Thursday, September 01, 2022

Vera Bradley (VRA)
Challenging 2Q23; but Signs of Better Times to Come

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

2QFY23 Results. Net revenues totaled $130.4 million compared to $147.0 million in the prior year second quarter ended July 31, 2021. Vera Bradley reported a consolidated net loss of $29.8 million, or a loss of $0.95 per share versus net income of $9.1 million, or $0.26 per diluted share, last year. Non-GAAP net income was $2.4 million, or $0.08 per diluted share, compared to $9.5 million, or $0.28 per diluted share in 2Q22.

Bifurcation Continues. Vera Bradley continued to see a bifurcation of its customer base, with higher household incomes remaining engaged and continuing to spend, while inflationary pressures, especially higher gas prices, continued to negatively affect the purchases of customers with lower household incomes, as well as traffic and spending….

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. 

Vera Bradley Announces Second Quarter Fiscal Year 2023 Results

Research, News, and Market Data on Vera Bradley

Aug 31, 2022

Consolidated second quarter net revenues totaled $130.4 million

Second quarter net loss totaled ($29.8) million, or ($0.95) per diluted share; excluding certain items, non-GAAP net income totaled $2.4 million, or $0.08 per diluted share

Balance sheet remains solid, with cash and cash equivalents of $38.3 million and no debt

FORT WAYNE, Ind., Aug. 31, 2022 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA) today announced its financial results for the second quarter ended July 30, 2022.

In this release, Vera Bradley, Inc. or “the Company” refers to the entire enterprise and includes both the Vera Bradley and Pura Vida brands. Vera Bradley on a stand-alone basis refers to the Vera Bradley brand.

Second Quarter Comments

Rob Wallstrom, Chief Executive Officer of the Company, commented, “While total Company second quarter revenues of $130.4 million were modestly below our expectations and we continued to experience gross margin pressure due to logistics costs, we drove product innovation at both Vera Bradley and Pura Vida, initiated meaningful cost reduction actions, and completed $6.0 million of share repurchases, while maintaining a solid, debt-free balance sheet.

“We are continuing to see bifurcation in the spending of our customer base. At Vera Bradley, Direct Full-Price Channel comparable revenues were nearly flat to last year and up double digits to fiscal 2020 as customers with higher household incomes remained engaged and continued to spend. However, inflationary pressures, especially higher gas prices, continued to negatively affect the purchases of customers with lower household incomes as well as traffic and spending in our Vera Bradley factory stores. Our Vera Bradley Indirect Channel continued to experience a healthy year-over-year rebound. Pura Vida’s ecommerce revenues continued to be affected by the shift in social and digital media effectiveness and escalating digital media costs.

“We are taking decisive actions to strengthen our core brands and the overall enterprise,” Wallstrom added. “We have begun implementation of annualized targeted cost reductions of $25 million, which are expected to be fully realized next fiscal year. These cost reductions will help offset inflationary expense pressures and the recessionary spending behavior from lower-income households. Expense savings are being derived across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll. In addition, we are continuing to evaluate and execute strategic price increases for both brands to offset rising raw material and freight costs.

“At the Vera Bradley brand, we remain confident in our core strategy, by continuing to innovate and build on our lifestyle merchandising focus. We will continue to optimize the travel category, which is nearly back to pre-pandemic levels; maximize back-to-campus opportunities, with strategic assortment enhancements; continue with powerful product collaborations like Disney and Harry Potter; and add excitement by expanding our footwear and home assortments this fall.”

Wallstrom continued, “At Pura Vida, we are focused on stabilizing the business and returning the brand to long-term growth. Our number one priority is to build a more diverse, innovative, effective, and performance-based marketing program to drive ecommerce sales. Prudent store growth can play a key role in driving new customer acquisition as we continue to diversify our marketing platforms, and stores demonstrate the power a retail presence can have on driving digital sales, omni-channel loyalty, and spending. We opened one new Pura Vida store location in the quarter, which is exceeding expectations.

“On the product front, we continue to build customer excitement and engagement through collaborations like Disney, Harry Potter, Hello Kitty, and the World Surf League; partnering with key influencers; offering themed-collections centered around key events like Shark Week; and the launch of our new demi-fine collection.”

Wallstrom further noted, “We are planning for the macro environment to remain challenging for the balance of the year and into next year. And, despite the strength in Pura Vida’s store business and opportunity for new store openings, we expect it to take time to return Pura Vida’s ecommerce business to growth as rebuilding and transforming the marketing program is underway. We are taking critical actions that will further strengthen both core brands and our company as a whole, not only to successfully manage through this period but position us for the future. Our teams are focused, and our cash position and balance sheet remain solid. We have successfully managed through difficult business cycles before, and I am confident we will manage through this period as well. We look forward to returning both brands to steady growth.”

Summary of Financial Performance for the Second Quarter

Consolidated net revenues totaled $130.4 million compared to $147.0 million in the prior year second quarter ended July 31, 2021.

For the current year second quarter, Vera Bradley, Inc.’s consolidated net loss totaled ($29.8) million, or ($0.95) per diluted share. These results included $32.2 million of net after tax charges, comprised of $18.2 million of Pura Vida goodwill and intangible asset impairment charges, $4.7 million of inventory adjustments associated with the exit of certain technology products and the write-off of excess mask inventory, $4.7 million of severance charges and other employee costs, $2.3 million of consulting fees associated with cost savings initiatives and the CEO search, $0.9 million of purchase order cancellation fees for spring 2023 goods, $0.6 million of store impairment charges, $0.5 million of intangible asset amortization, and $0.3 million of goodMRKT exit costs. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated second quarter net income totaled $2.4 million, or $0.08 per diluted share.

For the prior year second quarter, Vera Bradley, Inc.’s consolidated net income totaled $9.1 million, or $0.26 per diluted share. These results included $0.4 million of net after tax charges related to intangible asset amortization. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated second quarter net income totaled $9.5 million, or $0.28 per diluted share.

Summary of Financial Performance for the Six Months

Consolidated net revenues totaled $228.8 million for the current year six months ended July 30, 2022, compared to $256.1 million in the prior year six month period ended July 31, 2021.

For the current year six months, Vera Bradley, Inc.’s consolidated net loss totaled ($36.7) million, or ($1.15) per diluted share. These results included $33.1 million of net after tax charges, comprised of $18.2 million of Pura Vida goodwill and intangible asset impairment charges, $4.7 million of inventory adjustments associated with the exit of certain technology products and the write-off of excess mask inventory, $4.7 million of severance charges and other employee costs, $2.4 million of consulting fees associated with cost savings initiatives and the CEO search, $1.0 million of store and right-of-use asset impairment charges, $0.9 million of purchase order cancellation fees for spring 2023 goods, $0.9 million of intangible asset amortization, and $0.3 million of goodMRKT exit costs. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated net loss for the six months totaled ($3.6) million, or ($0.11) per diluted share.

For the prior year six months, Vera Bradley, Inc’s consolidated net income totaled $6.9 million, or $0.20 per diluted share. These results included $0.9 million of net after tax charges related to intangible asset amortization. On a non-GAAP basis, excluding these charges, Vera Bradley, Inc.’s consolidated net income for the prior year totaled $7.8 million, or $0.23 per diluted share, for the six months.

Non-GAAP Numbers

The current year non-GAAP second quarter and six-month income statement numbers referenced below exclude the previously outlined goodwill and intangible asset impairment charges, inventory adjustments, severance charges and other employee costs, consulting fees, store and right-of-use asset impairment charges, purchase order cancellation fees, intangible asset amortization, and goodMRKT exit costs. The prior year non-GAAP second quarter and six-month income statement numbers referenced below exclude the previously outlined intangible asset amortization.

Second Quarter Details

Current year second quarter Vera Bradley Direct segment revenues totaled $87.0 million, a 10.4% decrease from $97.1 million in the prior year second quarter. Comparable sales declined 13.8% in the second quarter. The Company permanently closed eight full-line stores and opened six factory outlet stores in the last twelve months.

Vera Bradley Indirect segment revenues totaled $17.3 million, a 2.9% increase over $16.8 million in the prior year second quarter, reflecting an increase in certain key account orders.

Pura Vida segment revenues totaled $26.0 million, a 21.3% decrease from $33.1 million in the prior year.

Second quarter consolidated gross profit totaled $60.5 million, or 46.4% of net revenues, compared to $80.4 million, or 54.6% of net revenues, in the prior year. On a non-GAAP basis, current year gross profit totaled $67.8 million, or 52.0% of net revenues. The current year gross profit rate was negatively impacted by higher inbound and outbound freight expense, deleverage of overhead costs, and channel mix changes, partially offset by price increases.

Second quarter consolidated SG&A expense totaled $74.0 million, or 56.8% of net revenues, compared to $68.7 million, or 46.7% of net revenues, in the prior year. On a non-GAAP basis, consolidated SG&A expense totaled $64.0 million, or 49.1% of net revenues, for the current year second quarter, compared to $68.0 million, or 46.2% of net revenues, in the prior year. As expected, Vera Bradley’s non-GAAP SG&A current year expenses were lower than the prior year primarily due to a reduction in variable-related expenses due to the lower sales volume and other cost reduction initiatives.

The Company’s second quarter consolidated operating loss totaled ($42.8) million, or (32.8%) of net revenues, compared to consolidated operating income of $12.6 million, or 8.6% of net revenues, in the prior year second quarter. On a non-GAAP basis, the Company’s current year consolidated operating income totaled $3.9 million, or 3.0% of net revenues, compared to $13.4 million, or 9.1% of net revenues, in the prior year.

By segment:

• Vera Bradley Direct operating income was $10.0 million, or 11.5% of Direct net revenues, for the second quarter, compared to $23.2 million, or 23.9% of Direct net revenues, in the prior year. On a non-GAAP basis, current year Direct operating income totaled $16.2 million, or 18.6% of Direct revenues.
• Vera Bradley Indirect operating income was $3.9 million, or 22.6% of Indirect net revenues, compared to $5.6 million, or 33.3% of Indirect net revenues, in the prior year. On a non-GAAP basis, current year Indirect operating income totaled $4.9 million, or 28.4% of Indirect net revenues. 
• Pura Vida’s operating loss was ($28.5) million, or (109.6%) of Pura Vida net revenues, in the current year, compared to operating income of $3.2 million, or 9.8% of Pura Vida net revenues, in the prior year. On a non-GAAP basis, Pura Vida’s operating income was $2.6 million, or 9.8% of Pura Vida net revenues, compared to $4.0 million, or 12.1% of Pura Vida net revenues, in the prior year.

Details for the Six Months

Vera Bradley Direct segment revenues for the current year six-month period totaled $148.6 million, a 9.3% decrease from $163.9 million in the prior year. Comparable sales declined 12.7% for the six months.

Vera Bradley Indirect segment revenues for the six months totaled $34.3 million, a 6.9% increase over $32.1 million, last year, reflecting an increase in certain key and specialty account orders.

Pura Vida segment revenues totaled $45.9 million, a 23.8% decline from $60.2 million in the prior year.

Consolidated gross profit for the six months totaled $113.0 million, or 49.4% of net revenues, compared to $139.5 million, or 54.5% of net revenues, in the prior year. On a non-GAAP basis, current year gross profit totaled $120.3 million, or 52.6% of net revenues. The current year gross profit rate was negatively affected by higher inbound and outbound freight expense, deleverage of overhead costs, and channel mix changes, partially offset by price increases.

For the six months, consolidated SG&A expense totaled $135.0 million, or 59.0% of net revenues, compared to $129.6 million, or 50.6% of net revenues, in the prior year. On a non-GAAP basis, current year consolidated SG&A expense totaled $123.4 million, or 53.9% of net revenues, compared to $128.1 million, or 50.0% of net revenues, in the prior year. As expected, Vera Bradley’s non-GAAP SG&A current year expenses were lower than the prior year primarily due to a reduction in variable-related expenses due to the lower sales volume and other cost reduction initiatives.

For the six months, the Company’s consolidated operating loss totaled ($51.1) million, or (22.3%) of net revenues, compared to consolidated operating income of $10.7 million, or 4.2% of net revenues, in the prior year six-month period. On a non-GAAP basis, the Company’s current year consolidated operating loss was ($2.9) million, or (1.2%) of net revenues, compared to consolidated operating income of $12.2 million, or 4.8% or net revenues, in the prior year.

By segment:

• Vera Bradley Direct operating income was $15.5 million, or 10.5% of Direct net revenues, compared to $34.0 million, or 20.8% of Direct net revenues, in the prior year. On a non-GAAP basis, current year Direct operating income was $21.7 million, or 14.6% of Direct net revenues.
• Vera Bradley Indirect operating income was $9.4 million, or 27.4% of Indirect net revenues, compared to $10.1 million, or 31.3% of Indirect net revenues, in the prior year. On a non-GAAP basis, current year Indirect operating income totaled $10.4 million, or 30.3% of Indirect net revenues.
• Pura Vida’s operating loss was ($27.5) million, or (59.9%) of Pura Vida net revenues, for the current year, compared to operating income of $5.7 million, or 9.5% of Pura Vida net revenues, in the prior year. On a non-GAAP basis, Pura Vida’s operating income was $4.4 million, or 9.5% of Pura Vida net revenues, compared to $7.3 million, or 12.1% of Pura Vida net revenues, in the prior year.

Balance Sheet

Net capital spending for the second quarter and six months totaled $2.7 million and $4.4 million, respectively.

Cash, cash equivalents, and investments as of July 30, 2022 totaled $38.3 million compared to $76.5 million at the end of last year’s second quarter. The Company had no borrowings on its $75 million ABL credit facility at quarter end.

Total quarter-end inventory was $179.6 million, compared to $148.0 million at the end of the second quarter last year. Current year inventory was higher than the prior year primarily due to approximately $24.0 million of additional inventory in-transit as the Company continues to navigate delays in the supply chain and ensures it has adequate inventory coverage going into the fall and holiday selling periods.

During the second quarter, the Company repurchased approximately $6.0 million of its common stock (approximately 1.0 million shares at an average price of $6.11), bringing year-to-date purchases through the end of the second quarter to approximately $16.5 million (approximately 2.4 million shares at an average price of $6.84). The Company has $29.3 million of remaining availability under its $50.0 million repurchase authorization that expires in December 2024.

Forward Outlook

Wallstrom also commented, “We expect the challenging macroeconomic environment to continue for the balance of the year and anticipate it will take additional time to return the Pura Vida ecommerce business to growth, high gas prices and other inflationary pressures will continue to impact the Vera Bradley factory channel, and there will be continued pressure on gross margin. Therefore, we believe it is appropriate to further adjust our outlook for the fiscal year.”

Excluding net revenues, all forward-looking guidance numbers referenced below are non-GAAP. The prior year SG&A and earnings per diluted share numbers exclude the previously disclosed net charges related to intangible asset amortization. Current year guidance excludes previously disclosed goodwill impairment charges, inventory adjustments, severance and other employee costs, consulting fees, store and right-of-use asset impairment charges, purchase order cancellation fees, intangible asset amortization, goodMRKT exit costs, and any similar charges.

For Fiscal 2023, the Company’s updated expectations are as follows:

• Consolidated net revenues of $480 to $490 million. Net revenues totaled $540.5 million in Fiscal 2022. Year-over-year Vera Bradley revenues are expected to decline between 7% and 9%, and Pura Vida revenues are expected to decline between 16% and 21%.
• A consolidated gross profit percentage of 53.7% to 54.1% compared to 53.3% in Fiscal 2022. The expected year-over-year increase is primarily related to incremental inbound and outbound freight expense and expected deleverage on overhead costs, more than offset by price increases.
• Consolidated SG&A expense of $246 to $250 million compared to $258.8 million in Fiscal 2022. The reduction in SG&A expense is being driven by cost reduction initiatives and a reduction in compensation expense, marketing, and other variable-related expenses due to the expected sales decline from the prior year.
• Consolidated operating income of $11.6 to $14.5 million compared to $30.1 million in Fiscal 2022.
• Consolidated diluted EPS of $0.20 to $0.28 based on diluted weighted-average shares outstanding of 31.6 million and an effective tax rate of between 24.0 and 25.0%. Diluted EPS totaled $0.57 last year.
• Net capital spending of approximately $8 to $10 million compared to $5.5 million in the prior year, reflecting investments associated with new Vera Bradley factory and Pura Vida store locations and technology and logistics enhancements.

Disclosure Regarding Non-GAAP Measures

The Company’s management does not, nor does it suggest that investors should, consider the supplemental non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Further, the non-GAAP measures utilized by the Company may be unique to the Company, as they may be different from non-GAAP measures used by other companies.

The Company believes that the non-GAAP measures presented in this earnings release, including free cash flow; cost of sales; gross profit; selling, general, and administrative expenses; impairment of goodwill and intangible assets; operating (loss) income; net (loss) income; net (loss) income attributable and available to Vera Bradley, Inc.; and diluted net (loss) income per share available to Vera Bradley, Inc. common shareholders, along with the associated percentages of net revenues, are helpful to investors because they allow for a more direct comparison of the Company’s year-over-year performance and are consistent with management’s evaluation of business performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in the Company’s supplemental schedules included in this earnings release. A recast of the supplemental schedule for the current year first quarter has been provided to exclude the consulting fees related to the cost savings initiatives for consistency with the current year second quarter supplemental schedule.

Call Information

A conference call to discuss results for the second quarter is scheduled for today, Wednesday, August 31, 2022, at 9:30 a.m. Eastern Time. A broadcast of the call will be available via Vera Bradley’s Investor Relations section of its website, www.verabradley.com. Alternatively, interested parties may dial into the call at (800) 437-2398, and enter the access code 3589431. A replay will be available shortly after the conclusion of the call and remain available through September 14, 2022. To access the recording, listeners should dial (844) 512-2921, and enter the access code 3589431.

About Vera Bradley, Inc.

Vera Bradley, Inc. operates two unique lifestyle brands – Vera Bradley and Pura Vida. Vera Bradley and Pura Vida are complementary businesses, both with devoted, emotionally-connected, and multi-generational female customer bases; alignment as casual, comfortable, affordable, and fun brands; positioning as “gifting” and socially-connected brands; strong, entrepreneurial cultures; a keen focus on community, charity, and social consciousness; multi-channel distribution strategies; and talented leadership teams aligned and committed to the long-term success of their brands.

Vera Bradley, based in Fort Wayne, Indiana, is a leading designer of women’s handbags, luggage and other travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women unlike any other brand in the global marketplace.

In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). Pura Vida, based in La Jolla, California, is a digitally native, highly-engaging lifestyle brand founded in 2010 by friends Paul Goodman and Griffin Thall. Pura Vida has a differentiated and expanding offering of bracelets, jewelry, and other lifestyle accessories.

The Company has three reportable segments: Vera Bradley Direct (“VB Direct”), Vera Bradley Indirect (“VB Indirect”), and Pura Vida. The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and factory outlet stores in the United States, verabradley.com, verabradley.ca, Vera Bradley’s online outlet site, and the Vera Bradley annual outlet sale in Fort Wayne, Indiana. The VB Indirect business consists of sales of Vera Bradley products to approximately 1,700 specialty retail locations throughout the United States, as well as select department stores, national accounts, third party e-commerce sites, and third-party inventory liquidators, and royalties recognized through licensing agreements related to the Vera Bradley brand. The Pura Vida segment consists of sales of Pura Vida products through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and 
www.puravidabracelets.ca; through the distribution of its products to wholesale retailers and department stores; and through its two Pura Vida retail stores.

Website Information

We routinely post important information for investors on our website 
www.verabradley.com in the “Investor Relations” section. We intend to use this webpage as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our webpage is not incorporated by reference into, and is not a part of, this document.

Investors and other interested parties may also access the Company’s most recent Corporate Responsibility and Sustainability Report outlining its ESG (Environmental, Social, and Governance) initiatives at https://verabradley.com/pages/corporate-responsibility.

Vera Bradley Safe Harbor Statement

Certain statements in this release are “forward-looking statements” made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events and are subject to various risks and uncertainties that may cause actual results to differ materially from those that we expected, including: possible adverse changes in general economic conditions and their impact on consumer confidence and spending; possible inability to predict and respond in a timely manner to changes in consumer demand; possible loss of key management or design associates or inability to attract and retain the talent required for our business; possible inability to maintain and enhance our brands; possible inability to successfully implement the Company’s long-term strategic plan; possible inability to successfully open new stores, close targeted stores, and/or operate current stores as planned; incremental tariffs or adverse changes in the cost of raw materials and labor used to manufacture our products; possible adverse effects resulting from a significant disruption in our distribution facilities; or business disruption caused by COVID-19 or other pandemics. Risks, uncertainties, and assumptions also include the possibility that Pura Vida acquisition benefits may not materialize as expected and that Pura Vida’s business may not perform as expected. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended January 29, 2022. We undertake no obligation to publicly update or revise any forward-looking statement. Financial schedules are attached to this release.

CONTACTS:
Investors:

Julia Bentley, VP of Investor Relations and Communications
jbentley@verabradley.com
(260) 207-5116

Media:
mediacontact@verabradley.com
877-708-VERA (8372)

 

Vera Bradley, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
	July 30, 2022				January 29, 2022				July 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	38,321			$	88,436			$	75,753
Short-term investments		–				–				727
Accounts receivable, net		25,593				20,681				29,897
Inventories		179,557				144,881				148,048
Income taxes receivable		5,113				9,391				6,289
Prepaid expenses and other current assets		16,913				15,928				15,627
Total current assets		265,497				279,317				276,341
Operating right-of-use assets		85,793				79,873				86,617
Property, plant, and equipment, net		60,305				59,941				62,350
Intangible assets, net		32,769				44,223				45,759
Goodwill		24,833				44,254				44,254
Deferred income taxes		9,276				3,857				3,294
Other assets		4,748				6,081				6,444
Total assets	$	483,221			$	517,546			$	525,059
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity
Current liabilities:
Accounts payable	$	43,722			$	30,492			$	30,247
Accrued employment costs		16,018				12,463				15,465
Short-term operating lease liabilities		19,768				18,699				20,584
Other accrued liabilities		21,526				16,422				17,522
Income taxes payable		374				–				–
Total current liabilities		101,408				78,076				83,818
Long-term operating lease liabilities		84,015				80,861				87,984
Other long-term liabilities		157				195				71
Total liabilities		185,580				159,132				171,873
Redeemable noncontrolling interest		23,491				30,974				30,364
Shareholders’ equity:
Additional paid-in-capital		107,941				107,907				106,455
Retained earnings		297,623				334,364				323,431
Accumulated other comprehensive loss		(135	)			(29	)			(4	)
Treasury stock		(131,279	)			(114,802	)			(107,060	)
Total shareholders’ equity of Vera Bradley, Inc.		274,150				327,440				322,822
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity	$	483,221			$	517,546			$	525,059

 

Vera Bradley, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
	Thirteen Weeks Ended							Twenty-Six Weeks Ended
	July 30, 2022				July 31, 2021			July 30, 2022				July 31, 2021
Net revenues	$	130,371			$	147,048		$	228,830			$	256,142
Cost of sales		69,854				66,687			115,799				116,617
Gross profit		60,517				80,361			113,031				139,525
Selling, general, and administrative expenses		74,042				68,729			134,956				129,625
Impairment of goodwill and intangible assets		29,338				–			29,338				–
Other income, net		42				1,016			209				789
Operating (loss) income		(42,821	)			12,648			(51,054	)			10,689
Interest expense, net		36				119			76				209
Income (loss) before income taxes		(42,857	)			12,529			(51,130	)			10,480
Income tax (benefit) expense		(5,956	)			2,672			(7,519	)			2,141
Net (loss) income		(36,901	)			9,857			(43,611	)			8,339
Less: Net (loss) income attributable to redeemable noncontrolling interest		(7,134	)			807			(6,870	)			1,434
Net (loss) income attributable to Vera Bradley, Inc.	$	(29,767	)		$	9,050		$	(36,741	)		$	6,905
Basic weighted-average shares outstanding		31,429				34,001			32,051				33,795
Diluted weighted-average shares outstanding		31,429				34,500			32,051				34,502
Basic net (loss) income per share available to Vera Bradley, Inc. common shareholders	$	(0.95	)		$	0.27		$	(1.15	)		$	0.20
Diluted net (loss) income per share available to Vera Bradley, Inc. common shareholders	$	(0.95	)		$	0.26		$	(1.15	)		$	0.20

 

Vera Bradley, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
	Twenty-Six Weeks Ended
	July 30, 2022				July 31, 2021
Cash flows from operating activities
Net (loss) income	$	(43,611	)		$	8,339
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation of property, plant, and equipment		4,371				4,514
Amortization of operating right-of-use assets		10,621				10,026
Goodwill and intangible asset impairment		29,338				–
Other impairment charges		1,351				–
Amortization of intangible assets		1,537				1,537
Provision for doubtful accounts		(119	)			26
Stock-based compensation		1,444				3,372
Deferred income taxes		(5,419	)			236
Other non-cash gain, net		–				(45	)
Changes in assets and liabilities:
Accounts receivable		(4,793	)			(2,380	)
Inventories		(34,676	)			(6,632	)
Prepaid expenses and other assets		348				2,153
Accounts payable		12,759				2,696
Income taxes		4,652				762
Operating lease liabilities, net		(12,910	)			(13,202	)
Accrued and other liabilities		7,989				5,085
Net cash (used in) provided by operating activities		(27,118	)			16,487
Cash flows from investing activities
Purchases of property, plant, and equipment		(4,391	)			(2,281	)
Proceeds from maturities and sales of investments		–				565
Proceeds from disposal of property, plant, and equipment		–				45
Net cash used in investing activities		(4,391	)			(1,671	)
Cash flows from financing activities
Tax withholdings for equity compensation		(1,410	)			(2,350	)
Repurchase of common stock		(16,477	)			–
Distributions to redeemable noncontrolling interest		(613	)			(879	)
Net cash used in financing activities		(18,500	)			(3,229	)
Effect of exchange rate changes on cash and cash equivalents		(106	)			(9	)
Net (decrease) increase in cash and cash equivalents	$	(50,115	)		$	11,578
Cash and cash equivalents, beginning of period		88,436				64,175
Cash and cash equivalents, end of period	$	38,321			$	75,753

 

Vera Bradley, Inc.
First Quarter Fiscal 2023
GAAP to Non-GAAP Reconciliation Thirteen Weeks Ended April 30, 2022
(in thousands, except per share amounts)
(unaudited)
	Thirteen Weeks Ended
	As Reported				Other Items				Non-GAAP (Excluding Items)
Gross profit	$	52,514			$	–			$	52,514
Selling, general, and administrative expenses		60,914				1,511		1		59,403
Impairment of goodwill and intangible assets		–				–				–
Operating loss		(8,233	)			(1,511	)			(6,722	)
Loss before income taxes		(8,273	)			(1,511	)			(6,762	)
Income tax benefit		(1,563	)			(375	)	2		(1,188	)
Net loss		(6,710	)			(1,136	)			(5,574	)
Less: Net income (loss) attributable to redeemable noncontrolling interest		264				(192	)			456
Net loss attributable to Vera Bradley, Inc.		(6,974	)			(944	)			(6,030	)
Diluted net loss per share available to Vera Bradley, Inc. common shareholders	$	(0.21	)		$	(0.03	)		$	(0.18	)
Vera Bradley Direct segment operating income	$	5,503			$	–			$	5,503
Vera Bradley Indirect segment operating income	$	5,479			$	–			$	5,479
Pura Vida segment operating income (loss)	$	1,056			$	(769	)	3	$	1,825
Unallocated corporate expenses	$	(20,271	)		$	(742	)	4	$	(19,529	)
1Items include $769 for the amortization of definite-lived intangible assets; $592 for a right-of-use asset impairment charge; and $150 for consulting fees associated with cost savings initiatives
2Related to the tax impact of the charges mentioned above
3Related to the amortization of definite-lived intangible assets
4Related to $592 for a right-of-use asset impairment charge and $150 for consulting fees associated with cost savings initiatives

 

Vera Bradley, Inc.
Second Quarter Fiscal 2023
GAAP to Non-GAAP Reconciliation Thirteen Weeks Ended July 30, 2022
(in thousands, except per share amounts)
(unaudited)
	Thirteen Weeks Ended
	As Reported				Other Items				Non-GAAP (Excluding Items)
Gross profit (loss)	$	60,517			$	(7,276	)	1	$	67,793
Selling, general, and administrative expenses		74,042				10,076		2		63,966
Impairment of goodwill and intangible assets		29,338				29,338				–
Operating (loss) income		(42,821	)			(46,690	)			3,869
(Loss) Income before income taxes		(42,857	)			(46,690	)			3,833
Income tax (benefit) expense		(5,956	)			(6,760	)	3		804
Net (loss) income		(36,901	)			(39,930	)			3,029
Less: Net (loss) income attributable to redeemable noncontrolling interest		(7,134	)			(7,771	)			637
Net (loss) income attributable to Vera Bradley, Inc.		(29,767	)			(32,159	)			2,392
Diluted net (loss) income per share available to Vera Bradley, Inc. common shareholders	$	(0.95	)		$	(1.02	)		$	0.08
Vera Bradley Direct segment operating income (loss)	$	10,044			$	(6,173	)	4	$	16,217
Vera Bradley Indirect segment operating income (loss)	$	3,918			$	(994	)	5	$	4,912
Pura Vida segment operating (loss) income	$	(28,534	)		$	(31,085	)	6	$	2,551
Unallocated corporate expenses	$	(28,249	)		$	(8,438	)	7	$	(19,811	)
1Items include $6,142 for inventory adjustments associated with the exit of certain technology products and the goodMRKT brand, as well as excess mask products and $1,134 for PO cancellation fees
2Items include $5,714 for severance charges; $2,755 for consulting fees associated with cost savings initiatives and CEO search; $768 for the amortization of definite-lived intangible assets; $759 for store impairment charges; and $80 for goodMRKT brand exit costs
3Related to the tax impact of the charges mentioned above, as well as goodwill and intangible asset impairment charges
4Related to $5,097 related to an allocation for certain inventory adjustments and PO cancellation fees; $759 for store impairment charges; $302 for goodMRKT brand exit costs; and $15 for severance charges
5Related to an allocation for certain inventory adjustments and PO cancellation fees
6Related to $29,338 of goodwill and intangible asset impairment charges; $963 for inventory adjustments associated with mask products; $768 for the amortization of definite-lived intangible assets; and $16 for severance charges
7Related to $5,683 for severance charges and $2,755 for consulting fees associated with cost savings initiatives and CEO search

 

Vera Bradley, Inc.
Second Quarter Fiscal 2022
GAAP to Non-GAAP Reconciliation Thirteen Weeks Ended July 31, 2021
(in thousands, except per share amounts)
(unaudited)
	Thirteen Weeks Ended
	As Reported				Other Items				Non-GAAP (Excluding Items)
Gross profit	$	80,361			$	–			$	80,361
Selling, general, and administrative expenses		68,729				768		1		67,961
Operating income (loss)		12,648				(768	)			13,416
Income (loss) before income taxes		12,529				(768	)			13,297
Income tax expense (benefit)		2,672				(130	)			2,802
Net income (loss)		9,857				(638	)			10,495
Less: Net income (loss) attributable to redeemable noncontrolling interest		807				(192	)			999
Net income (loss) attributable to Vera Bradley, Inc.		9,050				(446	)			9,496
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders	$	0.26			$	(0.01	)		$	0.28
Vera Bradley Direct segment operating income	$	23,168			$	–			$	23,168
Vera Bradley Indirect segment operating income	$	5,601			$	–			$	5,601
Pura Vida segment operating income (loss)	$	3,226			$	(768	)	1	$	3,994
Unallocated corporate expenses	$	(19,347	)		$	–			$	(19,347	)
1Includes the amortization of definite-lived intangible assets

 

Vera Bradley, Inc.
GAAP to Non-GAAP Reconciliation Twenty-Six Weeks Ended July 30, 2022
(in thousands, except per share amounts)
(unaudited)
	Twenty-Six Weeks Ended
	As Reported				Other Items				Non-GAAP (Excluding Items)
Gross profit (loss)	$	113,031			$	(7,276	)	1	$	120,307
Selling, general, and administrative expenses		134,956				11,587		2		123,369
Impairment of goodwill and intangible assets		29,338				29,338				–
Operating loss		(51,054	)			(48,201	)			(2,853	)
Loss before income taxes		(51,130	)			(48,201	)			(2,929	)
Income tax benefit		(7,519	)			(7,135	)	3		(384	)
Net loss		(43,611	)			(41,066	)			(2,545	)
Less: Net (loss) income attributable to redeemable noncontrolling interest		(6,870	)			(7,963	)			1,093
Net loss attributable to Vera Bradley, Inc.		(36,741	)			(33,103	)			(3,638	)
Diluted net loss per share available to Vera Bradley, Inc. common shareholders	$	(1.15	)		$	(1.03	)		$	(0.11	)
Vera Bradley Direct segment operating income (loss)	$	15,547			$	(6,173	)	4	$	21,720
Vera Bradley Indirect segment operating income (loss)	$	9,397			$	(994	)	5	$	10,391
Pura Vida segment operating (loss) income	$	(27,478	)		$	(31,854	)	6	$	4,376
Unallocated corporate expenses	$	(48,520	)		$	(9,180	)	7	$	(39,340	)
1Items include $6,142 for inventory adjustments associated with the exit of certain technology products and the goodMRKT brand, as well as excess mask products and $1,134 for PO cancellation fees
2Items include $5,714 for severance charges; $2,905 for consulting fees associated with cost savings initiatives and CEO search; $1,537 for the amortization of definite-lived intangible assets; $1,351 for store and right-of-use asset impairment charges; and $80 for goodMRKT brand exit costs
3Related to the tax impact of the charges mentioned above, as well as goodwill and intangible asset impairment charges
4Related to $5,097 related to an allocation for certain inventory adjustments and PO cancellation fees; $759 for store impairment charges; $302 for goodMRKT brand exit costs; and $15 for severance charges
5Related to an allocation for certain inventory adjustments and PO cancellation fees
6Related to $29,338 of goodwill and intangible asset impairment charges; $963 for inventory adjustments associated with mask products; $1,537 for the amortization of definite-lived intangible assets; and $16 for severance charges
7Related to $5,683 for severance charges; $2,905 for consulting fees associated with cost savings initiatives and CEO search; and $592 for a right-of-use asset impairment charge

 

Vera Bradley, Inc.
GAAP to Non-GAAP Reconciliation Twenty-Six Weeks Ended July 31, 2021
(in thousands, except per share amounts)
(unaudited)
	Twenty-Six Weeks Ended
	As Reported				Other Items				Non-GAAP (Excluding Items)
Gross profit	$	139,525			$	–			$	139,525
Selling, general, and administrative expenses		129,625				1,537		1		128,088
Operating income (loss)		10,689				(1,537	)			12,226
Income (loss) before income taxes		10,480				(1,537	)			12,017
Income tax expense (benefit)		2,141				(293	)			2,434
Net income (loss)		8,339				(1,244	)			9,583
Less: Net income (loss) attributable to redeemable noncontrolling interest		1,434				(384	)			1,818
Net income (loss) attributable to Vera Bradley, Inc.		6,905				(860	)			7,765
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders	$	0.20			$	(0.02	)		$	0.23
Vera Bradley Direct segment operating income	$	34,028			$	–			$	34,028
Vera Bradley Indirect segment operating income	$	10,062			$	–			$	10,062
Pura Vida segment operating income (loss)	$	5,734			$	(1,537	)	1	$	7,271
Unallocated corporate expenses	$	(39,135	)		$	–			$	(39,135	)
1Includes the amortization of definite-lived intangible assets

 

Tuesday, August 23, 2022

Lifeway Foods (LWAY)
A Healthy Food Alternative

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

Initiating Coverage. We are initiating research coverage on Lifeway Foods, Inc. with a Market Perform rating. Lifeway is the largest producer and marketer of kefir in the U.S. and an important player in the broader probiotic-based products and natural “better for you” foods. We believe Lifeway is well positioned to leverage its dominant kefir position into ancillary products and distribution channels. We should note, given an accounting error from 2009, Lifeway has yet to release operating results for the first and second quarters of 2022. We believe the issue to be satisfactorily resolved and expect the quarterly results to be released shortly. 

What Is Kefir? Originating in the North Caucasus 
region, 
kefir is a fermented milk drink similar to a thin yogurt or ayran that is made from kefir grains, a specific type of mesophilic symbiotic culture. Lifeway Kefir is tart and tangy as well as high in protein, calcium and vitamin D. As a result of the Company’s exclusive blend of kefir cultures, each cup of Lifeway kefir contains 12 live and active cultures and 25 to 30 billion beneficial CFU (Colony Forming Units) at the time of manufacture.…

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. 

Friday, August 19, 2022

Stem Holdings, Inc. (STMH)
Terminating Research Coverage

Stem is a multi-state, vertically integrated, cannabis company that, through its subsidiaries and its investments, is engaged in the cultivation, processing, packaging, distribution and branding of cannabis, hemp and their derivatives, including oils, edibles, concentrates. Additionally, the Company purchases, improves, leases, operates, and invests in properties for use in the production, distribution and sales of cannabis and cannabis-infused products licensed under the laws of the states of Oregon, Nevada, California, Massachusetts, and New York. As of December 31, 2021, Stem had ownership interests in 24 state-issued cannabis licenses including nine (9) licenses for cannabis cultivation, three (3) licenses for cannabis processing, two (2) licenses for cannabis wholesale distribution, three (3) licenses for hemp production and seven (7) cannabis dispensary licenses.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

Termination of Research Coverage. We are terminating research coverage of Stem Holdings, Inc. due to a reallocation of resources. Effective upon termination of coverage, investors should no longer rely on any of our prior research, financial estimates, or ratings for the Company.

…

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. 

Thursday, August 18, 2022

Item 9 Labs (INLB)
Challenging Market Conditions, Reducing to Market Perform

Item 9 Labs Corp. (OTCQX: INLB) is a vertically integrated cannabis operator and dispensary franchisor delivering premium products from its large-scale cultivation and production facilities in the United States. The award-winning Item 9 Labs brand specializes in best-in-class products and user experience across several cannabis categories. The company also offers a unique dispensary franchise model through the national Unity Rd. retail brand. Easing barriers to entry, the franchise provides an opportunity for both new and existing dispensary owners to leverage the knowledge, resources, and ongoing support needed to thrive in their state compliantly and successfully. Item 9 Labs brings the best industry practices to markets nationwide through distinctive retail experience, cultivation capabilities, and product innovation. The veteran management team combines a diverse skill set with deep experience in the cannabis sector, franchising, and the capital markets to lead a new generation of public cannabis companies that provide transparency, consistency, and well-being. Headquartered in Arizona, the company is currently expanding its operations space by up to 640,000-plus square feet on its 50-acre site, one of the largest properties in Arizona zoned to grow and cultivate flower. For additional information, visit https://investors.item9labscorp.com/.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

3Q Results. Item 9 Labs reported disappointing 3Q results. Revenue was $4.9 million, down 26.3% y-o-y and down 26% sequentially. We had projected $7 million. Gross profit margin declined to 32.2% from 43.2% a year ago. Net loss for the quarter was $5.5 million, or $0.06 per share, versus a net loss of $833,905, or $0.01 per share, in 3Q21. Adjusted EBITDA decreased by $1.9 million to a loss of $1.8 million from a positive $217,995 last year.

Inching Forward. Item 9 is making progress on both the Arizona and Nevada expansions, but at a much slower pace than we had expected. The same with the acquisition of Sessions in Canada and the Herbal Cure location in Colorado. We believe these investments will occur, but timing is uncertain….

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. 

Vera Bradley Makes Move Into Metaverse With Utility-Driven NFTs To Celebrate 40th Anniversary

Research, News, and Market Data on Vera Bradley

Genesis NFT Drop Comes With Limited-Edition Jilly Bag, Plus 100% Of Vera Bradley’s Primary Net Proceeds From 2nd NFT Drop To Benefit The Vera Bradley Foundation For Breast Cancer

FORT WAYNE, Ind., Aug. 17, 2022 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA), the parent company of iconic lifestyle brand and leading American bag and luggage brand Vera Bradley, announced the World of Vera Bradley via Discord and Twitter. This new digital concept will take customers on a journey into the metaverse, bringing together the brand’s past, present, and future through its upcoming NFT (non-fungible token) collections.

Pioneering colorful and beautiful travel solutions for women since 1982, Vera Bradley now aims to create an experience that bridges the physical and digital worlds and provides a space for women to explore and learn about Web3 through the World of Vera Bradley. Easy to access through worldofverabradley.com, the World of Vera Bradley will also be the point-of-purchase for Vera Bradley’s NFT collections, the first of which is slated to launch in September during New York Fashion Week.

Aptly named the Heritage Pass, Vera Bradley’s genesis NFT will celebrate the brand’s 40th anniversary and feature one animated image of Vera Bradley’s coveted throwback Jilly Bag in four archived prints. Available for purchase on September 14, 2022, and priced to sell at $82.00 USD*, each of the 440 Heritage Pass NFT tokens will function as a Mint Pass and come with a physical, limited-edition Jilly Bag in one of the four heritage prints featured in the NFT. Anticipation of the unknown will add to the excitement of the Heritage Pass, as buyers will receive a Jilly Bag in one of four surprise patterns. Additionally, first-adopters will be rewarded with early access to purchase the second Vera Bradley NFT, launching in October.

Available for presale on October 1 and 2 and for public sale on October 3, 2022, Vera Bradley’s second NFT drop, the 1982 Collection, will be comprised of 1,982 generative backgrounds derived from 40 archived prints to commemorate the year the company was founded. Priced at $19.82 USD*, the 1982 Collection will attract both crypto lovers and breast cancer awareness supporters alike with 100% of Vera Bradley’s primary net proceeds benefiting the Vera Bradley Foundation for Breast Cancer, focusing its unique utility on advocacy and fundraising.

“The World of Vera Bradley brings Vera Bradley’s brand vision for an interconnected future and Web3 world to life,” states Daren Hull, Brand President, Vera Bradley, “Beyond technology, Web3 will continue to evolve and shape ownership in the next generation. We believe NFT projects like ours, rooted in strong fundamentals and a commitment to maximizing the fundraising impact to the Vera Bradley Foundation for Breast Cancer, will be the future of Web3.”

Jennifer Bova, VP of Marketing, Vera Bradley continues, “With the launch of the World of Vera Bradley and our first NFT collections, we will create an authentic and connected community of digital asset holders through innovation, vision, and a consumer-first approach. This is another experience to strengthen Vera Bradley’s sisterhood, utilizing Web3 and fundraising for the Vera Bradley Foundation for Breast Cancer.”

Both Vera Bradley NFT Collections will be available for purchase through the World of Vera Bradley’s digital destination (www.worldofverabradley.com) using a credit card, or via Open Sea using ETH.

ABOUT VERA BRADLEY:
Vera Bradley, based in Fort Wayne, Indiana, is a leading designer of women’s handbags, luggage and other travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women unlike any other brand in the global marketplace. Visit www.verabradley.com and follow @verabradley to learn more.

ABOUT VERA BRADLEY FOUNDATION FOR BREAST CANCER:
The 
Vera Bradley Foundation
for Breast Cancer raises funds for breast cancer research to find a cure and to improve the lives of the many affected by this disease. The Foundation has contributed $37.5 million to the Vera Bradley Foundation Center for Breast Cancer Research at the Indiana University School of Medicine. The Center is focused on developing and dramatically improving therapies for some of the most difficult-to-treat types of breast cancer. Funds are raised through special events, partner events, and individual donations.

CONTACTS:
Email: mediacontact@verabradley.com
Phone: 877-708-VERA (8372)
Photos accompanying this announcement are available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d47a7824-51ff-42a7-9006-b437d3802e4b and https://www.globenewswire.com/NewsRoom/AttachmentNg/90dccc59-03b9-467a-9f01-8b1889c967a5.
*Please Note: The exact USD retail price will depend on gas prices at time of purchase.

 

Tuesday, August 16, 2022

Schwazze (SHWZ)
A Record Quarter, But What’s Next?

Schwazze (OTCQX:SHWZ, NEO:SHWZ) is building a premier vertically integrated regional cannabis company with assets in Colorado and New Mexico and will continue to take its operating system to other states where it can develop a differentiated regional leadership position. Schwazze is the parent company of a portfolio of leading cannabis businesses and brands spanning seed to sale. The Company is committed to unlocking the full potential of the cannabis plant to improve the human condition. Schwazze is anchored by a high-performance culture that combines customer-centric thinking and data science to test, measure, and drive decisions and outcomes. The Company’s leadership team has deep expertise in retailing, wholesaling, and building consumer brands at Fortune 500 companies as well as in the cannabis sector. Schwazze is passionate about making a difference in our communities, promoting diversity and inclusion, and doing our part to incorporate climate-conscious best practices.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

2Q22 Results. Revenue for the quarter totaled $44.3 million, up from $31.8 million in the first quarter and $30.7 million a year ago. The increase was mostly due to acquisitions as the Colorado market continued to experience softness from the 2021 COVID highs. Adjusted EBITDA was $15.0 million in the quarter, up from $10.0 million a year ago. Schwazze reported operating income of $9 million and net income of $32.1 million, or $0.24 per diluted share, versus $4.4 million and $0.08 last year. We had forecast revenue of $39 million and a net loss of $1.6 million, or $0.03 per share.

Metrics. For the sixth consecutive quarter, Schwazze outpaced the Colorado industry, this time by 11%, but ongoing weakness in the Colorado market resulted in declines in key performance metrics. Colorado two year stacked IDs for same store sales in the second quarter were up 1.8%, although one year were down 12.7%. The same measurements for New Mexico were up 41% and 30.4%, respectively. Average basket size fell in both markets….

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. 

ACCO Brands Corporation Announces Appointment of Joe Burton to Board of Directors

Research, News, and Market Data on ACCO Brands

08/15/2022

LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that Joe Burton has been appointed to its Board of Directors.

In his current role as Chief Executive Officer for Telesign Corp., Mr. Burton leads an organization that services global enterprises by connecting, protecting and defending their digital identities. Prior to his current role, he served as President, Chief Executive Officer, and a member of the Board of Poly (formerly Plantronics), a company that provides premium audio, video and conferencing products for businesses and consumers. Previously, Mr. Burton held various executive management, engineering leadership, strategy and architecture-level positions at Polycom, Cisco Systems, Inc. and Active Voice Corporation.

Boris Elisman, Chairman and Chief Executive Officer, ACCO Brands, commented, “We are excited to have Joe join our Board of Directors. Technology is becoming a more significant part of our product portfolio. Joe’s extensive expertise in technology and product development, as well as success driving digital transformation, growth acceleration and corporate/go-to-market strategies, will help guide us in our transformation journey to transition to a global consumer and brand-driven products company.”

About
ACCO Brands

ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.

Christopher McGinnis
Investor Relations
(847) 796-4320

Julie McEwan
Media Relations
(937) 974-8162

Source: ACCO Brands Corporation

Thursday, August 11, 2022

RCI Hospitality Holdings (RICK)
Another Solid Quarter

With more than 60 units, RCI Hospitality Holdings, Inc., through its subsidiaries, is the country’s leading company in adult nightclubs and sports bars/restaurants. Clubs in New York City, Chicago, Dallas-Fort Worth, Houston, Miami, Minneapolis, Denver, St. Louis, Charlotte, Pittsburgh, Raleigh, Louisville, and other markets operate under brand names such as Rick’s Cabaret, XTC, Club Onyx, Vivid Cabaret, Jaguars Club, Tootsie’s Cabaret, Scarlett’s Cabaret, Diamond Cabaret, and PT’s Showclub. Sports bars/restaurants operate under the brand name Bombshells Restaurant & Bar.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

3Q22 Results. Revenue hit a record $70.7 million, up 11% sequentially and up 22.2% y-o-y.  We had projected $72 million of revenue. Net income was $13.9 million, or $1.48 per share, compared to $12.3 million, or $1.37 per share last year. Adjusted EPS was $1.60 compared to $1.36. We were at $12.5 million of net income, or $1.33 per share.

Quarterly Drivers. Quarterly results benefited from higher sales, partially due to the acquired clubs, a continued rebound in Nightclubs service revenue, and sequential improvement in Bombshells….

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. 

Wednesday, August 10, 2022

ACCO Brands (ACCO)
Post Call Commentary

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, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

Hit the Reset Button. The major drag on 2Q results and full year guidance is PowerA. After a fantastic 2021, a lack of chips for consoles and a more normalized level of demand post-COVID resulted in PowerA sales declining in 2Q. ACCO’s management also gave an updated full year projection for PowerA, for which sales are estimated to be down 10-15%, or about $25-$40 million, for all of 2022.

Forex No Friend. The other major contributor to reduced guidance is forex headwinds. Forex is now expected to have a negative 4.5% impact on revenue for the year, up 200 bp from management’s previous expectation. Outside of PowerA and forex, the rest of ACCO’s business looks solid, although a significant economic downturn could change that view….

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. 

Tuesday, August 09, 2022

Kandi Technologies Group, Inc. (KNDI)
The shift towards off-road vehicles accelerates

Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua Economic Development Zone, Zhejiang Province, is engaged in the research, development, manufacturing, and sales of various vehicular products. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Technologies Group Co., Ltd. (“Zhejiang Kandi Technologies”), formerly, Zhejiang Kandi Vehicles Co., Ltd.) and its subsidiaries including Zhejiang Kandi Smart Battery Swap Technology Co., Ltd, and SC Autosports, LLC (d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the United States, and its wholly-owned subsidiary, Kandi America Investment, LLC. Zhejiang Kandi Technologies has established itself as one of China’s leading manufacturers of pure electric vehicle parts and off-road vehicles.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

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

Off-road vehicle sales rose 80% as the company continues to shift towards golf carts, go-karts, and ATVS. Off-road vehicle sales carry higher gross margins (10-15%) than other businesses. Management indicates that crossover golf carts delivered from the factory have increased from dozens in March 2022 to more than 2,000/month. Management believes the off-road market could be a $2.2 billion market by 2028, demonstrating 19% annual growth. Kandi plans on introducing new models this fall to stay ahead of demand. Battery sales (following an acquisition earlier this year) were also strong and contributing to profitability. 

Kandi is deemphasizing the electric vehicle market and seeing a slow down in scooters/bikes. Management continues to believe the EV market is currently too competitive stating that competitors are losing up to $10,000/vehicle to gain market share. Scooters/bikes sales, which were especially strong during COVID, declined 90% year over year as demand for the product drops….

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. 

Tuesday, August 09, 2022

ACCO Brands (ACCO)
First Look: 2Q22

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, Senior Research Analyst, Noble Capital Markets, Inc.

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

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

2Q22 Operating Results. ACCO reported 2Q22 revenue of $521 million, up 0.6% year-over-year and up 5.2% on a comparable basis, with all segments posting growth. ACCO has now recorded five consecutive quarters of comparable sales growth. We had forecast revenue of $545 million. Adjusted EPS was $0.37, compared to $0.43 last year. We had forecast adjusted EPS of $0.44.

Forex, Economic Conditions Restrain Growth. Slower economic growth, increased inflation, and unfavorable foreign currency impacts resulted in a more challenging quarter than anticipated. Adverse foreign exchange reduced sales by $23.6 million in the quarter, while a lack of computer chips resulted in lower sales of gaming accessories. Operating income benefited from $9.4 million of contingent earnout income related to the PowerA acquisition….

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. 

Comstock Announces Second Quarter 2022 Results

Research, News, and Market Data on Comstock Mining

Cellulosic
Breakthrough Unlocks Massive New Feedstock Model for Net Zero Energy
Independence

VIRGINIA
CITY, NEVADA, AUGUST 9, 2022 – Comstock Inc. (NYSE: LODE) (“Comstock” and the “Company”) today announced its recent business development highlights, second quarter 2022 results, and updated outlook.  

Selected Strategic Highlights – Cellulosic Fuels

• Expanded our leading cellulosic fuels technology portfolio by filing for a new patent covering breakthrough pathways to produce Bioleum a renewable offset for petroleum and multiple drop-in renewable fuels from woody biomass.
• Filed a preliminary application for a U.S. Department of Energy (“DOE”) grant opportunity for a pilot scale system to validate enhanced production metrics of purified bio-intermediaries and renewable fuels from woody biomass.
• Received a notification of “encouragement” from the U.S. Department of Energy for this same grant opportunity.
• Established strategic collaborations with leading industry partners, including feedstock and offtake relationships, for the development of renewable fuels, from woody biomass, at dramatically improved yield, efficiency, and cost.
• Advanced the engineering and development of our cellulosic fuel demonstration facility.

Selected Strategic Highlights – Lithium Extraction
and Electrification Products

• Commissioned our proprietarylithium-ion battery (“LIB”) pilot crushing, separation, and conditioning system.
• Enhanced the design and commenced upgrades on our proprietary LIB pilot crushing and separation system.
• Completed construction of our prototype lithium extraction system in our R&D facility and commenced testing.
• Advanced permitting for our state-of-the-art battery metal recycling facility in Nevada.
• Production of high-purity black mass to commence in our battery metal recycling facility by Q2 2023.
• Production of battery grade lithium carbonate to commence in our battery metal recycling facility by Q3 2023.

Selected Financial Highlights

• Total assets were $117,826,063 as of June 30, 2022, as compared to $115,119,393 at March 31, 2022.
• Operating expenses were $5,896,617 for the second quarter 2022, including selling, general and administrative expenses of $2,508,573 and research and development expenses of $2,579,150, and depreciation of $808,894.
• Second quarter 2022 net loss was $13,766,846 or $(0.20) per share, as compared to second quarter 2021 net loss of $6,320,992 or $(0.15) per share. The 2022 results were primarily driven by increases in research and development expenditures and changes in fair values of derivatives.
• Advanced non-strategic asset monetization efforts with asset sales proceeds expected at $20 million. 
• Debt was $4,572,356 on June 30, 2022, net of discount, representing an unsecured promissory note.
• Cash and cash equivalents were $4,345,315 on June 30, 2022.
• Outstanding common shares were 76,822,049 at June 30, 2022, and 78,737,632 at August 8, 2022.

“Our financial results reflect the impact of our continued investment in the research, development and commercialization of our renewable energy businesses,” said Corrado De Gasperis, Comstock’s executive chairman and chief executive officer. “The building and operating of these proprietary demonstration systems are critical prerequisites for full scale commercialization.”

Cellulosic Fuels

The Company recently announced a significant expansion of its leading cellulosic technology portfolio by filing for a new patent covering breakthrough pathways to produce renewable diesel, sustainable aviation fuel (“SAF”) gasoline and marine fuel from woody biomass, at dramatically improved yield, efficiency, and cost in comparison to all known methods.

Renewable fuels provide a critical opportunity for decarbonization, however, most of the existing U.S. renewable fuel refineries draw from the same limited pool of constrained feedstocks. Comstock’s plans to decarbonize with renewable fuels involves abundant feedstocks that are not used today, enabling a vast untapped energy source with superior benefits. 

“Our new patent covers processes and compositions that have been validated at our existing two ton per day cellulosic fuels pilot facility, verifying that we can simultaneously produce multiple purified biointermediates that are uniquely isolated and free of the contaminants that have frustrated prior attempts at commercializing cellulosic fuel technologies,” added De Gasperis.

Based on current data, Comstock projects best-in-class renewable yields exceeding 80 gallons per dry ton of woody biomass (on a gasoline gallon equivalent basis), with lifecycle greenhouse gas emissions reductions exceeding 80% over petroleum.

The Company is currently expanding its existing cellulosic demonstration systems to include the production of Bioleum™ and expects these demonstration systems to add to our existing capabilities for producing carbon-neutral pulps, cellulosic sugar and cellulosic ethanol.  The expansion into Bioleum™ will demonstrate the full capability of producing these bio-intermediaries suitable for the production of renewable diesel, marine, SAF and gasoline from woody biomass.

The Company recently submitted a preliminary grant application to the U.S. Department of Energy (“DOE”) entitled “Production of Renewable Diesel,
Sustainable Aviation Fuel, Gasoline, and Marine Fuel from Lignocellulosic
Biomass at Dramatically Improved Yield, Efficiency, and Cost” and received a DOE notification of encouragement to apply for this funding opportunity, reflecting positively on the Company technology readiness and the strength of its collaboration partners.

De Gasperis continued, “The existing U.S. biorefining capacity is far greater than current feedstocks can support, and the DOE clearly recognizes the need for expanded feedstocks. We believe that our expanded technology solutions, and the magnitude of feedstocks that they enable, unblock one of the most critical supply chain constraints across the U.S. and global markets.”

Electrification Products

The Company completed construction and initial commissioning of its breakthrough LIB crushing, separating, and conditioning process during the second quarter, successfully confirming the production of highly concentrated “black mass.”

“We have successfully developed a proprietary system that produces a novel and pure black mass, further positioning us for high efficiency metals extraction, starting with lithium,” said Mr. De Gasperis. “Our team is enhancing the pilot system for deployment in Nevada where we will ultimately integrate our black mass production and lithium extraction process in 2023.”  

The Company expects to receive its main operating permit during the fourth quarter of 2022 and complete the submission of its modified air quality permits for our LIB processes at our state-of-the-art, battery metal recycling facility in the third quarter.

“The cleaning and repairs of our facility in Nevada are near complete and truly look outstanding.  The facility can now be readied for the receipt and installations of pilot and demonstration units for crushing, separating and conditioning of our novel black mass and subsequently, our lithium extraction, while the permitting process continues” concluded Mr. De Gasperis.

Corporate

Cash and cash equivalents were $4,345,315 on June 30, 2022. The Company expects over $20 million in proceeds over the next two quarters from the sale of its non-mining properties, non-strategic investments, and collection of advances receivable, including the Daney Ranch for $2.5 million, net, and proceeds from Sierra Springs Opportunity Fund totaling over $18 million.

Conference Call Details

Comstock will host the conference call on Tuesday, August 9, 2022, at 1:15 p.m. PDT  (4:15 p.m. EDT) and the webcast will include a moderated question and answer session following the Company’s prepared remarks.  Please click the link below to register in advance and please join the event at least 10 minutes prior to the scheduled start time. Once registered, you will receive a confirmation email containing information about joining the Webcast. Please 
click here to register in advance.

About
Comstock

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

Forward-Looking
Statements 

This press release and any related calls or discussions may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, are forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “should,” “intend,” “may,” “will,” “would,” “potential” and similar expressions identify forward-looking statements, but are not the exclusive means of doing so. Forward-looking statements include statements about matters such as: future industry market conditions; future explorations or acquisitions; future changes in our exploration activities; future changes in our research and development; and future prices and sales of, and demand for, our products and services. Except as may be required by securities or other law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Neither this press release nor any related call or discussion constitutes an offer to sell, the solicitation of an offer to buy or a recommendation with respect to any securities of the Company, the fund or any other issuer.

Contact information:
Comstock Mining Inc. P.O. Box 1118 Virginia City, NV 89440 www.comstock.inc	Corrado De Gasperis Executive Chairman & CEO Tel (775) 847-4755 degasperis@comstockmining.com	Zach Spencer Director of External Relations Tel (775) 847-5272 Ext.151 questions@comstockmining.com