2024 Guidance(1)
Sales
Decline of 2% – 5%
Affirmed Lower End
Adjusted EBITDA(1)
$410 million – $430 million
Increased to $430 million – $450 million
Adjusted Operating Income(1)
$280 million – $300 million
Increased to $320 million – $340 million
Adjusted Earnings per Share (fully diluted)(*)(1)
$5.60 – $5.80 per share
Increased to $6.30 – $6.60 per share
Adjusted Free Cash Flow(1)(3)
Greater than $200 million
Affirmed
*Adjusted Earnings per Share (fully diluted) (EPS) guidance for 2024 excludes potential discrete (tax) items that may affect quarter to quarter fluctuations and includes expected impact from share repurchases
The Company’s full year guidance for 2024 includes non-GAAP measures, such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Earnings per Share (fully diluted) 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 stabilization of macroeconomic and business conditions, as well as continued store footprint consolidation and improving overall omni-channel trends at Office Depot. Additionally, our guidance assumes growth at ODP Business Solutions in the second half of the year, and continued expansion at Veyer. With the Board’s decision, going forward, Varis will be classified as held for sale and we are moving to complete that transaction in the very near term. Our adjusted EPS outlook assumes higher interest expense associated with projected ABL borrowings along with a more normalized tax rate for the balance of the year. 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 confidence,” Scaglione added.
The ODP Corporation will webcast a call with financial analysts and investors on May 8, 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 a potential sale 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.
As concerns over excessive screen time’s effects on kids escalate, the debate around regulating underage social media usage is intensifying – with major investing implications. The recent Florida law restricting online activity for those under 14 is just the beginning of a broader regulatory reckoning that could fundamentally disrupt platforms’ business models.
At the heart of the issue is big tech’s reliance on attention-grabbing, addictive algorithms to maximize engagement and ad revenue. Social media giants like Meta (NASDAQ: META) that own Facebook, Instagram, and WhatsApp have been criticized for tactics some argue exploit youths’ developmental vulnerabilities for profit.
Multiple studies link excessive social media use to disrupted sleep, lower self-esteem, cyberbullying, depression and more in young users. The long-term impacts remain largely unknown. But public pressures are mounting for these companies to better safeguard kids’ wellbeing over relentless growth.
From an investing standpoint, implementing robust parental controls and age verification mechanisms won’t come cheap. Significant compliance costs from stricter age-based targeting rules could compress Meta and peers’ profit margins, at least temporarily. Their scale across billions of users also makes effective content moderation extremely challenging.
As the regulatory tide shifts with bipartisan support for reining in big tech, new rules seem inevitable. Major changes to restrict underage social media engagement could be highly disruptive for growth trajectories if companies are forced to sacrifice lucrative younger audiences.
Instituting stronger guardrails proactively may let incumbents get ahead of even harsher regulatory crackdowns down the road. But their interim earnings could certainly take a hit from product reinventions reprioritizing child safety over engagement-driven profits.
Analysts expect this youth social media regulation debate will be a hot topic at upcoming consumer and tech investor conferences. With both policymakers and the public increasingly scrutinizing potential harms to kids, social platforms face intensifying pressures.
Some investors view any guardrails on big tech’s ability to monetize younger demographics as an existential risk to business models predicated on constant user growth. For companies like Meta that have operated with minimal oversight, preparing for a future of tighter digital reins on underage users is now prudent risk management.
Conversely, those with a longer-term outlook see upcoming regulatory requirements as valuations repressing near-term earnings overshoots. Any share price dips from compliance costs could actually present compelling entry points. Responsible corporate reforms demonstrating a willingness to evolve with the times could bolster brand equity and customer loyalty over the long haul.
Ultimately, the rapidly evolving online landscape demands new frameworks beyond the antiquated Children’s Online Privacy Protection Act established in the Web 1.0 era. Whether through new federal legislation, FTC action, or a combination, transformative change is coming to minors’ social media experiences. Well-prepared companies insulating ethical practices into their models now could emerge as winners, while those digging in their heels may face an existential reckoning down the road.
Investors should make plans to attend events like Noble Capital Markets Consumer, Communications, Media & Technology Conference scheduled for June, to dive deeper into these critical issues shaping the future of the social media industry and the AI revolution. With potential regulatory bombshells looming, having an informed perspective will be key for constructing a winning investment thesis in this pivotal sector.
For more than 70 years, Vectrus has provided critical mission support for our customers’ toughest operational challenges. As a high-performing organization with exceptional talent, deep domain knowledge, a history of long-term customer relationships, and groundbreaking technical expertise, we deliver innovative, mission-matched solutions for our military and government customers worldwide. Whether it’s base operations support, supply chain and logistics, IT mission support, engineering and digital integration, security, or maintenance, repair and overhaul, our customers count on us for on-target solutions that increase efficiency, reduce costs, improve readiness, and strengthen national security. Vectrus is headquartered in Colorado Springs, Colo., and includes about 8,100 employees spanning 205 locations in 28 countries. In 2021, Vectrus generated sales of $1.8 billion. For more information, visit the company’s website at www.vectrus.com or connect with Vectrus on Facebook, Twitter, and LinkedIn.
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.
Off on the Right Foot. V2X delivered solid first quarter results, starting 2024 off on the right foot. Revenue, adjusted EBITDA, and adjusted earnings all came in above our estimates. OpTempo remains elevated in CENTOM and INDOPACOM given the recent events occurring in those areas, driving V2X results.
1Q24. Revenue of $1.0 billion was up 7.1% y-o-y, driven by 22% growth in the Middle East and 7% growth in the Pacific. We had forecasted $950 million in revenue for 1Q. Adjusted EBITDA for the quarter totaled $69.1 million, or a 6.8% margin, and up from $68 million in 1Q23. Adjusted net income was $28.6 million, or EPS of $0.90, compared to $25.1 million, or EPS of $0.80 last year. We had estimated $24.8 million, or $0.77/sh.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*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, 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.
1Q Results. Total revenues decreased to $605.7 million from $608.2 million last year. We estimated revenue of $604 million. Net income for the quarter was $22.7 million, or $0.17 per diluted share, compared to $28.0 million, or $0.22, in the previous year. Adjusted EBITDA totaled $117.6 million compared to $130.9 million last year. We estimated net income of $23.6 million, or $0.19 per share, and adjusted EBITDA of $120 million.
ICE Populations. For 1Q24, GEO experienced average ICE pops in the 13,000 range, with that number carrying over into the second quarter. After a dip beginning in late March, overall ICE pops have rebounded back to the 37,000 level, according to GEO management. With the typical seasonal increase in crossings, it is possible numbers could trend up to the 41,500 bed authorized level.
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.
1Q24 Revenue Impacts. The lower y-o-y volume was driven by the loss of $4 million of rationalized revenue at underperforming plants, mostly offset by $3 million of revenue growth at healthy plants. Pricing had a negative $3 million impact y-o-y as 1Q23 benefitted from end-of-life premium pricing during the Irvine plant closure.
Making Progress. Management note that three of the seven underperforming plants have returned to the positive side of the ledger. About one-half of the $100 million of unprofitable revenue has been returned to at least breakeven, with the remainder expected to be resolved by year-end.
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.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields transformative, affordable technology, platforms, and systems for United States National Security related customers, allies, and commercial enterprises. Kratos is changing the way breakthrough technologies for these industries are rapidly brought to market through proven commercial and venture capital backed approaches, including proactive research, and streamlined development processes. At Kratos, affordability is a technology, and we specialize in unmanned systems, satellite communications, cyber security/warfare, microwave electronics, missile defense, hypersonic systems, training and combat systems and next generation turbo jet and turbo fan engine development. For more information go to www.kratosdefense.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.
Strong Results. Blowing past our expectations, revenue for the first quarter was $277.2 million, a 19.6% increase over the prior year’s $231.8 million. The increase includes 19.5% of organic revenue growth. Our estimate was at $250 million. Net income for the quarter of $1.3 million was an improvement from a net loss of $7.0 million last year, highlighting the Company’s revenue growth and improved margin (operating margin of 2.5% vs. 0.2% last year). We forecasted a net loss of $4.0 million.
Unmanned Systems. A highlight of the impressive revenue growth is Kratos’ Unmanned Systems segment. The segment had organic revenue growth of 21.8% in the quarter, with a more impressive 23.8% revenue growth factoring in the STS acquisition. The segment also generated approximately 25.5% of the total bookings for the quarter with a book to bill of 1.4 to 1.0. We expect the segment to continue to gain momentum as management places more emphasis on developing the segment throughout 2024 and beyond.
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 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.
Great Lakes Dredge & Dock Corporation is the largest provider of dredging services in the United States. In addition, Great Lakes is fully engaged in expanding its core business into the rapidly developing offshore wind energy industry. The Company has a long history of performing significant international projects. The Company employs experienced civil, ocean and mechanical engineering staff in its estimating, production and project management functions. In its over 131-year history, the Company has never failed to complete a marine project. Great Lakes owns and operates the largest and most diverse fleet in the U.S. dredging industry, comprised of approximately 200 specialized vessels. Great Lakes has a disciplined training program for engineers that ensures experienced-based performance as they advance through Company operations. The Company’s Incident-and Injury-Free® (IIF®) safety management program is integrated into all aspects of the Company’s culture. The Company’s commitment to the IIF® culture promotes a work environment where employee safety is paramount.
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.
Results. Great Lakes reported strong revenue of $198.7 million, beating out our expectation of $170 million. Higher capital and coastal protection project revenues led to the $40.7 million increase y-o-y, partially offset by lower rivers and lakes project revenue. Gross profit improved $33.5 million to $45.6 million for the quarter through improved utilization and project mix, resulting in a margin of 22.9%, beating out our expectation of 10.6%.
An Improved Bottom-Line. Following the topline, Great Lakes’ bottom-line greatly improved from last year, beating our estimates, including operating margin of 15.8% from a negative 0.5% (estimated a 2.4% margin) and net income of $21.0 million, or EPS of $0.31, from a net loss of $3.2 million, or a loss of $0.05/sh. We estimated net income of $0.8 million, or EPS of $0.01.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*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.
Gray Television is a multimedia company headquartered in Atlanta, Georgia. We are the nation’s largest owner of top-rated local television stations and digital assets in the United States. Our television stations serve 113 television markets that collectively reach approximately 36 percent of US television households. This portfolio includes 80 markets with the top-rated television station and 100 markets with the first and/or second highest rated television station. We also own video program companies Raycom Sports, Tupelo Honey, PowerNation Studios and Third Rail Studios.
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.
Q1 Results. The company reported Q1 revenue of $823.0 million, modestly beating our estimate of $814.0 million by 1.1%. Adj. EBITDA for the quarter was $197.0 million, beating our estimate of $171.0 million by 15.2%. Notably, core advertising was up 4.2% from the prior year period, excluding political revenue, even higher than the comparable quarter in 2019.
Favorable core undercurrent. The company experienced growth in several national advertising categories, including automotive and consumer goods, which was up high single digits for the quarter. Management guided 2024 core advertising to be above pre-Covid 2919 levels in spite of displacement in core advertising in political election years.
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 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.
Robert LeBoyer, Senior Vice President, Equity Research Analyst, Biotechnology, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
New IIT Study Has Started, With Phase 1b Data Kidney Trial Update In June. An Investigator-Initiated Trial (IIT) testing tegoprubart in islet cell transplantation has treated its first patient. Interim data from the Phase 1b trial testing tegoprubart in kidney transplantation was announced, with presentation at a medical meeting scheduled for June 1 to June 5, 2024.
Tegoprubart Is Currently In Two Kidney Transplant Trials. Eledon continues to report follow-up data from its Phase 1b open-label trial for tacrolimus as it enrolls patients in the double-blind Phase 2 BESTOW trial. Tegoprubart acts through a different mechanism than tacrolimus (the current standard treatment), with potential to have greater protection against rejection with improved function.
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.
Operating income of $30.3 million; adjusted operating income1 of $62.9 million
Net income of $1.1 million, up $18.6 million y/y
Adjusted EBITDA1 of $69.1 million with a margin1 of 6.8%
Diluted EPS of $0.04; Adjusted diluted EPS1 of $0.90
Selected to provide technology solutions for threat detection and response to Chemical, Biological, Radiological, & Nuclear hazards
Awarded position on U.S. Navy’s Global Contingency Services Multiple Award Contract III valued up to $2 billion
2024 Guidance:
Reaffirming full-year 2024 guidance
MCLEAN, Va., May 7, 2024 /PRNewswire/ — V2X, Inc. (NYSE:VVX) announced first quarter 2024 financial results.
“V2X reported a solid start to 2024 with revenue up 7% year-over-year,” said Chuck Prow, President and Chief Executive Officer of V2X. “Our leading growth indicators remain strong with a robust backlog of $12.6 billion and a pipeline of nearer-term new business opportunities of $25 billion. V2X continues to advance our transformation to deliver enhanced capabilities in an expanding market. Given our first quarter results and trends we are seeing in our business, we are reaffirming our 2024 guidance.”
“We continue to witness growth in the Pacific or INDOPACOM, with our presence in the region proving to be a key channel to support increasing mission requirements,” said Mr. Prow. “Revenue in the region was up 7% year-over-year. We continue to expand our scope of services in the region, which includes a new award to deploy an assured and protected private 5G communications solution and enable smart logistics in the Philippines. Additionally, our position in the Middle East or CENTCOM continues to expand with revenue up 22% year-over-year. As the largest services provider to the Department of Defense in the Middle East, V2X stands ready to support our clients mission requirements.”
Mr. Prow continued, “V2X remains focused on differentiated operational technologies that fuse the digital and physical aspects of our clients’ missions. This differentiation is driving growth and was recently demonstrated through contract awards valued at $75 million to provide technology solutions for threat detection and response to Chemical, Biological, Radiological, and Nuclear (CBRN) hazards. This work expanded from a prototype effort to a new sole source award for the production, upgrade, and fielding of cutting-edge systems at overseas operational locations. Under the contract, V2X is the lead systems integrator for CBRN Support to Command and Control (CSC2) program. CSC2 is the program of record for the integration of CBRN, which will link sensors together to provide integrated situational awareness about potential hazards to inform end user decision making.”
Mr. Prow concluded, “I’m pleased to announce that V2X was selected as a prime contractor for the U.S. Navy’s Global Contingency Services Multiple Award Contract III (GCSMAC III). The contract is valued at up to $2 billion, was awarded by the Naval Facilities Engineering Command, Pacific in Hawaii, and enables V2X to provide critical support services for a wide range of scenarios, including natural disasters, humanitarian efforts, and military actions. The total contract value for GCSMAC III was increased significantly from the prior iteration, which reached its ceiling value of $900 million. Importantly, V2X was the leading provider of services under the prior iteration of the contract, winning $300 million in task orders.”
First Quarter 2024 Results
“V2X reported revenue of $1.0 billion in the quarter, which represents 7.1% year-over-year growth,” said Shawn Mural, Senior Vice President and Chief Financial Officer. “Revenue growth in the quarter was achieved through continued expansion of existing business in the Pacific and Middle East regions, as well as new programs. Growth in the Pacific was driven by continued expansion of scope and services, particularly at Kwajalein Atoll. Growth in the Middle East was driven primarily by expansion in Qatar and the ramp up of our longer-term Saudi Aviation Support & Training program.”
“For the quarter, the Company reported operating income of $30.3 million and adjusted operating income1 of $62.9 million. Adjusted EBITDA1 was $69.1 million with a margin of 6.8%. First quarter GAAP diluted EPS was $0.04, due primarily to merger and integration related costs, amortization of acquired intangible assets, and interest expense. Adjusted diluted EPS1 for the quarter was $0.90.”
“An important attribute of our business is the ability to generate strong cash flow with low capital expenditure requirements. We expect to deliver full-year adjusted net cash provided by operating activities1 of $145 million to $165 million, representing 120% adjusted net income conversion1 at the mid-point. During the quarter, net cash used by operating activities was $57.2 million, in line with our historical pattern and reflective of a receivable delay that collected shortly after the quarter closed. Adjusted net cash used by operating activities1 was $83.5 million, adding back approximately $5.8 million of M&A and integration costs and removing the contribution of the master accounts receivable purchase or MARPA facility of $32.1 million.”
“At the end of the quarter, net debt for V2X was $1,173 million. Net leverage ratio1was 3.5x, down from 3.8x at the end of the first quarter 2023. We expect to achieve a net leverage ratio of 3.0x, or below, by the end of 2024.”
“Total backlog as of March 29, 2024, was $12.6 billion. Funded backlog was $2.7 billion. Bookings in the quarter were $0.8 billion, resulting in a trailing twelve-month book-to-bill of 1.2x.”
Reaffirming 2024 Guidance
Mr. Mural concluded, “We are pleased with the performance across our business and start to the year. Our teams continue to execute, driving expansion on existing operations and phasing in of new programs. As such, the Company is reaffirming its guidance for 2024.”
Guidance for 2024 remains as follows:
$ millions, except for per share amounts
2024 Guidance
2024 Mid-Point
Revenue
$4,100
$4,200
$4,150
Adjusted EBITDA1
$300
$315
$308
Adjusted Diluted Earnings Per Share1
$3.85
$4.20
$4.03
Adjusted Net Cash Provided by Operating Activities1
$145
$165
$155
The Company is not providing a quantitative reconciliation with respect to this forward-looking non-GAAP measure in reliance on the “unreasonable efforts” exception set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. For example, unusual, one-time, non-ordinary, or non-recurring costs, which relate to M&A, integration and related activities cannot be reasonably estimated. Forward-looking statements are based upon current expectations and are subject to factors that could cause actual results to differ materially from those suggested here, including those factors set forth in the Safe Harbor Statement below.
First Quarter Conference Call
Management will conduct a conference call with analysts and investors at 8:00 a.m. ET on Tuesday, May 7, 2024. U.S.-based participants may dial in to the conference call at 877-407-3982, while international participants may dial 201-493-6780. A live webcast of the conference call as well as an accompanying slide presentation will be available here: https://app.webinar.net/24war3pJ8n7
A replay of the conference call will be posted on the V2X website shortly after completion of the call and will be available for one year. A telephonic replay will also be available through May 21, 2024, at 844-512-2921 (domestic) or 412-317-6671 (international) with passcode 13745566.
Presentation slides that will be used in conjunction with the conference call will also be made available online in advance on the “investors” section of the company’s website at https://gov2x.com/. V2X recognizes its website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with its obligations under the U.S. Securities and Exchange Commission (“SEC”) Regulation FD.
Footnotes:
1 See “Key Performance Indicators and Non-GAAP Financial Measures” for descriptions and reconciliations.
About V2X
V2X builds smart solutions designed to integrate physical and digital infrastructure – by aligning people, actions, and outputs. Our lifecycle solutions improve security, streamline logistics, and enhance readiness.
The Company delivers a comprehensive suite of integrated solutions across the operations and logistics, aerospace, training, and technology markets to national security, defense, civilian and international clients. Our global team of approximately 16,000 employees brings innovation to every point in the mission lifecycle, from preparation to operations, to sustainment, as it tackles the most complex challenges with agility, grit, and dedication.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 (the “Act”): Certain material presented herein includes forward-looking statements intended to qualify for the safe harbor from liability established by the Act. These forward-looking statements include, but are not limited to, all the statements and items listed under “2024 Guidance” above and other assumptions contained therein for purposes of such guidance, other statements about our 2024 performance outlook, revenue, contract opportunities, and any discussion of future operating or financial performance.
Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “could,” “potential,” “continue” or similar terminology. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management.
These forward-looking statements are not guarantees of future performance, conditions, or results, and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside our management’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. For a discussion of some of the risks and uncertainties that could cause actual results to differ from such forward-looking statements, see the risks and other factors detailed from time to time in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other filings with the SEC.
We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
EPS of $0.09, Adjusted EBITDA of $12.7 million Electrical Systems revenues up 1.9% year-over-year despite a softening in end markets Reaffirming full-year Revenue and Adjusted EBITDA guidance ranges
NEW ALBANY, Ohio, May 06, 2024 (GLOBE NEWSWIRE) — CVG (NASDAQ: CVGI), a diversified industrial products and services company, today announced financial results for its first quarter ended March 31, 2024.
First Quarter 2024 Highlights(Compared with prior year, where comparisons are noted)
Revenues of $232.1 million, down 11.6% due primarily to a softening in customer demand, partially offset by an increase in Electrical Systems sales.
Operating income of $6.6 million, down 55.1%; adjusted operating income of $8.5 million, down 44.8%. The reduction in operating income was driven primarily by lower sales volumes, somewhat offset by reduced SG&A.
New business wins in the quarter of approximately $45 million when fully ramped; these wins were concentrated in our Electrical Systems segment, but also includes meaningful wins in Vehicle Solutions.
Net income of $2.9 million, or $0.09 per diluted share and adjusted net income of $4.4 million, or $0.13 per diluted share, compared to net income of $8.7 million, or $0.26 per diluted share and adjusted net income of $9.2 million, or $0.28 per diluted share.
Adjusted EBITDA of $12.7 million, down 35.9% with an adjusted EBITDA margin of 5.5%, down from 7.5%.
James Ray, President and Chief Executive Officer, said, “CVG’s transformation plan remains on track, despite our first quarter results declining relative to a strong quarter of comparison in the prior year. We made further progress procuring new business wins in the quarter, and we remain laser-focused on driving further operational efficiency improvements and growing our Electrical Systems segment to be our largest business. In line with the expected market softness contemplated in our outlook, we executed focused restructuring actions to address the lower demand environment. We are also taking additional steps to offset inflation and foreign exchange headwinds through customer recoveries and cost reductions. Collectively, we expect these actions to drive improved financial performance.”
Mr. Ray concluded, “I want to thank our talented global teams for their hard work to enable our transformation and drive us forward every day, and I am looking forward to our execution leading to improved financial results throughout fiscal 2024.”
Andy Cheung, Chief Financial Officer, added, “Our first quarter results improved sequentially as we recovered from items that impacted the prior quarter. However, softer market conditions, as well as record quarterly revenue in the prior year period, led to year-over-year declines in revenues and profits. While we are reaffirming our annual guidance ranges for fiscal year 2024, deterioration in construction and agricultural end markets is offsetting the improved Class 8 truck build forecast. In response to these market developments, we are taking proactive cost actions that help underpin our Adjusted EBITDA guidance range. Additionally, our balance sheet remains strong with 1.8x net leverage. Said differently, we are taking actions to proactively address current market conditions, and we expect improved profitability across our core business through the rest of the year.”
First Quarter Financial Results (amounts in millions except per share data and percentages)
Consolidated Results
First Quarter 2024 Results
First quarter 2024 revenues were $232.1 million, compared to $262.7 million in the prior year period, a decrease of 11.6%. The overall decrease in revenues was due to a softening in customer demand, the wind down of certain programs in our Vehicle Solutions segment and a further decline in our Industrial Automation and Aftermarket segments, partially offset by increased sales in Electrical systems.
Operating income in the first quarter 2024 was $6.6 million compared to $14.6 million in the prior year period. The decrease in operating income was attributable to the impact of lower sales volumes and increased restructuring charges. First quarter 2024 adjusted operating income was $8.5 million, compared to $15.4 million in the prior year period.
Interest associated with debt and other expenses was $2.3 million and $2.9 million for the first quarter 2024 and 2023, respectively.
Net income was $2.9 million, or $0.09 per diluted share, for the first quarter 2024 compared to net income of $8.7 million, or $0.26 per diluted share, in the prior year period.
On March 31, 2024, the Company had $17.5 million of outstanding borrowings on its U.S. revolving credit facility and no outstanding borrowings on its China credit facility, $46.8 million of cash and $142.5 million of availability from the credit facilities, resulting in total liquidity of $189.3 million.
First Quarter 2024 Segment Results
Vehicle Solutions Segment
Revenues were $137.9 million compared to $160.6 million for the prior year period, a decrease of 14.1%, due to lower customer demand and the wind-down of certain programs.
Operating income was $10.4 million, compared to $13.4 million in the prior year period, a decrease of 22.7%, primarily attributable to lower customer demand and increased freight, somewhat offset by lower SG&A. First quarter 2024 adjusted operating income was $10.9 million compared to $13.5 million in the prior year period.
Electrical Systems Segment
Revenues were $55.8 million compared to $54.7 million in the prior year period, an increase of 1.9%, primarily as a result of increased pricing.
Operating income was $2.0 million compared to $6.1 million in the prior year period, a decrease of 66.9%. The decrease in operating income was primarily attributable to restructuring costs, labor inflation, and unfavorable foreign exchange impacts. First quarter 2024 adjusted operating income was $3.1 million compared to $6.1 million in the prior year period.
Aftermarket & Accessories Segment
Revenues were $34.1 million compared to $37.6 million in the prior year period, a decrease of 9.5%, primarily as a result of lower sales volume due to decreased customer demand.
Operating income was $4.5 million compared to $5.6 million in the prior year period, a decrease of 18.7%. The decrease in operating income was primarily attributable to lower sales volumes. First quarter 2024 adjusted operating income was $4.6 million compared to $5.6 million in the prior year period.
Industrial Automation Segment
Revenues were $4.3 million compared to $9.7 million in the prior year period, a decrease of 55.9%, resulted from lower sales volume due to decreased customer demand.
Operating loss was $2.0 million compared to $0.9 million in the prior year period. The increase in operating loss was primarily attributable to lower sales volumes and higher SG&A. First quarter 2024 adjusted operating loss was $1.9 million compared to a loss of $0.2 million in the prior year period.
Outlook
CVG reaffirmed the following outlook for the full year 2024:
Metric
2024 Outlook ($ millions)
Net Sales
$915 – $1,015
Adjusted EBITDA
$60 – $73
This outlook reflects among others, current industry forecasts for North America Class 8 truck builds. According to ACT Research, 2024 North American Class 8 truck production levels are expected to be at 305,000 units. The 2023 actual Class 8 truck builds according to the ACT Research was 340,247 units.
Agriculture and construction market conditions have deteriorated relative to our prior update in March 2024. Based on industry data, we now project segments within global agriculture and construction market demand to be flat to down 10% in 2024.
GAAP to Non-GAAP Reconciliation
A reconciliation of GAAP to non-GAAP financial measures referenced in this release is included as Appendix A to this release.
Conference Call
A conference call to discuss this press release is scheduled for Tuesday, May 7, 2024, at 10:00 a.m. ET. Management intends to reference the Q1 2024 Earnings Call Presentation during the conference call. To participate, dial (800) 549-8228 using conference code 16332. International participants dial (646) 564-2877 using conference code 16332.
This call is being webcast and can be accessed through the “Investors” section of CVG’s website at ir.cvgrp.com, where it will be archived for one year.
A telephonic replay of the conference call will be available for a period of two weeks following the call. To access the replay, dial (888) 660-6264 using access code 16332 and international callers can dial (646) 517-3975 using access code 16332.
Company Contact Andy Cheung Chief Financial Officer CVG IR@cvgrp.com
Investor Relations Contact Ross Collins or Stephen Poe Alpha IR Group CVGI@alpha-ir.com
About CVG
At CVG, we deliver real solutions to complex design, engineering and manufacturing problems while creating positive change for our customers, industries and communities we serve. Information about the Company and its products is available on the internet at www.cvgrp.com.
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. These statements often include words such as “believe”, “anticipate”, “plan”, “expect”, “intend”, “will”, “should”, “could”, “would”, “project”, “continue”, “likely”, and similar expressions. In particular, this press release may contain forward-looking statements about the Company’s expectations for future periods with respect to its plans to improve financial results, the future of the Company’s end markets, changes in the Class 8 and Class 5-7 North America truck build rates, performance of the global construction equipment business, the Company’s prospects in the wire harness, warehouse automation and electric vehicle markets, the Company’s initiatives to address customer needs, organic growth, the Company’s strategic plans and plans to focus on certain segments, competition faced by the Company, volatility in and disruption to the global economic environment and the Company’s financial position or other financial information. These statements are based on certain assumptions that the Company has made in light of its experience as well as its perspective on historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Actual results may differ materially from the anticipated results because of certain risks and uncertainties, including those included in the Company’s filings with the SEC. There can be no assurance that statements made in this press release relating to future events will be achieved. The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by such cautionary statements.
PRINCETON, N.J., May 07, 2024 (GLOBE NEWSWIRE) — PDS Biotechnology Corporation (Nasdaq: PDSB) (“PDS Biotech” or the “Company”), a late-stage immunotherapy company focused on transforming how the immune system targets and kills cancers and the development of infectious disease vaccines, today announced that the Company will report financial results for the first quarter of 2024 and provide a business update on Wednesday, May 15, 2024, before the market opens. The press release will be available in the Investor Relations section of the Company’s website at www.pdsbiotech.com.
Additionally, the Company will host a Key Opinion Leader (“KOL”) Event on Wednesday, May 8, 2024, at 1:30 pm ET to discuss positive, updated data from its VERSATILE-002 Phase 2 clinical trial with Versamune® HPV in combination with KEYTRUDA® (pembrolizumab) (NCT04260126) and next steps for Versamune® HPV and PDS01ADC. The KOL event panel participants will include:
Dr. Jared Weiss, M.D., Section Chief of Thoracic and Head/Neck Oncology, Professor of Medicine at University of North Carolina, and Principal Investigator of the VERSATILE-002 clinical trial who will present and discuss the trial results
Dr. Robert Haddad, M.D., Professor of Medicine, Harvard Medical School and Dana-Farber Cancer Institute who will discuss the unmet need in HPV-positive head and neck squamous cell cancer
The event will be moderated by Kirk Shepard, M.D., PDS Biotech’s Chief Medical Officer who will also present the next steps on the clinical path forward to registration for the Versamune® HPV and PDS01ADC based triple combination.
About PDS Biotechnology PDS Biotechnology is a late-stage immunotherapy company focused on transforming how the immune system targets and kills cancers and the development of infectious disease vaccines. The Company plans to initiate a pivotal clinical trial in 2024 to advance its lead program in advanced head and neck squamous cell cancers (HNSCC). PDS Biotech’s lead program is a proprietary dual-acting combination of IL-12 fused antibody drug conjugate (ADC) PDS01ADC and T-cell activator Versamune® HPV in regimen with a standard-of-care immune checkpoint inhibitor. We believe that proof-of-concept long-term data have shown positive survival results and tumor shrinkage with this combination and indicate favorable tolerability.
We believe that with a novel investigational “inside-outside” mechanism, the PDS01ADC and Versamune® HPV immunotherapy has shown compelling results with potential to successfully disrupt a tumor’s inside defenses, while also generating potent, targeted killer T-cells to attack the tumor from the outside. We believe that data from more than 350 patients, as well as ongoing clinical trials across multiple tumor types and standard treatment regimens, have validated the potential for both platforms and point to potential broad utility.
Our Infectimune® based vaccines have demonstrated the potential to induce not only robust and durable neutralizing antibody responses, but also powerful T-cell responses, including long-lasting memory T-cell responses in pre-clinical studies to date. For more information, please visit www.pdsbiotech.com.
Forward Looking Statements This communication contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning PDS Biotechnology Corporation (the “Company”) and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of the Company’s management, as well as assumptions made by, and information currently available to, management. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “may,” “will,” “should,” “would,” “expect,” “anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,” “intend,” “forecast,” “guidance”, “outlook” and other similar expressions among others. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation: the Company’s ability to protect its intellectual property rights; the Company’s anticipated capital requirements, including the Company’s anticipated cash runway and the Company’s current expectations regarding its plans for future equity financings; the Company’s dependence on additional financing to fund its operations and complete the development and commercialization of its product candidates, and the risks that raising such additional capital may restrict the Company’s operations or require the Company to relinquish rights to the Company’s technologies or product candidates; the Company’s limited operating history in the Company’s current line of business, which makes it difficult to evaluate the Company’s prospects, the Company’s business plan or the likelihood of the Company’s successful implementation of such business plan; the timing for the Company or its partners to initiate the planned clinical trials for PDS01ADC, PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates; the future success of such trials; the successful implementation of the Company’s research and development programs and collaborations, including any collaboration studies concerning PDS01ADC, PDS0101, PDS0203 and other Versamune® and Infectimune® based product candidates and the Company’s interpretation of the results and findings of such programs and collaborations and whether such results are sufficient to support the future success of the Company’s product candidates; the success, timing and cost of the Company’s ongoing clinical trials and anticipated clinical trials for the Company’s current product candidates, including statements regarding the timing of initiation, pace of enrollment and completion of the trials (including the Company’s ability to fully fund its disclosed clinical trials, which assumes no material changes to the Company’s currently projected expenses), futility analyses, presentations at conferences and data reported in an abstract, and receipt of interim or preliminary results (including, without limitation, any preclinical results or data), which are not necessarily indicative of the final results of the Company’s ongoing clinical trials; any Company statements about its understanding of product candidates mechanisms of action and interpretation of preclinical and early clinical results from its clinical development programs and any collaboration studies; the Company’s ability to continue as a going concern; and other factors, including legislative, regulatory, political and economic developments not within the Company’s control. The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the other risks, uncertainties, and other factors described under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in the documents we file with the U.S. Securities and Exchange Commission. The forward-looking statements are made only as of the date of this press release and, except as required by applicable law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
Versamune® and Infectimune® are registered trademarks of PDS Biotechnology Corporation.
Keytruda® is a registered trademark of Merck Sharp and Dohme LLC, a subsidiary of Merck & Co., Inc., Rahway, N.J., USA.
