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.
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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.
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.
Improved Profitability. Management’s strategic transformation program is showing up in NN’s results. The first quarter of 2024 was the third quarter in a row of improved quarterly results. TTM adjusted EBITDA improved for the fourth consecutive quarter. Although the business environment remains unsettled, management is taking the steps to both win new business and reduce costs.
1Q24 Results. Net sales of $121.2 million were down 4.6% versus the year ago period, primarily as a result of rationalized volume. We had forecast $120 million. Adjusted EBITDA came in at $11.3 million, or 9.3% of sales, up from $8.1 million, or 6.4% of sales last year. We had estimated $9.6 million. NN reported an adjusted net loss of $4 million, or a loss of $0.08/sh, compared to an adjusted loss of $5.7 million, or $0.12/sh, in 1Q23. We were at an adjusted net loss of $5.2 million, or a loss of $0.10/sh.
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.
MCLEAN, Va., May 6, 2024 /PRNewswire/ — V2X, Inc. (NYSE: VVX) announces its continued support to the National Training Center Training Services Contract (NTCTSC) under a one-year bridge contract with the US Army. The bridge contract extends the period of performance of the original five-year award. This extension reinforces V2X’s longstanding record of excellence in preparing warfighters for deployment.
The NTCTSC contract enables V2X to maintain its role in supporting training operations at NTC, located in Ft. Irwin, CA. V2X’s responsibilities under the contract include providing advisory services, technical expertise, and system operators to ensure training is both effective and efficient. Specifically, the NTCTSC Bridge facilitates training support services, which include audio-visual operations for after-action review productions, leadership advisory services, secure LAN operations, skilled role players, Blue Force Tracker system management, battlefield effects, computer training, analytical system operations, and a range of other specialized services.
“We are proud to be a trusted partner in delivering mission-critical support to the brigade combat teams cycling through the National Training Center,” said Ken Shreves, Senior Vice President of Global Mission Solutions and Chief Service Delivery and Growth Officer at V2X. “With our proven track record of providing high-consequence training support to the US Army, V2X is uniquely positioned to prepare soldiers for global missions.”
“For nearly three decades, our team has met or exceeded all customer requirements at the NTC and continues to perform in an exceptional manner across the U.S. Army’s training centers,” said Aileen Amirault, Vice President and General Manager of V2X Global Training Solutions. “Our commitment extends globally, as evidenced by our work at the Joint Multinational Readiness Center (JMRC) in Germany, and our delivery of training support, maintenance, and range operations services to U.S. Army Central Command (ARCENT) in Kuwait. This sustained excellence underscores our dedication to supporting our troops wherever they serve.” This training builds on V2X’s time-honored pivotal role in supporting the strategic readiness of the United States Army.
About V2X V2X delivers a comprehensive suite of integrated solutions across defense and commercial training, operations and logistics, aerospace, 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.
Media Contact Angelica Spanos Deoudes Director, Corporate Communications Angelica.Deoudes@goV2X.com 571-338-5195
Investor Contact Mike Smith, CFA Vice President, Treasury, Corporate Development and Investor Relations IR@goV2X.com 719-637-5773
Kelly (Nasdaq: KELYA, KELYB) connects talented people to companies in need of their skills in areas including Science, Engineering, Education, Office, Contact Center, Light Industrial, and more. We’re always thinking about what’s next in the evolving world of work, and we help people ditch the script on old ways of thinking and embrace the value of all workstyles in the workplace. We directly employ nearly 350,000 people around the world and connect thousands more with work through our global network of talent suppliers and partners in our outsourcing and consulting practice. Revenue in 2021 was $4.9 billion. Visit kellyservices.com and let us help with what’s next for you.
Joe Gomes, 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.
Acquisition. Friday, Kelly Services announced the largest acquisition in Company History. Kelly is purchasing Motion Recruitment Partners LLC (MRP) for $425 million, with an additional earnout potential of up to $60 million. The acquisition significantly expands and strengthens Kelly’s scale and capabilities, in our view. The transaction will enhance the revenue growth potential and accelerate EBITDA margin expansion for Kelly.
Financing. Kelly expects to fund the purchase with debt and available capital, including the $100 million recently received from the sale of the European staffing business. At year-end, Kelly had $427 million of available liquidity, consisting of $126 million of cash and $301 million of availability under undrawn credit facilities. The transaction is expected to close in the second quarter of 2024.
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.
Transformational acquisition strengthens scale and capabilities of Kelly’s staffing and consulting solutions across technology, telecommunications, and government specialties in North America, and recruitment process outsourcing (RPO) solutions globally
Provides Motion Recruitment Partners and its leading brands with a highly invested partner to enable continued growth
Demonstrates Kelly’s commitment to rapidly redeploying capital and leveraging its strong balance sheet in pursuit of inorganic investments in higher-margin, higher-growth specialties
TROY, Mich., May 03, 2024 (GLOBE NEWSWIRE) — Kelly (Nasdaq: KELYA, KELYB) (“the Company”), a leading global specialty talent solutions provider, has entered into a definitive agreement to acquire Motion Recruitment Partners, LLC (“MRP”), from Littlejohn & Co., LLC (“Littlejohn”), a private investment firm based in Greenwich, Connecticut.
Under the terms of the agreement, Kelly will acquire MRP for $425 million in cash to be paid at close, with additional earnout potential of up to $60 million based on certain performance criteria. The Company expects to fund the transaction through debt and available capital, including the rapid redeployment of more than $100 million from the sale of Kelly’s European staffing operations in January 2024. The transaction is expected to close in the second quarter of 2024, subject to receipt of required regulatory approvals and other customary closing conditions.
The transaction will significantly build upon Kelly’s market-leading solutions portfolio, which includes Kelly Science, Engineering & Technology (SET), the second and fourth largest life sciences(1) and engineering(2) staffing provider, respectively, and a leading provider of technology, telecommunications, and government workforce solutions; KellyOCG, a top provider of RPO(3) and managed service provider (MSP)(4) solutions; Kelly Professional & Industrial, one of the ten largest industrial(5) staffing providers; and Kelly Education, the largest provider of K-12 education talent(6).
Following the close of the transaction, MRP will deliver services through its existing operating companies and brands with the goal of expanding Kelly’s capabilities and significantly increasing market share across several key areas:
Motion Recruitment’s technology staffing and consulting business will significantly expand Kelly SET’s delivery platform and establish the business as a top ten provider of tech talent solutions in the U.S.;
Sevenstep® will bring an industry leading brand and highly attractive client base in both RPO and MSP to elevate KellyOCG’s RPO segment to consistently rank in the top five globally;
Motion Telco will add a complementary client portfolio and set of delivery capabilities to Kelly’s existing telecommunications specialty to create a market-leading telecommunications offering; and
TG Federal will bring a dedicated new platform in government technology subcontracting with strong partnerships to build upon Kelly SET’s success in the government space.
In alignment with Kelly’s long-term strategy, the acquisition of MRP will enhance the revenue growth potential of the Company and accelerate EBITDA margin expansion. It will build upon the significant EBITDA margin expansion Kelly has delivered through actions implemented in 2023 and the sale of the Company’s European staffing operations in January 2024.
“We look forward to welcoming MRP to the Kelly team in what is a transformational step forward on our journey to sharpen the Company’s focus on higher-margin, higher-growth specialty outcome-based and staffing services in North America, and global RPO and MSP solutions,” said Peter Quigley, president and chief executive officer, Kelly. “MRP’s portfolio of businesses are an exceptional fit for Kelly’s SET and OCG segments, adding extensive expertise and an established presence in attractive end-markets. Likewise, Kelly’s breadth of resources and culture of collaboration form a strong foundation upon which MRP will reach extraordinary new heights.”
“There are so many valuable and complementary aspects to this new partnership and both companies have a lot to learn and gain from each other,” said Beth Gilfeather, chief executive officer, MRP. “We are excited to begin this new chapter to become part of the exceptional Kelly story and are very motivated to be a driving force behind the significant growth goals that lie ahead.”
“We are proud to have partnered with MRP’s strong leadership team during an important period of growth and evolution,” said Drew Greenwood, managing director, Littlejohn. “During our ownership period, MRP executed on a number of organic and inorganic initiatives that positioned it as a premier talent solutions provider with particular strength and depth in the technology market. We wish the company continued success as part of Kelly moving forward.”
The acquisition of MRP will be the largest in Kelly’s history and follows eight acquisitions completed and integrated successfully since 2017 as part of the Company’s strategy to pursue inorganic investments in higher-margin, higher-growth specialties. Kelly’s inorganic strategy has been enabled by a series of strategic actions to unlock significant capital and optimize the Company’s operating model, including: selling its European staffing operations; monetizing non-core real estate holdings; unwinding its cross-shareholding arrangement with Persol, reducing its ownership interest in PersolKelly, its Asia-Pacific staffing joint venture; and selling its operations in Brazil and Russia.
The Company will provide additional details about this transaction during its upcoming first-quarter earnings conference call on May 9, 2024.
Houlihan Lokey is serving as financial advisor to Kelly with Jasso Lopez PLLC serving as its legal counsel. Robert W. Baird is serving as the financial advisor to MRP with Baker Hostetler serving as its legal counsel.
About Kelly®
Kelly Services, Inc. (Nasdaq: KELYA, KELYB) helps companies recruit and manage skilled workers and helps job seekers find great work. Since inventing the staffing industry in 1946, we have become experts in the many industries and local and global markets we serve. With a network of suppliers and partners around the world, we connect more than 500,000 people with work every year. Our suite of outsourcing and consulting services ensures companies have the people they need, when and where they are needed most. Headquartered in Troy, Michigan, we empower businesses and individuals to access limitless opportunities in industries such as science, engineering, technology, education, manufacturing, retail, finance, and energy. Revenue in 2023 was $4.8 billion. Learn more at kellyservices.com.
About Motion Recruitment Partners, LLC
Established in 1989 and headquartered in Boston, Massachusetts, Motion Recruitment Partners, LLC, is parent company to a group of leading global talent solution providers to include Motion Recruitment (IT Staffing & Managed Solutions), Motion Consulting Group (IT Consulting), Motion Telco (IT & Telecom Solutions), Tech in Motion (Tech Networking & Events program), TG Federal (Government IT Subcontracting), and Sevenstep® (RPO, MSP & TA Advisory/Consulting). Learn more at www.motionrecruitment.com, www.sevensteptalent.com, and www.tgfederal.com.
About Littlejohn & Co., LLC
Littlejohn & Co., LLC, is a Greenwich, Connecticut-based investment firm focused on private equity and debt investments primarily in growing middle-market industrial and services companies that can benefit from Littlejohn’s 25+ years of operational and sector expertise. With approximately $8 billion in regulatory assets under management, the firm seeks to build sustainable success for its portfolio companies through a disciplined approach to engineering change. For more information about Littlejohn, visit www.littlejohnllc.com.
Forward-Looking Statements
This release contains statements that are forward looking in nature and, accordingly, are subject to risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about Kelly’s financial expectations, are forward-looking statements. Factors that could cause actual results to differ materially from those contained in this release include, but are not limited to, (i) changing market and economic conditions, (ii) disruption in the labor market and weakened demand for human capital resulting from technological advances, loss of large corporate customers and government contractor requirements, (iii) the impact of laws and regulations (including federal, state and international tax laws), (iv) unexpected changes in claim trends on workers’ compensation, unemployment, disability and medical benefit plans, (v) litigation and other legal liabilities (including tax liabilities) in excess of our estimates, (vi) our ability to achieve our business’s anticipated growth strategies, (vi) our future business development, results of operations and financial condition, (vii) damage to our brands, (viii) dependency on third parties for the execution of critical functions, (ix) conducting business in foreign countries, including foreign currency fluctuations, (x) availability of temporary workers with appropriate skills required by customers, (xi) cyberattacks or other breaches of network or information technology security, and (xii) other risks, uncertainties and factors discussed in this release and in the Company’s filings with the Securities and Exchange Commission. In some cases, forward-looking statements can be identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. All information provided in this press release is as of the date of this press release and we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.
Reported net sales of $359 million, with gross margin expanding 120 basis points
On track to deliver over $20 million in cost savings from our multi-year cost savings program
Net operating cash flow improved $51 million, generated free cash flow of $26 million
Consolidated net leverage ratio of 3.5x at quarter-end
Loss per share of $(0.07); adjusted EPS of $0.03, in line with the Company’s outlook
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today reported financial results for the first quarter ended March 31, 2024.
“Our first quarter results demonstrate our commitment to improving profitability and cash flow generation as we work to overcome persistent consumer and business spending weakness. We generated higher free cash flow year over year, which allowed us to end the quarter with a leverage ratio of 3.5 times, which was a significant improvement over the prior year. I am proud of our team’s execution as we implemented our global restructuring and cost savings initiatives, which are already yielding benefits,” stated ACCO Brands’ President and Chief Executive Officer, Tom Tedford.
“We continue to invest in new product development, innovation, and other growth initiatives, while generating strong free cash flow and reducing our debt levels. Looking ahead, we remain focused on streamlining our operations and refining our strategy to enhance business performance and create long-term shareholder value. ” concluded Mr. Tedford.
First Quarter Results
Net sales were $358.9 million a 10.9 percent decline from $402.6 million in 2023. Favorable foreign exchange increased sales by $1.7 million, or 0.4 percent. Comparable sales decreased 11.3 percent. Both reported and comparable sales declines reflect softer global consumer and business demand for our office products and computer accessories, and from the exit of lower margin business.
Operating income was $5.9 million compared to $10.1 million in 2023. We incurred higher restructuring charges of $3.3 million in 2023 associated with our cost reduction and footprint rationalization programs primarily in Europe. Adjusted operating income was $16.2 million down from $24.3 million in 2023. Both reported and adjusted operating income declines reflect lower sales volumes, which more than offset moderating input costs and the cumulative effect of cost reduction initiatives and price increases.
Net loss was $6.3 million, or $(0.07) per share, compared with a net loss of $3.7 million, or $(0.04) per share, in 2023. Adjusted net income was $2.7 million compared with $8.5 million in 2023, and adjusted earnings per share were $0.03 per share compared with $0.09 per share in 2023.
Capital Allocation and Dividend
For the quarter, the Company significantly improved its operating cash flow to $28.2 million versus an outflow of $23.2 million in the prior year, driven primarily by working capital. Free cash flow was $25.9 million versus an outflow of $25.2 million in 2023. The Company’s consolidated leverage ratio as of March 31, 2024, was 3.5x, versus 4.3x at the end of Q1 of the prior year.
On April 26, 2024, ACCO Brands announced that its board of directors declared a regular quarterly cash dividend of $0.075 per share. The dividend will be paid on June 12, 2024, to stockholders of record at the close of business on May 17, 2024.
Business Segment Results
ACCO Brands Americas – First quarter segment net sales of $197.2 million decreased 14.3 percent from $230.0 million in the prior year, and comparable sales declined 15.3 percent. Both reported and comparable sales decreases reflect softer consumer and business demand, particularly for our office products and computer accessories, and from the exit of lower margin business. In Brazil, end of season for back-to-school sales were weaker than the prior year.
First quarter operating income was $6.1 million versus $12.3 million a year earlier. Adjusted operating income was $12.3 million, down from $18.7 million in the prior year. Both reported and adjusted operating income declines reflect lower volume and negative fixed cost leverage, partly offset by moderating input costs, cost reduction initiatives and lower SG&A expense.
ACCO Brands International – First quarter segment net sales of $161.7 million decreased 6.3 percent from $172.6 million in the prior year. Favorable foreign exchange increased sales by 0.4 percent. Comparable sales were $162.4 million, down 5.9 percent versus the prior year. Both reported and comparable sales decreases reflect reduced consumer and business demand for our office and computer accessories categories, partially mitigated by the benefit of price increases.
First quarter operating income was $12.8 million, an increase from $9.7 million in the prior year, primarily due to lower restructuring expense. Adjusted operating income of $16.9 million decreased from $17.5 million in the prior year. The decline in adjusted operating income was due to the lower sales volume, which more than offset moderating input costs and the cumulative benefit of pricing and cost actions.
Updated Full Year 2024 and Second Quarter Outlook
“With a demand environment for our categories that is slower to recover than anticipated, we have prudently tempered our full year 2024 outlook. We previously announced a multi-year, $60 million cost reduction program, with $20 million expected to be realized in 2024, with further cost savings initiatives under consideration. I am confident that we are taking the appropriate actions to maintain our gross margins, reset our cost structure and generate strong cash flows, while investing in product development and other important growth initiatives,” Tedford added.
For the full year, the Company expects reported sales to be down in the range of 5.0% to 7.0%. This reflects the lower reported sales for the first quarter and a more tempered demand view for the balance of the year. Full year adjusted EPS is expected to be within a range of $1.02 to $1.07. The Company is maintaining its 2024 free cash flow outlook of at least $120 million and a year-end consolidated leverage ratio of approximately 3.0x to 3.2x.
In the second quarter, the Company expects reported sales to be down in the range of 7.0% to 9.0% and adjusted EPS within a range of $0.30 to $0.33.
Webcast
At 8:30 a.m. ET on May 3, 2024, ACCO Brands Corporation will host a conference call to discuss the Company’s first quarter and full year 2024 results. The call will be broadcast live via webcast. The webcast can be accessed through the Investor Relations section of www.accobrands.com. The webcast will be in listen-only mode and will be available for replay following the event.
About ACCO Brands Corporation
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, and play. 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.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this earnings release to aid investors in understanding the Company’s performance. Each non-GAAP financial measure is defined and reconciled to its most directly comparable GAAP financial measure in the “About Non-GAAP Financial Measures” section of this earnings release.
Forward-Looking Statements
Statements contained herein, other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, strategies, business operations and similar matters, results of operations, liquidity and financial condition, and those relating to cost reductions and anticipated pre-tax savings and restructuring costs are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. These statements, which are generally identifiable by the use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “forecast,” “project,” “plan,” and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Forward-looking statements are subject to the occurrence of events outside the Company’s control and actual results and the timing of events may differ materially from those suggested or implied by such forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. Investors and others are cautioned not to place undue reliance on forward-looking statements when deciding whether to buy, sell or hold the Company’s securities.
Our outlook is based on certain assumptions which we believe to be reasonable under the circumstances. These include, without limitation, assumptions regarding the impact of inflation and global geopolitical and economic uncertainties and fluctuations in foreign currency exchange rates; and the other factors described below.
Among the factors that could cause our actual results to differ materially from our forward-looking statements are: a relatively limited number of large customers account for a significant percentage of our sales; sales of our products are affected by general economic and business conditions globally and in the countries in which we operate; risks associated with foreign currency exchange rate fluctuations; challenges related to the highly competitive business environment in which we operate; our ability to develop and market innovative products that meet consumer demands and to expand into new and adjacent product categories that are experiencing higher growth rates; the long-term impacts of the COVID-19 pandemic; our ability to successfully expand our business in emerging markets and the exposure to greater financial, operational, regulatory, compliance and other risks in such markets; the continued decline in the use of certain of our products; risks associated with seasonality; the sufficiency of investment returns on pension assets, risks related to actuarial assumptions, changes in government regulations and changes in the unfunded liabilities of a multi-employer pension plan; any impairment of our intangible assets; our ability to secure, protect and maintain our intellectual property rights, and our ability to license rights from major gaming console makers and video game publishers to support our gaming accessories business; our ability to successfully execute our multi-year restructuring and cost savings program and realize the anticipated benefits; continued disruptions in the global supply chain; risks associated with inflation and other changes in the cost or availability of raw materials, transportation, labor, and other necessary supplies and services and the cost of finished goods; risks associated with outsourcing production of certain of our products, information technology systems and other administrative functions; the failure, inadequacy or interruption of our information technology systems or its supporting infrastructure; risks associated with a cybersecurity incident or information security breach, including that related to a disclosure of personally identifiable information; our ability to grow profitably through acquisitions, and successfully integrate them; risks associated with our indebtedness, including limitations imposed by restrictive covenants, our debt service obligations, and our ability to comply with financial ratios and tests; a change in or discontinuance of our stock repurchase program or the payment of dividends; product liability claims, recalls or regulatory actions; the impact of litigation or other legal proceedings; the impact of additional tax liabilities stemming from our global operations and changes in tax laws, regulations and tax rates; our failure to comply with applicable laws, rules and regulations and self-regulatory requirements, the costs of compliance and the impact of changes in such laws; our ability to attract and retain qualified personnel; the volatility of our stock price; risks associated with circumstances outside our control, including those caused by public health crises, such as the occurrence of contagious diseases, severe weather events, war, terrorism and other geopolitical incidents; and other risks and uncertainties described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and in other reports we file with the Securities and Exchange Commission.
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
March 31,
2024
December 31,
2023
(in millions)
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
124.6
$
66.4
Accounts receivable, net
274.8
430.7
Inventories
348.8
327.5
Other current assets
49.6
30.8
Total current assets
797.8
855.4
Total property, plant and equipment
584.7
599.6
Less: accumulated depreciation
(422.1
)
(429.5
)
Property, plant and equipment, net
162.6
170.1
Right of use asset, leases
92.2
91.0
Deferred income taxes
99.0
104.7
Goodwill
577.1
590.0
Identifiable intangibles, net
797.9
815.7
Other non-current assets
17.0
17.9
Total assets
$
2,543.6
$
2,644.8
Liabilities and Stockholders’ Equity
Current liabilities:
Notes payable
$
—
$
0.2
Current portion of long-term debt
57.3
36.5
Accounts payable
170.1
183.7
Accrued compensation
33.3
53.3
Accrued customer program liabilities
73.4
104.0
Lease liabilities
20.6
20.5
Other current liabilities
118.6
143.8
Total current liabilities
473.3
542.0
Long-term debt, net
897.5
882.2
Long-term lease liabilities
77.8
76.8
Deferred income taxes
119.9
125.6
Pension and post-retirement benefit obligations
148.2
157.6
Other non-current liabilities
68.4
73.6
Total liabilities
1,785.1
1,857.8
Stockholders’ equity:
Common stock
1.0
1.0
Treasury stock
(47.0
)
(45.1
)
Paid-in capital
1,918.8
1,913.4
Accumulated other comprehensive loss
(544.6
)
(526.3
)
Accumulated deficit
(569.7
)
(556.0
)
Total stockholders’ equity
758.5
787.0
Total liabilities and stockholders’ equity
$
2,543.6
$
2,644.8
ACCO Brands Corporation and Subsidiaries
Consolidated Statements of Loss (Unaudited)
Three Months Ended
March 31,
(in millions, except per share data)
2024
2023
% Change
Net sales
$
358.9
$
402.6
(10.9)%
Cost of products sold
248.5
283.3
(12.3)%
Gross profit
110.4
119.3
(7.5)%
Operating costs and expenses:
Selling, general and administrative expenses
94.2
95.0
(0.8)%
Amortization of intangibles
10.6
10.9
(2.8)%
Restructuring
(0.3
)
3.3
NM
Total operating costs and expenses
104.5
109.2
(4.3)%
Operating income
5.9
10.1
(41.6)%
Non-operating expense (income):
Interest expense
13.3
13.9
(4.3)%
Interest income
(1.9
)
(2.4
)
(20.8)%
Non-operating pension expense
0.4
0.1
NM
Other (income) expense, net
(0.6
)
1.8
NM
Loss before income tax
(5.3
)
(3.3
)
60.6%
Income tax expense
1.0
0.4
NM
Net loss
$
(6.3
)
$
(3.7
)
70.3%
Per share:
Basic loss per share
$
(0.07
)
$
(0.04
)
75.0%
Diluted loss per share
$
(0.07
)
$
(0.04
)
75.0%
Weighted average number of shares outstanding:
Basic
95.7
94.9
Diluted
95.7
94.9
Cash dividends declared per common share
$
0.075
$
0.075
Statistics (as a % of Net sales, except Income tax rate)
Three Months Ended
March 31,
2024
2023
Gross profit (Net sales, less Cost of products sold)
30.8
%
29.6
%
Selling, general and administrative expenses
26.2
%
23.6
%
Operating income
1.6
%
2.5
%
Loss before income tax
(1.5
)%
(0.8
)%
Net loss
(1.8
)%
(0.9
)%
Income tax rate
(18.9
)%
(12.1
)%
ACCO Brands Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31,
(in millions)
2024
2023
Operating activities
Net loss
$
(6.3
)
$
(3.7
)
Loss on disposal of assets
—
1.1
Depreciation
7.4
9.0
Amortization of debt issuance costs
0.7
0.8
Amortization of intangibles
10.6
10.9
Stock-based compensation
5.1
5.6
Changes in operating assets and liabilities:
Accounts receivable
153.8
88.6
Inventories
(26.5
)
(25.0
)
Other assets
(18.6
)
3.6
Accounts payable
(12.7
)
(38.0
)
Accrued expenses and other liabilities
(76.2
)
(63.6
)
Accrued income taxes
(9.1
)
(12.5
)
Net cash provided (used) by operating activities
28.2
(23.2
)
Investing activities
Additions to property, plant and equipment
(2.3
)
(2.0
)
Net cash used by investing activities
(2.3
)
(2.0
)
Financing activities
Proceeds from long-term borrowings
61.4
101.1
Repayments of long-term debt
(18.9
)
(10.0
)
Repayments of notes payable, net
(0.2
)
(1.2
)
Dividends paid
(7.2
)
—
Payments related to tax withholding for stock-based compensation
(1.9
)
(1.7
)
Net cash provided by financing activities
33.2
88.2
Effect of foreign exchange rate changes on cash and cash equivalents
(0.9
)
1.9
Net increase in cash and cash equivalents
58.2
64.9
Cash and cash equivalents
Beginning of the period
$
66.4
$
62.2
End of the period
$
124.6
$
127.1
About Non-GAAP Financial Measures
We explain below how we calculate each of our non-GAAP financial measures. This is followed by a reconciliation of our current period and historical non-GAAP financial measures to the most directly comparable GAAP financial measures.
We use our non-GAAP financial measures both to explain our results to stockholders and the investment community and in the internal evaluation and management of our business. We believe our non-GAAP financial measures provide management and investors with a more complete understanding of our underlying operational results and trends, facilitate meaningful period-to-period comparisons and enhance an overall understanding of our past and future financial performance.
Our non-GAAP financial measures exclude certain items that may have a material impact upon our reported financial results such as restructuring charges, the impact of foreign currency exchange rate fluctuations, unusual tax items, goodwill impairment charges, and other non-recurring items that we consider to be outside of our core operations. On an interim basis, we also calculate adjusted income tax expense using our estimated annual income tax rate. These measures should not be considered in isolation or as a substitute for, or superior to, the directly comparable GAAP financial measures and should be read in connection with the Company’s financial statements presented in accordance with GAAP.
Our non-GAAP financial measures include the following:
Comparable Sales: Represents net sales excluding the impact of material acquisitions, if any, with current-period foreign operation sales translated at prior-year currency rates. We believe comparable sales are useful to investors and management because they reflect underlying sales and sales trends without the effect of material acquisitions and fluctuations in foreign exchange rates and facilitate meaningful period-to-period comparisons. We sometimes refer to comparable sales as comparable net sales.
Adjusted Operating Income (Loss)/Adjusted Income (Loss) Before Taxes/Adjusted Net Income (Loss)/Adjusted Net Income (Loss) Per Diluted Share:Represents operating income (loss), income (loss) before taxes, net income (loss), and net income (loss) per diluted share excluding restructuring and goodwill impairment charges, the amortization of intangibles, non-recurring items, other income/expense, adjustments to reflect the estimated annual tax rate and discrete income tax adjustments, including income tax related to the foregoing. We believe these adjusted non-GAAP financial measures are useful to investors and management because they reflect our underlying operating performance before items that we consider to be outside our core operations and facilitate meaningful period-to-period comparisons. Senior management’s incentive compensation is derived, in part, using adjusted operating income and adjusted net income per diluted share, which is derived from adjusted net income. We sometimes refer to adjusted net income per diluted share as adjusted earnings per share or adjusted EPS.
Adjusted Income Tax Expense:Represents income tax expense calculated using the estimated annual income tax rate and excludes the tax effect of the items that have been excluded from adjusted income before taxes, unusual income tax items such as the impact of tax audits and changes in laws, significant reserves for cash repatriation, excess tax benefits/losses, and other discrete tax items. We believe our adjusted income tax expense is useful to investors because it reflects our income tax calculated using the estimated annual tax rate before discrete items that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons.
Adjusted EBITDA:Represents net income excluding the effects of depreciation, stock-based compensation expense, amortization of intangibles, interest expense, net, other (income) expense, net, and income tax expense, restructuring and goodwill impairment charges, and other non-recurring items. We believe adjusted EBITDA is useful to investors because it reflects our underlying cash profitability and adjusts for certain non-cash charges and other items that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons. In addition, this calculation of adjusted EBITDA is used in our loan agreement to calculate our leverage ratio covenant.
Free Cash Flow:Free cash flow represents cash flow from operating activities less cash used for additions to property, plant and equipment. We believe free cash flow is useful to investors because it measures our available cash flow for paying dividends, funding strategic material acquisitions, reducing debt, and repurchasing shares.
Consolidated Leverage Ratio:Represents balance sheet debt plus debt origination costs and less any cash and cash equivalents divided by adjusted EBITDA. We believe that consolidated leverage ratio is useful to investors since the company has the ability to, and may decide to use, a portion of its cash and cash equivalents to retire debt.
We also provide forward-looking non-GAAP comparable sales, adjusted earnings per share, free cash flow, adjusted EBITDA and historical and forward-looking consolidated leverage ratio. We do not provide a reconciliation of these forward-looking and historical non-GAAP measures to GAAP because the GAAP financial measure is not currently available and management cannot reliably predict all the necessary components of such non-GAAP measures without unreasonable effort or expense due to the inherent difficulty of forecasting and quantifying certain amounts that are necessary for such a reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, the variability of our tax rate and the impact of foreign currency fluctuation and material acquisitions, and other charges reflected in our historical results. The probable significance of each of these items is high and, based on historical experience, could be material.
ACCO Brands Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP Information (Unaudited)
(In millions, except per share data)
The following tables set forth a reconciliation of certain Consolidated Statements of Loss information reported in accordance with GAAP to Adjusted Non-GAAP Information for the three months ended March 31, 2024 and 2023.
Three Months Ended March 31, 2024
Operating
Income
% of
Sales
(Loss) Income
before Tax
% of
Sales
Income Tax
Expense (B)
Tax Rate
Net (Loss)
Income
% of Sales
Reported GAAP
$5.9
1.6 %
$(5.3)
(1.5)%
$1.0
(18.9)%
$(6.3)
(1.8)%
Reported GAAP diluted loss per share (EPS)
$(0.07)
Restructuring
(0.3)
(0.3)
(0.1)
(0.2)
Amortization of intangibles
10.6
10.6
2.9
7.7
Net operating tax gains
(A)
—
(1.2)
(0.4)
(0.8)
Discrete tax items and adjustments to annual tax rate
(B)
—
—
(2.3)
2.3
Adjusted Non-GAAP
$16.2
4.5 %
$3.8
1.1 %
$1.1
29.0 %
$2.7
0.8 %
Adjusted net income per diluted share (Adjusted EPS)
$0.03
Three Months Ended March 31, 2023
Operating
Income
% of
Sales
Income (Loss)
before Tax
% of
Sales
Income Tax
Expense (B)
Tax Rate
Net (Loss)
Income
% of Sales
Reported GAAP
$10.1
2.5 %
$(3.3)
(0.8)%
$0.4
(12.1)%
$(3.7)
(0.9)%
Reported GAAP diluted loss per share (EPS)
$(0.04)
Restructuring
3.3
3.3
0.9
2.4
Amortization of intangibles
10.9
10.9
2.9
8.0
Other asset write-off
(C)
—
1.1
0.3
0.8
Discrete tax items and adjustments to annual tax rate
(B)
—
—
(1.0)
1.0
Adjusted Non-GAAP
$24.3
6.0 %
$12.0
3.0 %
$3.5
29.4 %
$8.5
2.1 %
Adjusted net income per diluted share (Adjusted EPS)
$0.09
Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Loss to Adjusted EBITDA (Unaudited)
A.
Represents certain indirect tax credits in Brazil and losses related to the additional recorded reserves for certain operating taxes.
B.
The income tax impact of the non-GAAP adjustments and other discrete tax items. The Company adjusts its tax rate to 29.0% which represents its full year non-GAAP estimated annual tax rate as of March 31, 2024. The Company’s full year non-GAAP estimated annual effective tax rate remains subject to variation from the mix of earnings across the Company’s operating jurisdictions.
C.
Represents the write off of assets related to a capital project.
ACCO Brands Corporation and Subsidiaries
Reconciliation of Net Loss to Adjusted EBITDA (Unaudited)
(In millions)
The following table sets forth a reconciliation of net loss reported in accordance with GAAP to Adjusted EBITDA.
Three months ended
March 31,
2024
2023
% Change
Net loss
$(6.3)
$(3.7)
70.3 %
Stock-based compensation
5.1
5.6
(8.9)%
Depreciation
7.4
9.0
(17.8)%
Amortization of intangibles
10.6
10.9
(2.8)%
Restructuring credits
(0.3)
3.3
(109.1)%
Interest expense, net
11.4
11.5
(0.9)%
Other (income) expense, net
(0.6)
1.8
(133.3)%
Income tax expense
1.0
0.4
NM
Adjusted EBITDA (non-GAAP)
$28.3
$38.8
(27.1)%
Adjusted EBITDA as a % of Net Sales
7.9 %
9.6 %
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Unaudited)
(In millions)
The following table sets forth a reconciliation of net cash provided by operating activities reported in accordance with GAAP to Free Cash Flow.
For the three months
ended March 31, 2024
For the three months
ended March 31, 2023
Net cash provided by operating activities
$28.2
$(23.2)
Net (used) provided by:
Additions to property, plant and equipment
(2.3)
(2.0)
Free Cash Flow (non-GAAP)
$25.9
$(25.2)
ACCO Brands Corporation and Subsidiaries
Supplemental Business Segment Information and Reconciliation (Unaudited)
(In millions)
2024
2023
Changes
Reported
Net Sales
Reported
Operating
Income
(Loss)
Adjusted
Items
Adjusted
Operating
Income
(Loss)
Adjusted
Operating
Income
(Loss)
Margin
Reported
Net Sales
Reported
Operating
Income
(Loss)
Adjusted
Items
Adjusted
Operating
Income
(Loss)
Adjusted
Operating
Income
(Loss)
Margin
Net
Sales $
Net
Sales %
Adjusted
Operating
Income
(Loss) $
Adjusted
Operating
Income
(Loss) %
Adjusted
Margin
Points
Q1:
ACCO Brands Americas
$197.2
$6.1
$6.2
$12.3
6.2%
$230.0
$12.3
$6.4
$18.7
8.1%
$(32.8)
(14.3)%
$(6.4)
(34.2)%
(190)
ACCO Brands International
161.7
12.8
4.1
16.9
10.5%
172.6
9.7
7.8
17.5
10.1%
(10.9)
(6.3)%
(0.6)
(3.4)%
40
Corporate
—
(13.0)
—
(13.0)
—
(11.9)
—
(11.9)
—
(1.1)
Total
$358.9
$5.9
$10.3
$16.2
4.5%
$402.6
$10.1
$14.2
$24.3
6.0%
$(43.7)
(10.9)%
$(8.1)
(33.3)%
(150)
See “Notes to Reconciliations of GAAP to Adjusted Non-GAAP Information and Net Loss to Adjusted EBITDA (Unaudited)” for further information regarding adjusted items.
ACCO Brands Corporation and Subsidiaries
Supplemental Net Sales Change Analysis (Unaudited)
% Change – Net Sales
$ Change – Net Sales (in millions)
GAAP
Non-GAAP
GAAP
Non-GAAP
Net Sales Change
Currency Translation
Comparable Sales Change (A)
Net Sales Change
Currency Translation
Comparable Sales Change (A)
Comparable Sales
Q1 2024:
ACCO Brands Americas
(14.3)%
1.0 %
(15.3)%
$(32.8)
$2.4
$(35.2)
$194.8
ACCO Brands International
(6.3)%
(0.4)%
(5.9)%
(10.9)
(0.7)
(10.2)
162.4
Total
(10.9)%
0.4 %
(11.3)%
$(43.7)
$1.7
$(45.4)
$357.2
(A) Comparable sales represents net sales excluding material acquisitions, if any, and with current-period foreign operation sales translated at the prior-year currency rates.
Haynes International, Inc. is a leading developer, manufacturer and marketer of technologically advanced, nickel and cobalt-based high-performance alloys, primarily for use in the aerospace, industrial gas turbine and chemical processing industries.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Merger proposal receives scrutiny in Austria. The Austrian Federal Competition Authority (AFCA) is of the opinion that the proposed merger between Haynes International and North American Stainless, Inc., a wholly owned subsidiary of Acerinox S.A., should not receive clearance in its current form but should be subjected to a detailed examination by the Austrian Cartel Court. The AFCA filed an application with the Austrian Cartel Court for a Phase II in-depth examination. Like Haynes, Acerinox is active in the field of specialty alloys through its VDM Metals subsidiary.
What is the problem? Based on the release, the AFCA is concerned that the merger would further strengthen Acerinox’s market position in the nickel alloy products sector which could have a negative impact on competition and lead to higher prices.
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.
DLH delivers improved health and readiness solutions for federal programs through research, development, and innovative care processes. The Company’s experts in public health, performance evaluation, and health operations solve the complex problems faced by civilian and military customers alike, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With over 2,300 employees dedicated to the idea that “Your Mission is Our Passion,” DLH brings a unique combination of government sector experience, proven methodology, and unwavering commitment to public health to improve the lives of millions. For more information, visit www.DLHcorp.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.
Government Budgets. With the budgets for the 2024 fiscal year passed, DLH is prepared to capitalize on the expected increased bidding environment, in our view. The Company has roughly $500 million in outstanding bids, and we expect to see awards to be announced throughout the fiscal year.
Increasing Cash Flow. The Company generated $10.3 million in cash from operations year-to-date, above 2023’s cash generation of $6.9 million. The result is from an improvement in the Company’s Day Sales Outstanding, which improved to 50 days from 61 days last year. Improved cash collections corresponds to quicker debt reduction, in our view.
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.
MCLEAN, Va., May 2, 2024 /PRNewswire/ — V2X, Inc. (NYSE: VVX) is proud to announce it has been awarded a firm-fixed price contract valued at $88 million, including option periods. This contract supports the operation and maintenance of Navy communication, electronic, and computer systems in support of the Naval Computer and Telecommunications Area Master Station Pacific (NCTAMS PAC).
The NCTAMS PAC serves as the principal Navy hub for communications in the Pacific, providing crucial command, control, communications, computers, and intelligence support to U.S. and allied forces across the Pacific and Indian Oceans.
“This significant award not only enables V2X to continue our crucial support of the Navy’s global communication networks, but it also highlights our expanding footprint and growing solutions in the Pacific region.” said Chuck Prow President and Chief Executive Officer of V2X. “We are grateful for the Navy’s trust in selecting us and look forward to delivering operational excellence while improving the security and efficiency of Navy communications.”
Work under the contract will be primarily performed in Oahu, Hawaii, and Geraldton, Australia and runs through October 2029, including all option periods.
The contract includes a 12-month base period, four 12-month options, and a six-month extension option, as per federal regulations. The full execution of this contract, through October 2029, underscores V2X’s commitment to long-term strategic support for the U.S. Navy’s operational capabilities.
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.
Media Contact Angelica Spanos Deoudes Director, Corporate Communications Angelica.Deoudes@goV2X.com 571-338-5195
Investor Contact Mike Smith, CFA Vice President, Treasury, Corporate Development and Investor Relations IR@goV2X.com 719-637-5773
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.
New Credit Agreement. Last week, Great Lakes entered into an $150 million 5-year, senior secured second-lien credit agreement with Guggenheim Credit Funding, LLC. The new agreement provides the Company with flexibility to fund its new vessel build out program as well as optionality on borrowing, although the interest rate is higher than the existing debt.
Use of Funds. The Company borrowed $100 million under the agreement on the closing date, which was used to repay amounts outstanding under the existing ABL. Great Lakes has the option to draw an additional $50 million for a period of 12 months following the closing date of the initial loan. The optional $50 million, if drawn, will be used to fund future new build payments, ongoing working capital, and other general corporate purposes.
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).
DLH delivers improved health and readiness solutions for federal programs through research, development, and innovative care processes. The Company’s experts in public health, performance evaluation, and health operations solve the complex problems faced by civilian and military customers alike, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With over 2,300 employees dedicated to the idea that “Your Mission is Our Passion,” DLH brings a unique combination of government sector experience, proven methodology, and unwavering commitment to public health to improve the lives of millions. For more information, visit www.DLHcorp.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.
Past the Continuing Resolution. With the Continuing Resolution in the rear view mirror and building momentum in government decision making, DLH is positioned to realize any opportunities for awards throughout 2024, in our view. With the more positive environment, DLH already experienced an increase in its backlog, up $80 million sequentially, and we believe there is still more to come.
2Q Results. Revenue for the second quarter was $101.0 million, an increase from $99.4 million last year and above our estimate of $99 million. Net income totaled $1.8 million, or $0.12 per diluted share, versus $0.8 million, or $0.06 per diluted share, for 2Q23 and in-line with our estimate. EBITDA for 2Q24 was approximately $10.2 million versus $10.5 million in the prior year, or a margin of 10.1% and 10.5%, respectively, slightly below our $11.3 million projection.
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.
Revenue Grows and Backlog Strengthens as Debt Reduction Continues
ATLANTA, May 01, 2024 (GLOBE NEWSWIRE) — DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading provider of science research and development, systems engineering and integration, and digital transformation and cyber security solutions to federal agencies, today announced financial results for its fiscal second quarter ended March 31, 2024.
Second Quarter Highlights
Second quarter revenue was $101.0 million in fiscal 2024 versus $99.4 million in fiscal 2023
Earnings were $1.8 million, or $0.12 per diluted share, for the second quarter of fiscal 2024 versus $0.8 million, or $0.06 per diluted share, for the second quarter of fiscal 2023
Earnings before interest, taxes, depreciation and amortization (“EBITDA”) were $10.2 million for the second quarter of fiscal 2024 as compared to $10.5 million for the second quarter of fiscal 2023.
Total debt was $170.8 million as of March 31, 2024 versus $174.4 million as of December 31, 2023
Contract backlog was $736.2 million as of March 31, 2024 versus $653.5 million as of December 31, 2023.
Management Discussion “I am very pleased to announce that, with the Continuing Resolution behind us and decision-making in Washington getting back on track, we posted both revenue and backlog growth during the quarter — positioning us well for the remainder of fiscal 2024,” said Zach Parker, DLH President and Chief Executive Officer. “Revenue rose to $101.0 million, up slightly year-over-year, and our backlog climbed more than $80 million sequentially from the end of the first quarter, to $736.2 million. Our bottom line also improved over fiscal 2023 results, reflecting the positive impact of focusing cash flow on de-levering our balance sheet. We were proud to announce renewal contract awards with the National Cancer Institute and the National Institute on Drug Abuse as we were selected to continue supporting their critical missions and potentially increase our presence at each institute through significant contract provisions for optional IT services. Over the past quarter we saw momentum building in government decision making and, with an active pipeline of opportunities, we expect to deliver further backlog gains and top line growth going forward. This should position us well for fiscal 2025 and beyond, while our ongoing debt reduction strategy continues to enhance underlying performance and shareholder value.
“With respect to the VA CMOP program, as reported during the quarter, the VA issued notices of intent to award short term contracts for each of the CMOP locations. They subsequently cancelled those notices and issued us a new contract to provide services while the procurements for new five-year contracts are evaluated and awarded. The contract has a ceiling value of $200 million, with initial tasking through July 31, 2024.”
Results for the Three Months Ended March 31, 2024 Revenue for the second quarter of fiscal 2024 was $101.0 million versus $99.4 million in fiscal 2023, reflecting growth across the Company’s programs, particularly in public health and IT services offset in part by national security contracts converting to small business set-aside companies.
Income from operations was $5.9 million versus $6.0 million in the fiscal 2023 second quarter and, as a percentage of revenue, the Company reported operating margin of 5.9% in fiscal 2024 second quarter versus 6.0% in the prior-year period. For the quarter, general and administrative costs increased as a percentage of revenue to 11.6% from 10.8%, primarily due to an increase in legal costs associated with customer procurements and strategic corporate planning costs.
Interest expense was $4.2 million in the fiscal second quarter of 2024 versus $4.8 million in the prior-year period, reflecting lower debt outstanding due to the Company’s use of cash flow generation to de-lever the balance sheet. Income before income taxes was $1.8 million for the second quarter this year versus $1.2 million in fiscal 2023, representing 1.7% and 1.2% of revenue, respectively, for each period.
For the three months ended March 31, 2024 and 2023, DLH recorded a $(0.1) million and $0.4 million provision for income tax expense, respectively, with the lower tax in fiscal 2024 reflecting the beneficial impact of stock based compensation expense as options are exercised. The Company reported net income of approximately $1.8 million, or $0.12 per diluted share, for the second quarter of fiscal 2024 versus $0.8 million, or $0.06 per diluted share, for the second quarter of fiscal 2023. As a percentage of revenue for the second quarters of fiscal 2024 and 2023, net income was 1.8% and 0.8%, respectively.
On a non-GAAP basis, EBITDA for the three months ended March 31, 2024 was approximately $10.2 million versus $10.5 million in the prior-year period, or 10.1% and 10.5% of revenue, respectively.
Key Financial Indicators During the second quarter of fiscal 2024, DLH generated $5.2 million in operating cash. As of March 31, 2024 the Company had cash of $0.2 million and debt outstanding under its credit facilities of $170.8 million versus cash of $0.2 million and debt outstanding of $179.4 million as of September 30, 2023. The debt reduction of $3.6 million was all voluntary prepayments applied to floating rate debt. The Company expects to reduce its total debt balance to between $157.0 million and $153.0 million by the end of fiscal 2024.
As of March 31, 2024 total backlog was approximately $736.2 million, including funded backlog of approximately $106.9 million and unfunded backlog of $629.3 million.
Conference Call and Webcast Details DLH management will discuss second quarter results and provide a general business update, including current competitive conditions and strategies, during a conference call beginning at 10:00 AM Eastern Time tomorrow, May 2, 2024. Interested parties may listen to the conference call by dialing 888-347-5290 or 412-317-5256. Presentation materials will also be posted on the Investor Relations section of the DLH website prior to the commencement of the conference call.
A digital recording of the conference call will be available for replay two hours after the completion of the call and can be accessed on the DLH Investor Relations website or by dialing 877-344-7529 and entering the conference ID 2520402.
About DLH
DLH (NASDAQ: DLHC) enhances technology, public health, and cyber security readiness missions through science, technology, cyber, and engineering solutions and services. Our experts solve some of the most complex and critical missions faced by federal customers, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With over 3,000 employees dedicated to the idea that “Your Mission is Our Passion,” DLH brings a unique combination of government sector experience, proven methodology, and unwavering commitment to innovative solutions to improve the lives of millions. For more information, visit www.DLHcorp.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or DLH`s future financial performance. Any statements that refer to expectations, projections or other characterizations of future events or circumstances or that are not statements of historical fact (including without limitation statements to the effect that the Company or its management “believes”, “expects”, “anticipates”, “plans”, “intends” and similar expressions) should be considered forward looking statements that involve risks and uncertainties which could cause actual events or DLH’s actual results to differ materially from those indicated by the forward-looking statements. Forward-looking statements in this release include, among others, statements regarding estimates of future revenues, operating income, earnings and cash flow. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Our actual results may differ materially from such forward-looking statements made in this release due to a variety of factors, including: the risk that we will not realize the anticipated benefits ofacquisitions (including anticipated future financial performance and results); the diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations; the inability to retain employees and customers; contract awards in connection with re-competes for present business and/or competition for new business; our ability to manage our debt obligations; compliance with bank financial and other covenants; changes in client budgetary priorities; government contract procurement (such as bid and award protests, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; the impact of inflation and higher interest rates; and other risks described in our SEC filings. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s periodic reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as well as subsequent reports filed thereafter. The forward-looking statements contained herein are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business.
Such forward-looking statements are made as of the date hereof and may become outdated over time. The Company does not assume any responsibility for updating forward-looking statements, except as may be required by law.
