reports
- Doug Lane
3QFY24 Profit Upside on Modest Sales Shortfall; Raising FY24 EBITDA bu...
3QFY24 EPS was $0.21 versus a depressed $0.08 in 3QFY23 and above our $0.16 estimate. 3QFY24 EBITDA of $5.1 million beat our $4.6 million estimate and was up sharply from $3.3 million a year ago. EBITDA margin of 10.5% exceeded our 8.7% estimate, driven primarily by lower commissions and incentives as a percentage of sales than we expected (210 bps), as well as lower SG&A (70 bps). This was partially offset by gross margin of 78.9%, which was below our 80.0% estimate and 80.2% in the year-ago ...
- John Roy
- Ph.D
1Q24 Earnings Weak on 6 GHz Delay; 2H24 Expectations for Growth and Re...
Cambium Networks (CMBM) reported earnings on May 9 that came in below our expectations (we were the lowest on the Street), mainly due to a delay in FTC approval of 6 GHz spectrum. This also hit gross margin, which came in at 22.7%. Company expectations are for a better 2Q24 and 2H24, but with continued challenges in inventory and the move to 6 GHz. The company did see a recovery in the enterprise market in 1Q24, but not enough to offset the weakness in 6 GHz. The stock dropped 13% in the afterma...
- Dmitry Silversteyn
Solid Start to the Year and Progress on Asset Transformation
1Q24 performance ahead of expectations. RYAM reported 1Q24 results that included EPS of ($0.02) versus consensus of ($0.10) and our estimate of ($0.19). While sales of $388 million fell short of our estimate of $402 million and consensus of $430 million, tight cost controls, lower raw material and transportation costs, and improved operating efficiencies drove EBITDA of $52 million versus our estimate of $39 million and consensus of $49 million. EBITDA guidance maintained, FCF guidance increased...
- Robert Sassoon
Shroom Shmooz
ICER pours cold water on MAPS’ MDMA-AT candidate for treating PTSD. In March, the Institute for Clinical and Economic Review (ICER) published its draft evidence report on MAPS’ (aka Lykos Therapeutics) Phase III clinical trials. The draft report, which is not the final version, controversially questions the integrity of the studies and validity of MAPS’ reported results. Thus, the draft evidence report goes against the overwhelming enthusiasm for the trial results from mental health practitioner...
- Jesse Redmond
Water Tower Hour Recap
Poseidon co-founders Emily and Morgan Paxhia joined us on the Water Tower Hour podcast to discuss the rescheduling news. Those interested can listen to this podcast on Apple Podcasts, Spotify, or on our website. On April 30, 2024, the DEA reportedly agreed with the HHS recommendation to reclassify cannabis from Schedule I to Schedule III. Moving to Schedule III eliminates the 280E tax burden that prevents US plant-touching operators from deducting ordinary expenses such as rent and salaries. It ...
- Peter Gastreich
- Shawn Severson
1Q24 Results: Share Repurchase Underway
Gevo has begun repurchasing shares under the company’s previously announced program. The company has so far repurchased 5.5 million shares for $3.7 million, leaving $21.3 million available for repurchases. Gevo revised spending on its Net-Zero 1 plant project. The expected spending required to reach financial close was reduced from $125-175 million to $90-125 million. This followed negotiations with EPC and wind/hydrogen equipment providers. Gevo expects to fund its Net-Zero 1 project with exist...
- Jesse Redmond
Announces Debt Restructuring, Settlement for Equity, and Equity Offeri...
LEEF Brands (CSE: LEEF, OTCQX: LEEEF) is a scaled, vertically integrated operator in California. It holds the largest cultivation permit in Santa Barbara County, owns LEEF Labs, one of the state’s largest manufacturing companies, and has The Leaf dispensary in Palm Springs. The company recently successfully restructured its debt. LEEF Brands agreed to settle for equity a portion of its outstanding 11% convertible debentures due in 2024 into units of the company and extended the maturity of the r...
- Peter Gastreich
- Shawn Severson
4Q23 Results: Finance Income Continues Uptrend
RE Royalties reported its 4Q23 results. During the conference call hosted by management, the company said it continues to see substantial new quality investment opportunities, including solar projects in Asia. The company also mentioned a potential “tidal wave” in EV battery charging and storage opportunities in North America. The company reported 4Q23 revenue of C$2.6 million, up 64.7% Y/Y. Finance income was the key driver, up C$1.1 million Y/Y to C$2.4 million during the quarter due to invest...
- Thierry Wuilloud
Solid Top-Line Momentum Continues in 1Q24
Gaia reported strong 1Q24 results, with revenue of $21.7 million (up 11%), 33,000 net member additions for a total membership count of 839,000 (all-time high), and strong operating cash flow of $5.9 million. International revenue growth was particularly strong at 20.4%, compared with respectable US growth of 3.7%. Member acquisition costs decreased 10%, partly as a result of a focus on direct-to-paid marketing campaigns, whereby free trial periods are replaced by special incentives to lock in lo...
- Jesse Redmond
The Highlights
This week, the AP reported the DEA has agreed with the HHS recommendation to move cannabis from Schedule I to Schedule III. This would remove the 280E tax burden for plant-touching operators, allow for meaningful medical research, and attract new investors. Read the details about the announcement in our DEA Signs Off on Schedule III update note. Link in our full report. The US cannabis MSOS ETF gained 10.14% this week, while the global YOLO ETF climbed 7.67%. Schedule III benefits US plant-touch...
- Brian Gordon
- Budd Bugatch
Furniture/Furnishings Weekly
It was a mixed week in stocks, with most Water Tower Research furniture/furnishings indexes outperforming (with Residential the weak spot following LEG’s dividend cut). Our Home Goods Retailers Index (+6.0%) significantly outperformed the broader market (+0.2% to +1.0%) as well as our Mass Retailers Index (+1.8%) and our Commercial/Contract Furniture Index (+1.6%). Our Residential Manufacturers & Suppliers Index declined 0.9%, driven in part by Leggett & Platt’s steep 23.9% sell-off following it...
- Jesse Redmond
Touring LEEF Labs' Extraction Facility
LEEF Brands is a scaled, vertically integrated operator in the world’s largest cannabis market. California is a dominant force in cannabis. With $4.6 billion in sales in the last year, California represents about 15% of the $30 billion US industry. It’s not only the leader in size, but also in quality and culture. The company is vertically integrated, which enhances margins and provides greater control of the supply chain. Scale and vertical integration are key ingredients to winning in Californ...
- Dmitry Silversteyn
Water Tower Hour Recap
BioLargo CEO Dennis Calvert recently joined us on the Water Tower Hour podcast to discuss the company’s business model and strategy. Those interested can listen to this podcast on Apple Podcasts, Spotify, or on our website. Links are accessible in our full report. Calvert highlighted BioLargo’s 15-year investment in building science- and engineering-based innovation engines that are now powering the commercialization of several novel technologies to tackle some of humanity’s most intractable pro...
- Peter Gastreich
- Shawn Severson
Fireside Chat Introduces New CEO and the Company's Competitive Servici...
We recently hosted Chris Hayes, the new CEO at Spruce Power, for our first fireside chat with the company. Spruce is a leading owner-operator in residential solar. We discussed the CEO transition, the company’s competitive advantages, including its unique integrated servicing platform, capital-light strategy, opportunistic approach to M&A, and other topics. This report contains a transcript of the fireside chat from April 26, 2024, which can be accessed on demand. The link is accessible in our f...
- Brian Gordon
- Budd Bugatch
Culp to Restructure Mattress Division, Eliminate Excess Capacity, Give...
After Wednesday’s market close, Culp announced aggressive actions to ‘right-size’ capacity in CHF, its Culp Home Fashions (CHF) segment. CHF is the market leader and serves the mattress/bedding fabric market. In the face of persisting weak end market demand for mattresses, Culp initiated restructuring initiatives to right-size CHF capacity to match industry conditions for the foreseeable future. These actions will evolve during FY25 (began May). The bulk of the ~$8MM in planned restructuring cha...
- Jesse Redmond
DEA Signs Off on Schedule III
On April 30, 2024, the DEA agreed with the HHS recommendation to reclassify cannabis from Schedule I to Schedule III. The news drove cannabis stocks higher, with the US cannabis MSOS ETF gaining 24.83% on record-high volume of 50.55 million shares. With more than $12 million in inflows and share price appreciation, the ETF gained more than $280 million in AUM and reached a new all-time high in assets. Moving to Schedule III eliminates the 280E tax burden that prevents US plant-touching operators...
- Jesse Redmond
Outperforming in Nevada; Expanding Nationally
CLS Holdings is a vertically integrated cannabis company with core operations in Nevada. Nevada is the 32nd most populous state with 3.14 million residents. The state had 40.8 million visitors in 2023, ranking it fifth worldwide in tourism. Nevada ranks second in cannabis sales per capita, driven by the large number of tourists. The company owns and operates Oasis Cannabis Dispensary, a popular retail cannabis store for locals and visitors. It is a ~2,500-square-foot recreational and medical dis...
- Graham Mattison
Continued Execution Across All Projects; Cash Flow Growing; Multiple P...
Recent update highlights a proven and replicable cash-generating business model. In the two-plus years since its founding, Base Carbon has successfully sourced, invested, and developed three projects that are on time, on budget, and are either producing credits or will be in the coming quarters. Credit sales from Vietnam have already generated ~$18 million in cash, Rwanda has produced its first credits, and the Indian ARR project is on track to deliver its first credits in early 2025. Potentia...
- Jeff Robertson
Diversified Asset Portfolio Supports Free Cash Flow
A diverse mix of producing assets in Gabon, Egypt, and Canada, coupled with future development projects in Equatorial Guinea and Cote d’Ivoire, positions VAALCO with an asset base that could generate substantial free cash flow to reinvest for growth and continue returning cash to shareholders in the coming years. VAALCO closed the Svenska acquisition on April 30, 2024, for $40.2 million in cash. The primary asset is a 27.39% non-operated working interest in the deepwater producing Baobab field i...
- Brian Gordon
- Budd Bugatch
Revising FY24 EPS Estimates Following Strong 1Q EPS Beat and Continued...
In the wake of HNI’s strong 1Q margin performance, we are revising our FY24 and out-year consolidated revenue and EPS estimates (see Figure 1). In its release and earnings call, management exuded confidence that margins should continue to expand through FY24 given the combined effects of price/cost gains, productivity improvements, simplification/streamlining initiatives, and accretion from the mid-2023 KII acquisition. Our new estimates reflect better margins, with adjustments accounting for a...
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