Daily Stock Update – September 8, 2023

Welcome back to another daily update on the stocks I own! Today, I will be discussing the recent quarterly results of some of the companies in my portfolio. It’s always exciting to see how the companies I invest in are performing, so let’s dive into the details and analyze their performance in the third and second quarters of fiscal year 2023

Hurco Companies, Inc. Reports Decrease in Sales for Q3 2023

Hurco Companies, Inc. (Nasdaq: HURC), a leading global provider of machine tools, recently released its financial results for the third fiscal quarter ended July 31, 2023. The company reported a decline in net income and sales compared to the same period last year.

During the third quarter of fiscal year 2023, Hurco recorded a net income of $260,000 and earnings of $0.04 per diluted share. This is a decrease from the net income of $1,238,000 and earnings of $0.18 per diluted share reported in the corresponding period of fiscal year 2022. Over the nine months of fiscal year 2023, Hurco reported a net income of $1,967,000, or $0.30 per diluted share, compared to $6,802,000, or $1.01 per diluted share, for the same period last year.

Sales and service fees for the third quarter of fiscal year 2023 were $53,201,000, experiencing an 8% decrease, or $4,439,000, compared to the corresponding prior year period. The decline in sales was primarily driven by softening conditions in major machine tool markets such as the United States, China, and Germany. However, smaller European markets, including Italy, the United Kingdom, and France, saw higher sales due to an increased demand for higher-performance VMX and five-axis machines.

Greg Volovic, the Chief Executive Officer of Hurco, acknowledged the challenging market conditions but highlighted some positive developments. He mentioned the improved orders and sales of Milltronics machines in Europe, which is a market the company is actively targeting for growth. Additionally, sales of electromechanical components and accessories manufactured by LCM also increased during the quarter.

Going forward, the company’s top priority is to focus on reducing inventory levels and generating higher levels of cash flow for the remainder of the year. Hurco aims to adjust its production to align with changing levels of demand. While the current market conditions pose challenges, the company remains patient and poised for future growth opportunities.

Considering the decline in net income and sales, I would recommend exercising caution for investors holding Hurco stocks. The softening conditions in major machine tool markets raise concerns about the company’s future performance. It would be prudent to monitor the company’s ability to adjust production and generate cash flow. I recommend selling the stock until more positive developments emerge in the machine tool industry.

(Word count: 349)

Rent the Runway Reports Strong Q2 Financial Results

Rent the Runway, Inc. (NASDAQ: RENT), the world’s leading shared designer closet platform, recently announced its intention to accelerate the path to free cash flow profitability. In their fiscal quarter ended July 31, 2023, the company reported impressive financial results, with an adjusted EBITDA of $7.7 million and an adjusted EBITDA margin of 10.2%. This is a significant improvement from the same period in the previous year, where they reported an adjusted EBITDA of $1.8 million and a margin of 2.4%.

The company’s revenue for Q2 2023 was $75.7 million, a slight decrease of 1.0% compared to the second quarter of fiscal year 2022. However, Rent the Runway has made significant progress in reducing fixed and variable costs, which has contributed to their improved profitability.

Rent the Runway’s management believes that prioritizing the long-term health of the business over short-term revenue gains and lower margin customers is key to achieving profitability. They have empowered their leaders to make the right decisions in service to this goal and to their customers and investors. By making strategic changes in their promotional strategies and increasing rental product acquisition through non-wholesale channels, the company is confident in its ability to achieve free cash flow breakeven, before cash interest expense, in fiscal year 2024.

As an investor, the strong financial performance and the company’s commitment to profitability are positive indicators. Rent the Runway’s focus on growing their business while maintaining financial discipline is commendable. With their innovative business model and significant market opportunity, the path to profitability appears promising.

Based on the positive financial results and the company’s clear strategy, I recommend buying Rent the Runway stocks. The improvements in profitability, combined with their efforts to reduce costs and drive long-term growth, make it an attractive investment opportunity. Moving forward, I am excited to see how Rent the Runway continues to capture the significant market opportunity ahead.

Note: This blog post is my personal opinion and should not be taken as financial advice. Investors should conduct thorough research and consult with a financial advisor before making any investment decisions.

Hooker Furnishings Corporation Reports Decreased Sales in Q2 2024

Hooker Furnishings Corporation, a global leader in home furnishings, recently released its operating results for the second quarter and first half of fiscal year 2024. The company reported a decrease in net sales and net income, primarily due to decreased demand for home furnishings and the planned closure of unprofitable operations within the Home Meridian segment.

In the fiscal 2024 second quarter, consolidated net sales were $97.8 million, representing a decrease of $55.1 million or 36% compared to the same period last year. This decline was driven by the industry-wide decreased demand for home furnishings. Additionally, the planned exits of unprofitable operations within the Home Meridian segment contributed to the decrease in sales.

Despite the decrease in sales, the company managed to maintain a positive operating income of $1.3 million or 1.3% of net sales in the second quarter. However, this is a significant decline compared to the prior year period, where the operating income was $7.3 million or 4.8% of net sales.

Net income for the second quarter also saw a decline, with $785,000 or $0.07 per diluted share, compared to $5.5 million or $0.46 per diluted share in the previous year. The decrease in net income reflects the challenging market conditions and decreased demand for home furnishings.

Despite the turbulent market conditions, Hooker Furnishings managed to strengthen its financial position during the second quarter. The company generated over $51 million in cash from operations and ended the quarter with cash and cash equivalents of $50 million. Additionally, the company reduced inventory levels by $70 million from the previous year and completed most of its planned liquidation sales of the Home Meridian segment’s discontinued inventories.

In a strategic move to diversify its product offerings, Hooker Furnishings acquired BOBO Intriguing Objects, an Atlanta-based lighting, décor, and accents designer and importer. This acquisition will enable the company to introduce new furnishings categories such as lighting, wall art, textiles, and décor, thus expanding its product diversity.

Considering the decrease in sales and net income, it is advisable to evaluate the impact of these results on our investment in Hooker Furnishings. If you are a current investor, it may be prudent to consider selling your shares in light of the negative financial performance. However, for potential investors, this decline in stock price may present an opportunity to buy at a discounted rate.

Remember, investing in stocks carries inherent risks, and it is essential to conduct thorough research and consult with financial professionals before making any investment decisions.

Concrete Pumping Holdings Reports Strong Third Quarter Results

Concrete Pumping Holdings, Inc. (Nasdaq: BBCP), a leading provider of concrete pumping and waste management services in the U.S. and U.K., has reported impressive financial results for the third quarter ended July 31, 2023.

Financial Highlights

• Revenue increased 16% to $120.7 million compared to $104.5 million in the same quarter last year.
• Gross profit increased 18% to $49.5 million compared to $41.9 million.
• Income from operations increased 38% to $19.5 million compared to $14.1 million.
• Net income was $10.3 million compared to $13.0 million.
• Net income attributable to common shareholders was $9.9 million or $0.18 per diluted share, compared to $12.5 million or $0.22 per diluted share.
• Adjusted EBITDA increased 16% to $34.9 million compared to $30.0 million, with an Adjusted EBITDA margin of 28.9%.

Management Commentary

CPH CEO Bruce Young commented, “The growth we experienced in the first half of the year accelerated in our record-setting third quarter, driven by double-digit revenue growth in every segment of our business. This was primarily due to strong organic growth and the successful integration of acquisitions. Demand for new residential housing has reaccelerated, and our expanding U.S. footprint has allowed us to win infrastructure projects.”

Personal Thoughts

Concrete Pumping Holdings has delivered another quarter of impressive financial performance, with significant revenue growth and improved profitability. The strong organic growth and successful acquisitions indicate the company’s ability to adapt to changing market conditions and capitalize on emerging opportunities. The rebound in demand for new residential housing is particularly promising, as it suggests a positive outlook for the company in the coming quarters.

With a record-setting year on the horizon, Concrete Pumping Holdings appears well-positioned to continue its growth trajectory. The management’s solid execution strategy and expanding U.S. footprint further enhance its competitive advantage. Therefore, I recommend considering buying the stock as it shows the potential for long-term growth.

Note: This article is for informational purposes only and should not be taken as financial advice. Investors should conduct their own research before making any investment decisions.

Sportsman’s Warehouse Holdings, Inc. Faces Challenges in Q2 with Decreased Sales and Traffic

Sportsman’s Warehouse Holdings, Inc. (Nasdaq: SPWH) recently released disappointing financial results for the thirteen weeks ended July 29, 2023. The company, which specializes in outdoor sporting goods and equipment, experienced a decline in net sales and store traffic due to challenging macroeconomic conditions impacting consumer discretionary spending.

During this period, net sales were $309.5 million, representing an 11.8% decrease compared to the second quarter of fiscal year 2022. This decline in sales was mainly attributed to reduced demand across all product categories and diminished store traffic. The ongoing impact of consumer inflationary pressures on discretionary spending further exacerbated the situation. However, the opening of 14 new stores since July 30, 2022, provided a partial offset to the decreasing sales figures.

Same store sales also experienced a significant decline of 16.1% during the second quarter of fiscal year 2023, when compared to the second quarter of the previous fiscal year. The same factors that affected net sales, namely lower demand and the impact of consumer inflation, contributed to this decline in same-store sales.

Gross profit for the quarter amounted to $100.8 million, accounting for 32.6% of net sales. This represents a decrease compared to the previous fiscal year, where gross profit accounted for 33.5% of net sales. The decline in gross profit margin reflects the challenges faced by Sportsman’s Warehouse in maintaining profitability amidst the difficult market conditions.

Joseph Schneider, interim CEO and Chair of the Board, expressed disappointment in the second-quarter results and acknowledged the need for further action to align the company’s expense structure with current sales trends. In an effort to drive foot traffic, Sportsman’s Warehouse plans to implement a more aggressive and strategic promotional campaign while leveraging its omni-channel platform to provide consumers with a wide range of products.

Considering the negative financial results and the ongoing challenges faced by Sportsman’s Warehouse, I would recommend selling the stock. The decline in net sales and same store sales, combined with the pressure on discretionary spending, indicate potential difficulties in the near future. With a decreased gross profit margin, investors should carefully consider the company’s ability to sustain profitability.

As the company continues to search for a permanent CEO, it is important to monitor how this leadership change may impact Sportsman’s Warehouse’s future performance. Investors should keep a close eye on any updates regarding the appointment of a new CEO and the company’s strategic initiatives to address the macroeconomic challenges they face.