$GDDFF $FOOD $FOOD.T with a big topline beat (all metrics in CAD)
Revenues up 71% YoY to 100.7M (9.75% beat off of the 91.75M estimate which was adjusted down from 93.75M last week)
Gross margin up 14 bps to 30.44% (more on this below but in-line with consensus)
Delivered positive Adj. EBITDA of 0.5M (backing out SBC this becomes 0.9M EBITDA vs. -3.4M in Q2 2020)
FCF of 0.3M without adding SBC vs. -7.3M in Q2 2020
$163M in cash on the balance sheet (33% of market cap)
The most important note from the call:
Gross profit impact from 50% off grocery promo in January was 3-5M. This implies gross margin would have likely been > the Q1 32.3% number had the promo not happened (lower revenues + the above impact)
Gross margins will be heavily scrutinized in 2H 2021 and 2022 as COVID winds down because there are lots of doubters that meal-kit delivery + online grocery delivery have staying power once the pandemic ends.
This is why it's important to note the Q1 vs. Q2 gross margins comparison is skewed by the 50% off promo in January.
Other notes from the call:
Gross profit grew 2.5x the rate of subscribers
750 SKUs on GoodFood WOW (up 36% QoQ)
Exceeding expectations of 1,000 SKUs by EOY 2021 (no official raised guidance given but at the current rate they will pass this by July)
GoodFood WOW customers are younger on average (could be skewed by demographics) and basket sizes are smaller but more frequent vs. meal-kit offering
Credits and incentives should normalize below pre-COVID levels but above the lowest mid-pandemic levels in the short-to-mid-term.
Amazon mentioned as being a guide for what GoodFood is trying to achieve with its fulfillment network in terms of speed
Mgmt. is open to breaking out WOW subscribers from meal-kit subscribers down the line
Vertical integration + private labels are key to fending off competition
In the late stages of hiring a new CFO
------
A near 10% topline beat is very impressive and nearly met consensus for Q4 (101.4M) 2 quarters early
Estimates almost certainly will come up given the recent partial lockdown in Ontario and today's big beat
Comps get tough next quarter, but that will happen when you're on track to 5x revenues in 3 years and have posted 11 straight quarters of >60% YoY growth
Assuming no QoQ growth (QoQ growth this quarter was 10%), revenues would grow 16% YoY.
Subscriber growth in the mid 20%s (was 30% last Q) likely gets you near 16% YoY revenue growth alone. GoodFood WOW, which didn't launch until October last year, should cover the rest, even if churn increases as the pandemic ends.
Trading at ~6x TTM gross profit (analyst + my own forward estimates need to be updated), FCF ex-SBC positive, and growing their topline near 40% this year (implies 207M in revenues in 2H 2021), I think shares are a bargain
Adding 20% to my position today to make it a 3% position
• • •
Missing some Tweet in this thread? You can try to
force a refresh
Scotiabank goes from $13 CAD -> $11.50 CAD ($9.10 USD)
Raymond James goes from $14 CAD -> $12 CAD ($9.55 USD)
Waiting to see their model updates once I get the reports, but to me the PT adjustments are due to it being irregular to have a PT >100% above the current price and not have the stock as one of your top picks. (as Stifel's 18 CAD PT was)
The average of the PTs is still 52% above the current share price so there's still a lot of optimism from the analyst community.
Per TIKR, the Q3 topline estimate rose 2.6%, but so far Q4 estimates have declined 4%.
The people surprised by the selloff post-positive FDA news in $TMDX and $NNOX must not have been shareholders in $MYOV over the past 4 months
Joking aside, there's a lesson to be learned here for some.
With the big positive catalyst now absorbed by the market (whether you think it was properly priced in or not), it seems marginal shareholders now want to focus on cash flows.
All have enormous potential, but the first positive quarter
of FCF for each is currently projected to come in the following periods:
$NNOX: early 2023
$MYOV: late 2023
$TMDX: late 2022
$BC acquires 6 New York are Freedom Boat Club locations. These clubs have >600 combined members and membership has grown at a near 30% YoY rate for the past 3 years
Knox comes from her previous role as Global Head of HR for the Mixed Reality / AI Platform & Cloud Security / Identity division at Microsoft (8,000 person division) and previous held executive HR roles at Twitter, Sony, CBS Interactive, PepsiCo, Disney, and Verizon.
Knox will focus on continuing to align compassionate and ethical AI as a foundation of LivePerson's culture.
Ethics in AI is an increasingly important area as use cases become more sophisticated, so I like that the head of talent development is directly focusing on this space.
$BC with two positive developments in the past week.
First, they tripled the size of their i-Jet Innovation Lab at the University of Illinois to support an acceleration of the Company’s ACES (Autonomy, Connectivity and Electrification) strategy
This isn’t going to have an immediate impact but shows Brunswick has an eye on the future of boating in the areas of electrification and autonomous driving
The bigger development was Freedom Boat Club (FBC) establishing its first company-owned location in Europe (this one is opening in Portsmouth, UK in Summer 2021)
FBC seems to be the primary way Brunswick is hoping to combat cyclicality.