Looking over the Q2 FOR report, in the CC they called out the unusually high GM in the Q:

"Our gross profit margin for the quarter was 24.9% compared to 18.5% for the same quarter last year. Gross margin this quarter was positively impacted by non-recurring revenue items with unusually high margins, including selling excess sewer capacity and a land contract assignment fee. Excluding the effects of these items in the prior-year impairment charges and unusually high-margin track sales, our second quarter gross profit margin would have been approximately 22.5% compared to approximately 23% for the prior-year quarter."

(Q1 also had a slight benefit too). The entirety of the earnings "beat" came from this non-recurring element in the GM.

They also have some difficult y/y comps coming up, and the forward estimates show flat to slightly negative eps growth going forward:
https://seekingalpha.com/symbol/FOR/earnings/estimates?period=quarterly

I think that's why the stock sold off fairly hard on what appeared to be a decent beat. They would have shown a slight drop in y/y eps otherwise.

A couple that I like and have been a recent buyer of:

1. Indivior (INDV 19.50). A specialty pharma company that has three major drugs targeting substance use disorders. Biggest seller is Sublocade which targets opioid addiction. They are projected to earn approx 2.00/sh in FY24, that's up from an adj 1.57 in FY23. (both are taxed at approx 20%). The company has been buying back shares and has set aside cash to pay for class action lawsuits that were recently settled. I think the worst of their litigation problems are behind them. The stock has traded at 15x TTM adj eps in the past. I like its potential over the next 3-6 mos.

2. Audiocodes (AUDC 10.65). This is an Israeli company that provides advanced communications software, products, and productivity solutions for the digital workplace worldwide. The company offers solutions, products, and services for unified communications, contact centers, hosted business services, Voice.AI, and service provider businesses. Its definitely a beneficiary of the AI boom/focus, and is transitioning into a higher margin software/services company. FY23 earnings were down y/y, although a strong turnaround is being signaled by the company and its Q4 results. If they can execute and hit their LT forecasts, the company's prospects could rerate into a higher forward multiple to match its adj operating margin growth/strength that could power strong eps growth. Mgmt guiding to adj eps of 1.00 - 1.15; if they can get a 15x forward multiple the stock could see upwards of 15-16/sh later this year. Of course, the risk of an expansion in the Mideast conflict will likely put some caution into buying, but I think the risks of severe business interruption are probably unlikely.

Hweb, I added to HHS today. It looks like the estimates for FY24 have dropped to 0.50-0.51 vs the previous estimate of 0.71, so that might be behind the drop since earnings. Looks oversold on a technical basis and is approaching some possible support at its 200 DMA around 6.65. Looks like the first half of this year will be a little underwhelming for GAAP eps, but they are setting up nicely for some big quarterly numbers in Q3 and Q4. Could be a nice turnaround story:

"there's palpable sales momentum evident here. And we all inside the company are aware of it. It's an exciting time. But you do have a sales cycle to work through and an onboarding process to work through when you land new business. So it does take a little time, but it's all about pipeline and conversion. And we're very happy with our progress there. But we also are focused on being more profitable, and that's the $16 million approximate cost savings we've identified." -from Q4 2023 CC transcript

If the company is being judged on its GAAP numbers, they clearly won't be great in Q1 and Q2. But, looking at EV / EBITDA is pretty interesting. I note their TTM Adj. EBITDA for FY23 at 16.5MM, so with the stock at 6.90/sh, that means its trading at 2x Ev /EBITDA ratio which is dirt cheap. And, they are expecting higher adj profits in FY24 from 6MM in projected cost savings. Just have to grind through the next 4-6 mos before having the chance to show some better numbers. Good one to quietly accumulate.

IMXI. Was a buyer of the selloff this am. Had a great Q4, beating expectations but the Q1 guide was a little light; FY eps guide was in-line and showing 13% growth, albeit with a lower share count from a large buyback of shares that should continue going forward. IMXI handles a lot of money transfers from US to latin america and back. Growth slowed a little bit due to economic conditions, but this company has a nice transaction network stranglehold and is gaining market share. I think its fair value is closer to 12-13x forward eps, or 27-28/share. Steady grower, decent share buyback in place, I think it might be under pressure for a bit but should rebound within 3-6 mos as a stronger 2nd half appears not priced in.

RMAX. I've put it on my watch list. I would expect that sales and net income (adj) will be down in FY24, based upon the sector (real estate brokerage), so I think this continues to slide lower without prospects of higher sales and eps until early FY25 at best. I would be looking to start nibbling if it gets into the high 6s, with the caveat that it is always tough to time a bottom purely based upon valuation. Good luck!

Nelson, re HRTG: Good memory, the Hyer purchase was announced then:

"On December 14, 2023, the Company entered into a securities purchase agreement (“Purchase Agreement”) pursuant to which (i) Raymond T. Hyer, a current holder of approximately 13.5% shares of our Common Stock, agreed to purchase directly from us, in a concurrent private placement, 148,148 shares of Common Stock at the Public Offering Price and (ii) Ernie Garateix, a director of the Company and the Company’s Chief Executive Officer and Paul L. Whiting, a director of the Company, agreed to purchase directly from us, in a concurrent private placement, an aggregate of 27,247 and 40,871, respectively, shares of our Common Stock at $7.34, the closing price of the Company’s Common Stock on December 14, 2023 (the “Private Placement”)."

The other two filed their Form 4 a day or two after this 8K was filed. What's interesting is that these insiders actually paid a higher price (7.34) than what the secondary offering was placed at (6.75). The stock traded well below those prices, finally putting in a bottom in the 5.50s.

UVE's stock is reacting really well to their earnings cc. (The quarterly results weren't all that great compared to y/y figures, but I guess its on to FY24!) From the Q4 transcript:

"We closed out both the fourth quarter and full year with double-digit adjusted returns on common equity. And I believe that even stronger results are firmly in our future. 2023 was a transformative year for us and our significant efforts position us for meaningful success in the new legislative environment.

We've added a buffer to our loss picks and bolstered reserves for years that predate the elimination of one-way attorney fees and assignment of benefits to what I view as the most conservative level in our history. Importantly, we did this because we wanted to place the past in the rearview mirror and shift our focus to the future. "

On SA, the one UVE analyst they track has projected UVE to earn 2.30 in FY24, so if that's anywhere close to accurate (the adjusted fd eps for FY23 was 1.95), then the stock is trading at 8.7x forward earnings. Seems fair to me. If we apply a similar multiple to HRTG, that would put the stock price at $11.47/sh. I really like the hold of HRTG into its next earnings.....

HRTG Thanks Nelson. I'm sure you saw that big insider buy that was filed this week?

https://www.sec.gov/Archives/edgar/data/1598665/000167204824000001/xslF345X03/primary_doc.xml

Just a little late on reporting the actual trade, but I'm glad he finally got around to filing it. Stock has since traded well below that purchase price so I wonder if he has been buying but just not filing? He probably should get a slap on the wrist from the SEC for being so late. It should have been reported a few days after the fact.

CRNT on its Q4 CC just guided for lower interest exp (~8MM) and a slightly lower tax rate in FY24 vs FY23. Based on those newer numbers, I'd now put adj non-gaap fd eps at 0.30-0.31/sh in FY24. That's inline with the estimate and a slight beat.

CRNT pretax margins (adj) came in a little lower sequentially, but I think that was because of the rev mix. Most of the growth was in India, which carries lower margins. The non-GAAP tax rate was also high (I calculated it at ~27%). The company would have reported closer to 0.05 eps in Q4 if it had been 20-21%.

The guide appears to be for eps (non-gaap) of around 0.28 - 0.29. Maybe just a bit shy of the aggressive analyst est? Still, that's a 40% increase in eps at the low end. What is the appropriate forward multiple here? I still think this will see the low 3s, at minimum and could reach the low 4s with a PE multiple expansion up to 15x, which is certainly reasonable given the growth forecast.

The stock does have a history of selling off a bit after earnings, but I still think its too cheap. I'm holding.

Nelson, re PERI. I was in it and was disappointed with the guide for FY24 and the company's capital allocation plan (i.e. NO share buybacks). I sold it at 26, so was wrong about that one and took a loss.

Top line growth is good for FY24, but it should be because they just bought Hivestack. This is another deal where it looks like pretax margins will take a hit in the short run, so eps growth which had been 35%+ drops down to 7 - 8%. PERI also has a low tax rate (11-12%). This sector (internet advertising) is so competitive. PERI had been doing a great job of showing strong rev and eps growth while many of their competitors were struggling. They still have decent adjusted margins and a very good balance sheet, so its not all bad. I just prefer to see strong eps growth and I don't think PERI will show that this upcoming FY. My FV is 26, so I'd start nibbling around 20.60 or below.

Nelson, re AVNW. I wasn't a fan of the NEC acquisition, because of the short term hits to earnings growth that will likely result. GMs will be lower, they have fairly large incremental SGA and R&D costs to make in the next 2 quarters AND they issued stock and debt, so even more of a hit to eps. I will need to see some signs of recovery in adj pretax margins before I get comfortable buying in. I think forward eps numbers for FY24 will get lowered; I think they might be able to do fd eps of 2.71/sh (I'm factoring in the 19MM in incremental costs and a 2% tax rate with a slight rise in FDS). At 12x, that puts FV at 32.60; I'd get interested again around 26. FY25 is still too far away for me to begin factoring in to valuation...stocks often trade based upon what's expected 3-6 mos out, but when I look at that time period for AVNW, I see difficult comps which don't get me excited.

R59, I think COLL is probably fairly valued at current prices. I sold the last of my shares when it hit 33. I wasn't impressed with the company's guide for revenues in FY24; it only appears to be 3-4% growth over 2023 with EBITDA growing at ~7%. Sskillz raises a good point about potential new competition and possible generic challengers; I think its what specialty pharma companies and their investors fear most.

VIRC. They are coming into a seasonally weak quarter where they typically post a loss. And on a technical basis, the stock broke down below its 50DMA, so perhaps some stop loss orders got hit. There is a gap in the chart back to last earnings release which would if closed, would be low 7s. I think this is decline is overdone, IMO. Initiated a small position here in the low 9s

Still like CRNT and invested in it now. Between their last acquisition and a big order kicking in, their 2H in FY24 should be really strong. They might have some margin compression in this quarter, but I am nibbling in the 2.30s and below. I can see it trading into the low 3s soon. Probably drafting a little off that big AVNW move today.

HRTG is looking pretty cheap again in the 5.60s. Nelson, why do you think its been dropping lately?

I don't get the AVNW pop either. I guess they did beat the consensus eps estimates, but I think that was largely because the acquisition was delayed and so hardly hurt the Q at all. In the presentation, the company stated that they expect GM in the 2H to be 34-37% of revs (they just reported a very strong 38.7% GM in Q2). So that's not great. Plus, they are expecting incremental R&D and SGA costs of ~19MM (a range of 16-22MM) in the 2H as they invest in their acquisition and products. I'm taking that from the FY24 guidance slide in the presentation.

It doesn't add up to a great 2H for the company in terms of earnings comps (which are basically untaxed anyway because they have a lot of NOLs). Forward EV / Ebitda ratio looks to be about 8.6x at 37....I'd say its probably fairly valued to slightly overvalued given the lack of clear catalysts over the next two quarters.

GTLS. Yes, I was buying as it dropped on Friday. In hindsight, I was fortunate to get some in the 110.25 - 110.75 range. Probably more fortunate that management decided to come out to defend the stock with that PR on Friday after the bell.

A good source of info on the company is from this poster on Seeking Alpha:
https://seekingalpha.com/article/4665607-chart-industries-expect-earnings-to-skyrocket

He's followed the company a long time......

Clearly, the company is in the "prove it" doghouse after they didn't meet expectations with their Q3 results.

I added some more HALO today around 34/sh. I guess some investors didn't like the presentation given by the company today. Lots of info in there, so its worth a listen to those who are interested in this seemingly cheap biotech company:

https://ir.halozyme.com/events-and-presentations/events/event-details/2024/Halozyme-Financial-Update-Call/default.aspx

They provided an update on Q4 (revenue a little lower than expected, but EPS came in at the high end of the range.)
From the company filed 8K
Unaudited Preliminary Estimates of Results for the Twelve Months Ended December 31, 2023
The Company estimates 2023 Revenue will be in the range of $827 million to $832 million.
The Company estimates 2023 royalties will be in the range of $445 million to $450 million.
The Company estimates 2023 Net Income will be in the range of $292 million to $297 million, 2023 EBITDA will be in the range of $435 million to $440 million and 2023 Adjusted EBITDA will be in the range of $425 million to $430 million.
The Company estimates 2023 GAAP Diluted EPS will be in the range of $2.18 to $2.21 and 2023 Non-GAAP Diluted EPS will be in the range of $2.77 to $2.80.

First guide for FY24 (see slide 24 for more details):
https://s28.q4cdn.com/284259014/files/doc_events/2024/01/HalozymeFinancialUpdateJanuary2024-FINAL.pdf

FY24 Rev: 915 - 985
FY24 adj EPS: 3.55 - 3.90 (MP: 3.73)

Just a tad below consensus on FY24 earnings, and well below on revs. During the call, the company explained how and why its margins on EBITDA should be strong and likely to continue increasing over the next 4 years. A chunk of those EBITDA adjustments are non-cash and get backed out of adjusted Pretax....hence the stronger margins and better eps than expected at that revenue level. I thought they did a good job addressing the concerns about patent cliffs and their ability to maintain margins in later years of the patents. If 2024 is indeed going to be a tough year for the economy, I'd think steady, stable growth in healthcare would be more desirable, but what do I know?

Nelson, good post on CRNT. For an Israeli company in the high tech sector, I usually use a pro-forma 20-25% tax rate. But I agree with your thinking on FY24

Would much rather see CRNT provide conservative guidance and then beat and raise later. The guidance for FY24 is still very solid at the midpoint (~14%). They spoke of their ability to increase margins and achieving operating margins at better than 10%. That excludes interest expense, and they might have a little bit of a headwind there over the first half of 2024 in adjusted pretax (but I'd guess they still show y/y growth.) They are setting up for a very nice 2H of 2024 given the full integration of the recent acquisition (Siklu), and the beginning of the massive $150MM contract. I think the 0.30 estimate is a bit aggressive for FY24, but the odds of achieving that have improved with the announcement of the recent contract.

CRNT. It's hard as an investor when you are faced with a stock that appears undervalued fundamentally, but is clearly overbought on a technical basis in the short term. How much of a pullback will come? And how high can the stock go before correcting? With CRNT, if the market decides to rerate its forward valuation, trading north of 4.00 over the next 3-6 mos isn't out of the question. Put a 15x multiple on that 0.30 estimate for next year (which is an old estimate before the news of the big contract came out) and you can see why some investors are scrambling to buy more even with it very overbought.

CRNT. Announced a huge new contract win this AM. 150MM over an 8 quarter period beginning in Q2 2024. That would add approx 15-17% additional revenue per quarter (based on most recent quarter) once it starts to kick in. Before any other new or existing business.

https://seekingalpha.com/pr/19588250-ceragon-signs-agreement-global-integrator-valued-approximately-150-million-to-modernize-tier

Stock is still cheap on a forward eps basis. Perhaps this also expands the potential forward multiple as well?

HRTG. Nelson, do you estimate FV for these insurers at a percentage above book value? Forward PE? or some combo of both? Thanks.

The book value for HRTG was at 5.65/sh prior to the secondary offering of stock, in which they issued at least 3.7MM shares (with a max possible of 4.26MM new shares). Shares outstanding as of Q3 prior to the offering were around 26.7MM. Are those director placements in addition to the amounts raised via the primary offering?

Q3 had roughly 40MM in catastrophic event expenses, which actually was flat y/y....so they've had two straight difficult years. I guess they are due for some mean reversion, plus they are clearly raising premiums and diversifying across other states besides FL

I thought this article on averaging down on stocks was interesting and well written:
https://microcapclub.com/when-should-you-average-down/

YRD (last trade: 2.77) Can I interest anyone in a Chinese fintech that is perhaps one of the cheapest stocks trading on the market that isn't a pink sheeter?
https://ir.yirendai.com/news-releases/news-release-details/yiren-digital-reports-third-quarter-2023-financial-results

YRD YTD EPS: 2.31 (on track to earning 3.15+) <1x PE
Book value (mostly cash): 11.57/ADS
Diversified biz: Loans/Insurance/E-Commerce
Pretax margins: 54%
Cash flow from operations: 240MM USD (YTD thru 9 mos)

It has run up a bit from a week ago, when it was trading in the low 2s. Very low float here as the CEO and hedge fund partner hold about 80% of the stock through the founder's company (CreditEase). And there are accounting concerns from a couple of years ago when they failed to file their annual report on time because their auditor then would not sign off on the related party deal that effectively merged CreditEase into YRD.

Stock should at least be 2x higher, and even at that higher price level it trades at <50% of the valuations afforded other Chinese fintechs like FINV or QFIN. Another one to watch is XYF that is similar to YRD in valuation yet has been aggressively repurchasing its own shares and paid a special dividend this year.

The extreme low valuations have been there for years, but its extremely compressed at the moment. The company should go private or seek a buyout from a larger competitor to maximize shareholder value. The market for stocks like this (small cap Chinese) is completely broken.

SURG. Came across this post on twitter:

Surgpays relies on Affordable Connectivity Program (ACP) subsidies for internet access. Check their 10Q for details. ACP offers up to $100 tablet reimbursement and a $30 monthly broadband subsidy. CEO has a history of telephone bill fraud. https://t.co/VMSuBxcMr3

— Nand (@BuschBu) November 15, 2023

COLL (21.56). In with another decent quarter (Adj EPS of 1.34, beating estimates for eps by 0.10.) Bought back $50MM shares in the quarter, and just initiated another $25MM repurchase authorization. Large short interest here but a chunk of them are likely held by the convertible debt owners who often hedge their potential converts by shorting the stock. The stock is trading at ~4x forward FY23 earnings. Revenues only grew by 8% y/y in the quarter, but they had a tough comp from the year ago period. YTD, revenues are expected to grow by 22%, with adj EBITDA growing faster than that. Ev / EBITDA is 3.7x. This stock is cheap, but it has been that way all year. I don't know why there aren't more buyers here unless there are concerns about the growth of its pain drugs next year. Management touted its new negotiated prices and additional patients from Medicare:

Successfully completed contract renegotiations with payors that represent 30% of Xtampza ER total prescriptions while maintaining access in 57% of the renegotiated opportunity. As a result, Collegium expects gross-to-net improvement in 2024 to be a catalyst for revenue growth.
Renegotiated a major Medicare Part D contract for Belbuca, maintaining its access position and materially reducing the rebate, and won a new Medicare Part D plan for Belbuca representing approximately one million covered lives.

I would think if there are recession concerns for FY24, drug stocks like COLL would look more attractive to investors. So far, it hasn't played out that way.....

https://seekingalpha.com/pr/19527141-collegium-reports-third-quarter-2023-financial-results

Hey Nelson, the CRNT presentation of its income statement lists R&D as part of its Operating expenses, so I'd have to assume that any discussion by them regarding OpEx includes those expenses. Sales and marketing has been increasing as a %of revenue, but other areas have been reduced so the overall pretax margins have been increasing nicely.

I don't know what that analyst meant by saying opex in the Q4 would be increasing dramatically y/y. In Q4 2022, they had 22.9MM in opex, so an amount just over 23MM is not a large increase in my book. I dropped pretax margins down to 7%, and used a higher tax rate of 21% to get around 0.05/sh in fd eps for Q4. The acquisition probably won't close until close to the end of the quarter, so no meaningful dilution either way. That 0.05 is a bit below the current non-GAAP estimate of 0.06 for Q4, so perhaps a little bit of shoot first selling by investors disappointed that the numbers weren't better.

I like the sounds of their new acq. That company has higher GMs, and should be accretive to earnings by Q3 2024. That adds about 25-29MM in Rev, on top of organic growth of 8-9%. Wouldn't surprise me if they can earn 0.23+ in FY24. But that is also way lower than the 0.30 estimate that I see on SA and Merrill for next year. I have to assume that is non-GAAP. The Yahoo est must be GAAP. I've been a buyer in the 1.75 area and would be more aggressive in the 1.60s

I also see an estimate out there for CRNT's FY24 eps at 0.30. Looks way too high.

Thanks. I'm looking at both AVNW and CRNT. I don't like AVNW's acquisition and its near term impacts on eps. CRNT is looking a little better based on that forecast for organic growth in FY24, possibly higher margins and accretion from its own acq

Here's the post:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=172607501

I guess it was more about a slowdown/pause in the order pattern from Dish.

HALO. This is a biotech company that I've been following/own and like its potential. Just announced another partnership with its Enhanze drug delivery technology:
https://www.prnewswire.com/news-releases/halozyme-and-acumen-pharmaceuticals-enter-global-collaboration-and-non-exclusive-license-agreement-for-the-enhanze-technology-in-alzheimers-disease-301978022.html

They also report after the bell today. HALO has a tough Q3 y/y comp, but the expectation for future growth appears pretty solid. If accurate, the stock looks undervalued. It's been sold off like a lot of biotech has been this year, but they are solidly non-GAAP profitable and generate decent cash from operations.

CRNT. Didn't you have some concern over the loss of a significant customer?

There was a question in the CPS call about these retroactive price settlements. It seems that the company recorded them as revenue in Q3 even though it was clearly from prior quarters. It would appear that they treated this as pure profit, so the GMs on those settlements was 100% and this inflated GM and EBITDA in the Q3. That's why I think using the full 9 month period is a little more realistic in terms of what they might report in Q4 and going forward.

YTD, the pretax loss (adjusted for one times) was around (43MM). To be fair, they are likely to be replacing some lines of business with higher margin sales in FY24. This is a tough, low margin biz. Even the best, like MGA (Magna) report GMs around 13-14%. I think CPS is probably lower than that. My guess is that a realistic GM for CPS is closer to 11%

CPS. I think there were some "retroactive price settlements" that boosted Q3 rev and margins:

"This increase includes a portion of price negotiation settlements that, were retroactive to the start of the year, and a smaller amount pulled forward into Q3 that we had originally anticipated settling and recording in Q4. Combined, these represented approximately $25 million to $30 million in sales above the normalized Q3 run rate." Q3 2023 CPS transcript

I don't know how much of that was pure profit for the company, since the GM Q3 were really high, and probably unsustainable. I think the 9 mo period provides a more realistic margin % going forward ie. a little over 10% rather than the 14%+.

Nelson, I really like the sectors that USAP is in. That company and CRS have showed up on my radar with their decent results in the Sept quarter.

Strong end markets, high backlog, growing margins. I guess they compete with CRS? USAP looks a bit overbought at the moment, but I'd be looking to add on any pullback.

That story you relate is pretty crazy and kinda typical with the microcaps I guess.

I sold some in the 121 - 122 range. Still think it could get back into the 140s, but it might very well languish in the low 100s until there is greater clarity on FY24

GTLS. Probably not the best day to be pushing an aggressive guide for next year when you disappoint the analysts estimates. To be fair, the updated guide for FY23 was within their previous guide from Q2:

"Our full year 2023 adjusted EPS range is $6.05 to $6.25 vs $6.20 consensus (in line with our prior outlook)"

And, they are reporting a) record backlog, b) record orders, c) record EBITDA as percentage of rev, and strong industry fundamentals:

Highlights include:
Continued broad-based demand with no indicators of slowing ahead.

Third quarter 2023 backlog of $4.1 billion set a new record, following the prior historical high backlog of $3.96 billion as of the end of the second quarter 2023. This reflects strong demand across our business and end markets which we expect to continue throughout the remainder of 2023 and the coming years. Third quarter 2023 orders of $1.13 billion did not include any Big LNG orders and resulted in a book-to-bill ratio of 1.26. We continue to expect one additional Big LNG order around year-end 2023. We are also very proud to announce that during the third quarter 2023 our IPSMR® liquefaction technology was chosen for a major international Big LNG project (modular design) for which the order is expected to be booked in late 2024 or early 2025 and engineering is already underway. We also received another patent for our mixed refrigerant technology in August 2023.
Updating 2023 Outlook and Providing 2024 Forecast.

We are updating our full year 2023 sales forecast to approximately $3.45 billion to $3.50 billion (prior 2023 full year sales forecast of $3.66 billion to $3.80 billion). This is driven by the removal of sales associated with American Fan, Cryo Diffusion, and Cofimco due to the accelerated closing as compared to the originally anticipated closing timing as well as our expectation of the timing of the delayed revenue recognition moving into 2024 primarily from supply chain delivery timing. Our full year adjusted EBITDA is anticipated to be in the range of $745 million to $760 million (prior 2023 full year forecast of $780 million to $810 million). In aggregate, we divested a total of approximately $225 million of annualized revenue at EBITDA multiples in-line with prior Chart transactions, as previously discussed. We expect to see a sequential step up in adjusted free cash flow in the fourth quarter 2023, resulting in a full year 2023 outlook for adjusted free cash flow of $335 million to $350 million, above the mid-point of our prior range of $300 million to $350 million. Our expected full year 2023 adjusted EPS is in the range of $6.05 to $6.25, narrowed from our prior outlook range of $5.70 to $6.70.

Our 2024 adjusted EBITDA forecast of approximately $1.3 billion remains unchanged from November 2022 despite the divestitures we announced year-to-date 2023. We are initiating a 2024 sales outlook of approximately $5.1 billion and an adjusted earnings per share estimate of $14.00 plus. In addition, we anticipate our full year 2024 free cash flow to be in the range of $575 million to $625 million.



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The analysts on the call expressed some concerns about the impact of higher rates on GTLS' customers and their ability to properly forecast the timing and completion of their projects in backlog. Here is an example:

Ben Nolan

So I – first of all, the orders are strong. The guidance is really strong. The backdrop though, in this environment with higher interest rates, it feels a little less certain than maybe it has in the past. In fact, I know, Jill, you would know that one of your competitors, or at least a fraction of their businesses competitive years, was out sort of saying there’s just too much uncertainty to have much confidence looking into next year. You don’t seem to be reflecting that at all, and certainly, it’s not in your orders.

So the question here is, sorry, that was a longwinded start, but the question here is, could you maybe talk through, maybe segment by segment, what your line of sight is for next year? And maybe by those segments, what portion of the business is economically sensitive and then what portion of it you think is maybe not?

Jill Evanko

All right. Thanks, Ben, for the question and the tee up. And before I answer your question directly, thank you for recognizing the strength in the order book and the outlook ahead. So that leads me to our view in our confidence level, our very high confidence level in these figures, in this outlook, in particular, given our record backlog, record orders ex-Big LNG, which I think is extremely important, right? It’s the shift in the dynamic of the business away from that heavy reliance on one or two orders coming in and this broad base demand where we have multiple end markets that we serve, which, by the way, we don’t have to change our manufacturing lines to serve, right? We can use the brazed aluminum heat exchangers, whether that’s in Big LNG, whether that’s in hydrogen liquefaction or helium liquefaction, in some cases carbon capture.

So the list could go on. And you’re really familiar with that. But that broad based nature of our backlog, the visibility that we have to where those projects are in terms of progression is one of the shifts that Joe talked about in his remarks thereof moving toward that solution provider gives us more visibility into that backlog. I’d also say specifically of more than 65% of our backlog for that covers – 65% of our 2024 covered by backlog. I think that’s an important metric, right? We talk about also the ability for us to move schedules around and to be able to adapt, how we serve our customers is another key element to how we deliver on that backlog.

And we did mention as well in our outlook that it does include commercial synergies. And I mean heck, I think you commented on it in your early look report. We delivered 100% more of our year one synergies commercially in the first seven months of our ownership of Howden. I mean, that shows the combination and that full solution offering coming into our backlog.

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It will be interesting to see what the new estimates are for FY24 and whether that triggers some buying among investors in the coming days. Given the selling today, you'd think that they cut guidance in half instead of providing a new estimate for FY24 revenue and for adjusted eps to more than double over FY23. The current average of estimates for FY24 eps is 10.71/sh. (Projected EBITDA remains the same as before). Reminds me of when CROX got crushed after they announced a big acquisition (Hey Dude) that added a lot more debt to their balance sheet....similar story here. Chart (GTLS) bought Howden a year ago and closed the deal in March 2023. The stock went from 230 down to the low 100s in about 1 month. So its had some brutal corrections before, but it generally recovers because its in a highly desirable niche market for LNG production. The demand seems clear, but i guess the execution risk is what the market is concerned about right now.

GTLS getting hammered today on missing the analyst estimates for Q3 and slightly lowering their numbers for FY23. However, they guided for adj fd eps of 14.00/sh in FY24. Stock trades at 112. I've been nibbling at these levels for a rebound back up to 140

TZOO comes in with another good quarter. Reported 0.16 GAAP, my non-GAAP eps number is 0.20.
https://seekingalpha.com/pr/19507093-travelzoo-reports-third-quarter-2023-results

Forward estimates look low and they could be entering an ideal market for their type of business (think Groupon for travel). Consumers still want to travel, but on the cheap.

There are some red flags here though. I own a few shares, and I'm concerned about the large owner who's been selling a ton of stock lately in order to pay off a loan the company made to him. If they are largely done, and they could be, the stock should move higher.

http://www.openinsider.com/search?q=tzoo

EDIT: They just announced another 1MM share repurchase; replacing their previous repurchase plan that they had largely used up. YTD, they have repurchased $11.8MM worth, and $7MM in Q3 alone.