Noble Capital Markets Research Morning Call

Noble Capital Markets Research Report Monday, September 16, 2024

Companies contained in today’s report:

FreightCar America (RAIL)/OUTPERFORM – Raising Price Target Based on Expected Lower Cost of Capital
GDEV Inc (GDEV)/OUTPERFORM – Revising Estimates Upward; Raising Price Target
SelectQuote (SLQT)/OUTPERFORM – Taking Steps for the Long Term

FreightCar America (RAIL/$10.33 | Price Target: $12)
Mark Reichman [email protected] | (561) 999-2272
Raising Price Target Based on Expected Lower Cost of Capital
Rating: OUTPERFORM

Pure play manufacturer. FreightCar America, Inc. is a diversified manufacturer of railroad cars and rail car components. The company designs and manufactures a broad variety of railroad car types for the transportation of bulk commodities and containerized freight products primarily in North America. The company recently reported strong second-quarter financial results and appears poised for greater scale and margin expansion as it increases its market share and expands its product suite.

Expected redemption of high-cost preferred stock. We have assumed the company could redeem its high-cost preferred shares using a private credit term loan. For the sake of simplicity, we have assumed this occurs just prior to 2025. Based on the company’s strong cash flow profile and outlook, we estimate the rate on a $100 million private credit term loan could approximate the secured overnight financing rate (SOFR) plus 600 basis points or 11.33%. We note that the amount of the term loan and the interest rate could vary from our estimates. If the loan amount or interest rate is lower, interest expense could be lower. 

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GDEV Inc (GDEV/$28 | Price Target: $70)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Revising Estimates Upward; Raising Price Target
Rating: OUTPERFORM

Q2 results. The company reported Q2 revenue of $105.8 million, which was in line with our $105.0 million estimate. Due to lower than expected Selling & Marketing Expenses and efficiency initiatives, adj. EBITDA was $16.2 million, far better than our $0.9 million estimate. Selling & Marketing expenses were roughly $11 million lower than expected, accounting for the largest portion of the sizable “beat”.PC picking up Steam. Notably, management highlighted the launch of Pixel Gun 3D PC Edition to the Steam platform, the largest digital distribution platform for PC gaming. The launch of Pixel Gun 3D on Steam and a solid quarter for Hero Wars: Dominion Era led to PC revenue accounting for 42% of total revenue, up from 38% in the prior year period. The addition of Steam is viewed favorably given that PC players tend to spend more money and time playing than mobile users.

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SelectQuote (SLQT/$2.02 | Price Target: $5)
Patrick McCann, CFA [email protected] | (314) 724-6266
Michael Kupinski [email protected] | (561) 994-5734
Taking Steps for the Long Term
Rating: OUTPERFORM

Strong fiscal Q4. SelectQuote’s fiscal Q4 revenue of $307.2 million and adj. EBITDA of $14.4 million exceeded our estimates of $271.3 million and a loss of $2.2 million, respectively.  In our view, the strong performance demonstrated the power of the company’s synergistic business model, which serves consumers’ needs both for insurance policies and pharmacy services. 

Pharmacy momentum. Total revenue grew an impressive 38% over the prior year period, driven largely by the company’s Healthcare Services segment, which is comprised primarily of SelectRx (home-direct pharmacy business). Healthcare Services revenue was up roughly 75%, year-over-year with SelectRx membership growing to approximately 82,000, up from roughly 75,000 at the end of fiscal Q3. 

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Noble Capital Markets Research Report Thursday, September 12, 2024

Companies contained in today’s report:

Bowlero (BOWL)/OUTPERFORM – Floating Increased M&A Activity
MAIA Biotechnology (MAIA)/OUTPERFORM – New THIO Data Shows Improved Survival and Meets Trial Goals
MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – Onto the East Coast

Bowlero (BOWL/$10.8 | Price Target: $17.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Floating Increased M&A Activity
Rating: OUTPERFORM

Q4 results. Q4 revenues exceeded our expectations, $283.9 million (up a strong 18.6% y-o-y) versus our $270.0 million estimate, driven by strong 6.9% growth in same store revenues. Adj. EBITDA was $83.4 million, roughly in line with our $86.5 million estimate.

Resilient against economic headwinds. Management indicated that its business caters to a high end consumer that appears to be resilient to the economy. It plans to roll out high end food items and focus on its event business as a key revenue growth driver in fiscal 2025. Event business is currently $275 million and is expected to exceed $300 million in fiscal 2025.

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MAIA Biotechnology (MAIA/$3.13 | Price Target: $14)
Robert LeBoyer [email protected] | (212) 896-4625
New THIO Data Shows Improved Survival and Meets Trial Goals
Rating: OUTPERFORM

New Data Announced For Additional Patients. MAIA announced new interim data from its Phase 2 THIO-101 open-label trial testing the combination of THIO and Libtayo in non-small cell lung cancer. The new data shows that as of August 1, 2024, 16 patients had passed the 12-month survival point with reported median survival of 10.2 months. This greatly exceeds published data for comparable patients with survival of 5.8 months.

THIO-101 Treated Third-Line Patients With Advanced Disease. Patients in the trial had advanced non-small cell lung cancer (NSCLC) and were treated with the combination of THIO and cemiplimab (Libtayo, an anti-PD-1 checkpoint inhibitor from Regeneron) after failing 2 or more standard-of-care therapy regimens. Patients received 3-week cycles of THIO 60 mg administered on days 1, 2 and 3 (180 mg total), rest on day 4, and cemiplimab 350mg administered on day 5. Patients on treatment for 12-months have received up to 21 cycles.

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MustGrow Biologics Corp. (MGROF/$0.7)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Onto the East Coast
Rating: MARKET PERFORM

Another Approval. Following the approval from the state of Arizona late last month, MustGrow announced receipt from the Florida Department of Agriculture and Consumer Services (FDACS) for the registration approval of its TerraSante product. Florida now becomes the sixth state to approve the Company’s product alongside Arizona, Idaho, California, Oregon, and Washington.

Florida Market. The state consists of around 47,300 farms which utilized 9.7 million acres, 5,000 farms of which had sales exceeding $100,000 according to the FDACS. Florida ranked first in 2022 in value of the production of bell peppers, Valencia oranges, grapefruit, sugarcane, fresh market tomatoes, and watermelons. The average farm size in the state is around 205 acres. The state adds plenty of opportunity to MustGrow’s expanding pipeline and we expect more states to be added in the future.

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Noble Capital Markets Research Report Wednesday, September 11, 2024

Companies contained in today’s report:

Comstock Inc. (LODE)/OUTPERFORM – End to End Solar Panel Recycling Solutions
Maple Gold Mines (MGMLF)/OUTPERFORM – Shareholders Approve Restructuring Transaction with Agnico Eagle
V2X (VVX)/OUTPERFORM – American Industrial Partners Lightens Its Holdings

Comstock Inc. (LODE/$0.27 | Price Target: $2.6)
Mark Reichman [email protected] | (561) 999-2272
End to End Solar Panel Recycling Solutions
Rating: OUTPERFORM

Deinstallation services. In direct response to customer needs, Comstock Metals now provides and manages deinstallation services for customers. Comstock Metals receives a tipping fee for the receipt and storage of end-of-life solar panels and now may receive additional fees for decommissioning and transporting the panels in addition to revenue earned from the recovery of high value minerals and metals from the recycled panels. The company has completed several deinstallations with several others being negotiated or under bid.

Well positioned to grow the customer base. We think the expansion of the company’s product suite to include decommissioning services better positions the company to more rapidly win new business from a broader range of customers. Comstock Metals coordinates and enables the decommissioning of the end-of-life panels from their customer facilities and coordinates the transportation of these panels to Comstock’s facility in Silver Springs where the materials will be processed and recycled. Comstock is engaged with various, nationally recognized commercial customers to decommission, transport, and process end-of-life solar panels installed at their facilities.

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Maple Gold Mines (MGMLF/$0.06 | Price Target: $0.35)
Mark Reichman [email protected] | (561) 999-2272
Shareholders Approve Restructuring Transaction with Agnico Eagle
Rating: OUTPERFORM

Shareholder meeting. Maple Gold shareholders overwhelmingly approved all proposed resolutions at the annual general meeting on September 9. This included minority shareholder approval of the restructuring transaction between Maple and Agnico Eagle Mines Limited. The company expects to close the restructuring transaction within days and expects to announce plans for a fully financed Fall/Winter drilling program shortly. For more information about the restructuring agreement, please refer to our research note dated June 25th.

Control of the property package. Upon closure of the restructuring agreement, Maple gains 100% control of an established gold mineral resource of over three million ounces at Douay, a past-producing high-grade gold mining complex at Joutel, and a fertile yet underexplored 400 square kilometer land package straddling one of the three major regional deformation zones in the Abitibi greenstone belt. Maple will pursue a clear path to advance the Douay and Joutel projects without near-term dilution risk at the project level.

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V2X (VVX/$48.7 | Price Target: $62)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
American Industrial Partners Lightens Its Holdings
Rating: OUTPERFORM

A Sale. Last week, V2X announced an offering of 2 million shares, with an additional 300,000 shares potentially sold, at $48/sh by American Industrial Partners. AIP will continue to beneficially own approximately 54.4% of the outstanding common stock, or 16,967,286 shares (or approximately 53.4% if the underwriters exercise their option to purchase additional shares in full). Noble Capital was a co-manager of the offering. V2X did not receive any proceeds from the share sale.

Expected. AIP received its shares in the Vectrus/Vertex merger, and we had expected AIP eventually to begin to sell off its stake. V2X shares reacted negatively to the announcement, declining from the $54 level prior to the announcement to the current $49 level. We believe the sell-off to be unwarranted given V2X’s strong operating performance and AIP’s still substantial holdings in V2X shares.

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Noble Capital Markets Research Report Friday, September 6, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – August Production
Bowlero (BOWL)/OUTPERFORM – Sets Its Mark On M&A Targets

Bit Digital (BTBT/$2.67 | Price Target: $5.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
August Production
Rating: OUTPERFORM

AI Services. Bit Digital had 256 servers actively generating revenue from its initial Bit Digital AI contract, as of August 31, 2024. The Company earned approximately $4.3 million of unaudited revenue from this contract during the month of August 2024. A service credit of $579,000 related to the downtime experienced during an equipment upgrade was issued to the client in August for the period of February to June 2024.

Bitcoin Mining. The Company produced 53.4 bitcoin during the month, down 11.7% when compared to the prior month. The active hash rate was 2.43 EH/s as of the end of August, compared to 2.46 EH/s at the end of July. As we have noted previously, management continues to monitor the mining environment post halving, with additional investment into this business dependent upon the returns achievable.

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Bowlero (BOWL/$10.79 | Price Target: $17.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Sets Its Mark On M&A Targets
Rating: OUTPERFORM

Reports solid Q4 results. Q4 revenues exceeded our expectations, $283.9 million (up a strong 18.6% y-o-y) versus our $270.0 million estimate, driven by strong 6.9% growth in same store revenues. Adj. EBITDA was $83.4 million, roughly in line with our $86.5 million estimate. Figure #1 Q4 Results illustrates our estimates versus reported results.

Resilient against economic headwinds. Management indicated that its business caters to a high end consumer that appears to be resilient to the economy. It plans to roll out high end food items and focus on its event business as a key revenue growth driver in fiscal 2025. Event business is currently $275 million and is expected to exceed $300 million in fiscal 2025. 

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Noble Capital Markets Research Report Thursday, September 5, 2024

Companies contained in today’s report:

Aurania Resources (AUIAF)/OUTPERFORM – Progress on Key Priorities
GDEV Inc (GDEV)/OUTPERFORM – Picking Up Steam

Aurania Resources (AUIAF/$0.43 | Price Target: $0.6)
Mark Reichman [email protected] | (561) 999-2272
Progress on Key Priorities
Rating: OUTPERFORM

Key priorities for 2024 and 2025. Aurania appears to be making significant progress on key 2024 and 2025 priorities that were highlighted by Dr. Keith Barron, CEO and Director, during the company’s annual general meeting in June. These include: 1) exploration at the Lost Cities project in Ecuador, 2) advancing the company’s application for an exploration license in the Brittany Peninsula of northwestern France, 3) advancing joint venture and strategic partnership discussions, and 4) expanding community access agreements and community projects in Ecuador.

Exploration program. While Aurania’s exploration program is flexible, the company intends to complete an induced polarization (IP) geophysical survey this year at the Kuri-Yawi epithermal gold target followed by a drill program that will likely commence in the first quarter of 2025. An Anaconda mapping program has been completed in the southern part of Aurania’s Awacha porphyry copper target area and exploration teams are wrapping up a mapping program in the northern portion of the property with the goal of preparing it for drilling in the future. Fieldwork is also expected to continue at Crunchy Hill during the third quarter.

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GDEV Inc (GDEV/$22.02 | Price Target: $60)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Picking Up Steam
Rating: OUTPERFORM

Overachieves expectations. Second quarter revenues of $105.8 million was in line with our $105.0 million estimate. Due to lower than expected Selling & Marketing Expenses and efficiency initiatives, adj. EBITDA was $16.2 million, far better than our $0.9 million estimate, illustrated in Figure #1 Q2 Results. Selling & Marketing expenses were roughly $11 million lower than expected, accounting for the largest portion of the sizable “beat”. 

PC picking up Steam. Notably, management highlighted the launch of Pixel Gun 3D PC Edition to the Steam platform, the largest digital distribution platform for PC gaming. The launch of Pixel Gun 3D on Steam and a solid quarter for Hero Wars: Dominion Era led to PC revenue accounting for 42% of total revenue, up from 38% in the prior year period. The addition of Steam is viewed favorably given that PC players tend to spend more money and time playing than mobile users.

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Noble Capital Markets Research Report Wednesday, September 4, 2024

Companies contained in today’s report:

Century Lithium Corp. (CYDVF)/OUTPERFORM – Getting Close to Producing Battery Grade Lithium On-Site
Unicycive Therapeutics (UNCY)/OUTPERFORM – NDA Submission Keeps OLC Approval On Expected Timeline

Century Lithium Corp. (CYDVF/$0.2 | Price Target: $2.35)
Mark Reichman [email protected] | (561) 999-2272
Getting Close to Producing Battery Grade Lithium On-Site
Rating: OUTPERFORM

Lithium carbonate production at the pilot plant. Century Lithium successfully added a lithium carbonate stage at the company’s lithium extraction facility which is part of the company’s Angel Island Mine project. Previously, concentrated lithium solutions from the pilot plant were treated by Saltworks Inc. at their facility in Richmond, British Columbia to produce samples of battery grade lithium carbonate. Century Lithium is now able to do this at the pilot plant and demonstrate it has an end-to-end process to produce lithium carbonate.

Assay results. Century Lithium released assay results from the first lithium carbonate produced at the newly commissioned lithium carbonate stage at the company’s lithium extraction facility. Assays received for the initial five individual lots of lithium carbonate produced indicated purity of the lithium carbonate ranging from 98.2% to 99.2%. While lithium carbonate greater than 99.5% purity is typically considered battery grade, the company has identified steps to improve the purity level.

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Unicycive Therapeutics (UNCY/$0.23 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
NDA Submission Keeps OLC Approval On Expected Timeline
Rating: OUTPERFORM

Unicycive Announced Submission Of The OLC Application For Approval. Unicycive has announced that its New Drug Application (NDA) for its phosphate binder OLC (oxylanthanum carbonate) has been submitted to the FDA. This is consistent with our expectations after data from the last clinical study showing efficacy in treating high phosphate levels in chronic kidney disease (CKD) patients on dialysis. We continue to anticipate product approval in 2Q25.

We Believe Dosing and Efficacy Could Make OLC The Leading Phosphate Binding Drug. OLC was developed with proprietary nanoparticle technology to reduce the daily number of pills to just one three times a day for a full dose. This gives an advantage over other phosphate binders, which require 9 to 12 pills each day. Its formulation is based on lanthanum, the active entity in the approved drug Fosrenol. We expect this to be a strong advantage for OLC.

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Noble Capital Markets Research Report Tuesday, September 3, 2024

Companies contained in today’s report:

1·800·Flowers.com, Inc. (FLWS)/OUTPERFORM – Why This Company Should Be On Your Radar Screen
Lifeway Foods (LWAY)/OUTPERFORM – Positive Momentum for Shares, Increasing Price Target
MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – Gearing Up for Sales
NN Inc (NNBR)/OUTPERFORM – Some Additional Flexibility

1·800·Flowers.com, Inc. (FLWS/$8.03 | Price Target: $14)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Why This Company Should Be On Your Radar Screen
Rating: OUTPERFORM

Q4 results. The company reported Q4 revenue of $360.9 million, which was modestly below our estimate of $373.5 million by 3.4%. Additionally, Adj. EBITDA loss in the quarter of $8.8 million was below our estimate of negative $5.8 million. While the results were softer than expected, there were some bright spots. Notably, Q4 gross profit margin increased 130 basis points from the prior year period, which was largely attributed to lower freight and commodity costs, as well as cost saving initiatives. Increasing revenue investments. Management indicated that it plans to step up marketing, post the upcoming elections, and will introduce new products at price points that may help to offset the lackluster sales particularly for its everyday gifting products. There has been a bifurcation of sales for its products that target its high end consumer and that for consumers that are price sensitive. 

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Lifeway Foods (LWAY/$19.18 | Price Target: $25)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Positive Momentum for Shares, Increasing Price Target
Rating: OUTPERFORM

Increasing Price Target. Shares of LWAY have risen since the Company had record-breaking operating results in the second quarter. The increase in the share price, of around 15% from the announcement of second quarter results, along with the positive operating momentum of the Company pushes our target price from a previous $20 to $25.

Rise in Price. Since the second quarter results on August 13th, shares of LWAY have risen to $19.18 as of Friday’s close from $16.66. The average volume per day over the course of this time (14 days) was approximately 255,571 shares as opposed to last quarter’s 164,046. Although not all volume is positive, the positive trend indicates more investor interest in Lifeway’s story and being encouraged with the Company’s performance.

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MustGrow Biologics Corp. (MGROF/$0.69)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Gearing Up for Sales
Rating: MARKET PERFORM

2Q Results. MustGrow had no revenue during the quarter. We estimated revenue of CAD$1,000. Net loss was CAD$960,209, or a loss of $0.02/sh, compared to a loss of CAD$1.2 million last year, or a loss of $0.02/sh. We estimated a net loss of $1.1 million, or a loss of $0.02/sh.

But Revenue Underway. Revenue for MustGrow’s TerraSante product is now coming in. We believe this initial revenue recognition to be an important milestone for the Company, with the product now in farmers’ hands. Management noted that sales are performing as expected, with farmers having small-scale testing of TerraSante to understand the product.

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NN Inc (NNBR/$3.94 | Price Target: $6)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Some Additional Flexibility
Rating: OUTPERFORM

Flexibility. On Friday, NN filed an 8-K disclosing some amendments to its term loan and ABL agreements. In essence, the amendments to each will provide the Company with additional financial flexibility, in our view. While there does not appear to be any change in interest rates, a reduction in rates is a long-term goal of management.

Term Loan. The amendment raises the amount of the Company’s allowable indebtedness – incurred in connection with the purchase or lease of fixed assets – from $20 million to $40 million, provided that no more than $26.95 million is used with respect to any sale and leaseback transaction. In addition, the amendment requires the Company to use the net cash proceeds obtained in connection with any future sale and leaseback transactions to prepay any outstanding principal indebtedness under the term loan.

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Noble Capital Markets Research Report Friday, August 30, 2024

Companies contained in today’s report:

1·800·Flowers.com, Inc. (FLWS)/OUTPERFORM – Positioning To Offset Economic Headwinds

1·800·Flowers.com, Inc. (FLWS/$7.91 | Price Target: $14)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Positioning To Offset Economic Headwinds
Rating: OUTPERFORM

Q4 results. The company reported Q4  revenue of $360.9 million, which was modestly below our estimate of $373.5 million by 3.4%. Additionally, Adj. EBITDA loss in the quarter of $8.8 million was below our estimate of negative $5.8 million. Illustrated in Figure #1 Q4 Results. While the results were softer than expected, there were some bright spots. Notably, Q4 gross profit margin increased 130 basis points from the prior year period, which was largely attributed to lower freight and commodity costs, as well as cost saving initiatives.

Stepping up revenue investments. Management indicated that it plans to step up marketing, post the upcoming elections, and will introduce new products at price points that may help to offset the lackluster sales particularly for its everyday gifting products. There has been a bifurcation of sales for its products that target its high end consumer and that for consumers that are price sensitive. 

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Noble Capital Markets Research Report Wednesday, August 28, 2024

Companies contained in today’s report:

GDEV Inc (GDEV)/OUTPERFORM – Shedding Its SPAC Image

GDEV Inc (GDEV/$2.8501 | Price Target: $60)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Shedding Its SPAC Image
Rating: OUTPERFORM

Reverse split. On August 21, the company announced a one for ten reverse stock split on its ordinary shares. Notably, the reverse split will be effective following the market close on August 28, and will be adjusted for the split when trading opens on August 29. We view the move favorably as the company sheds its SPAC image.

Positive implications. Management highlighted that the reverse split could improve the marketability and attractiveness of its shares, as an investment grade company that it is. We believe the higher share price could improve investor perception, liquidity and marketability of the GDEV shares and open the company to more institutional interest, with the shares trading above single digit price points. 

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Noble Capital Markets Research Report Tuesday, August 27, 2024

Companies contained in today’s report:

FreightCar America (RAIL)/OUTPERFORM – Positive Momentum Driven by Potential for Market Share Gains and Margin Expansion
Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – Additional Information on New Awards

FreightCar America (RAIL/$6.58 | Price Target: $7.7)
Mark Reichman [email protected] | (561) 999-2272
Positive Momentum Driven by Potential for Market Share Gains and Margin Expansion
Rating: OUTPERFORM

Pure play manufacturer. FreightCar America, Inc. is a diversified manufacturer of railroad cars and rail car components. The company designs and manufactures a broad variety of railroad car types for the transportation of bulk commodities and containerized freight products primarily in North America. The company recently reported strong second-quarter financial results and appears poised for greater scale and margin expansion as it increases its market share and expands its product suite.

Updating estimates. While our 2024 and 2025 earnings per share estimates are unchanged at $0.25 and $0.47, respectively, we have increased our EBITDA estimates to $38.8 million and $46.7 million from $38.6 million and $46.0 million. We have assumed modestly higher sales. Importantly, we have increased our forward estimates beginning in 2026 to better reflect the company’s recent order for 1,000 tank car conversions and entry into the new tank car market beginning in 2028 which is expected to have a positive impact on gross margin.

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Great Lakes Dredge & Dock (GLDD/$9.84 | Price Target: $11)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Additional Information on New Awards
Rating: OUTPERFORM

New Awards. Yesterday, Great Lakes issued a press release revealing receipt of $256.2 million of dredging awards, including the $120 million of awards we highlighted last week. The six awards the Company noted included two capital projects, three coastal protection, and one maintenance award.

Pipeline Over $1 Billion. In addition to the noted awarded projects, Great Lakes has approximately $318 million in low bids and options pending award, according to the release, which includes two jobs on which the Company was low bidder on this month. This brings Great Lakes’ potential total pipeline of work to over $1.2 billion.

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Noble Capital Markets Research Report Friday, August 23, 2024

Companies contained in today’s report:

MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – Another State Added

MustGrow Biologics Corp. (MGROF/$0.59)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Another State Added
Rating: MARKET PERFORM

A New State. On the heels of Idaho’s approval of TerraSante earlier in the month, MustGrow announced receipt from the Arizona Department of Agriculture for the registration approval of its TerraSante product. The approval will give MustGrow the ability to commence sales within the state. Arizona now joins a list that includes four other states in the aforementioned Idaho, Oregon, California, and Washington State.

Synergy with California. Arizona’s approval is key with the Company’s commercialization strategy with BioAg Product Strategies. In the winter months, agriculture companies in California use the winter climate in Arizona for its winter farming production. We believe that the Company can ‘double-dip’ in potential sales to farming companies looking to use MustGrow’s products for both California and Arizona, providing increased revenue.

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Noble Capital Markets Research Report Wednesday, August 21, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – Focused On Computing
Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – More New Business
Hemisphere Energy (HMENF)/OUTPERFORM – Second Quarter Financial Results Exceed Expectations; Increasing Estimates
NN Inc (NNBR)/OUTPERFORM – Some Insider Buying

Bit Digital (BTBT/$3.61 | Price Target: $5.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Focused On Computing
Rating: OUTPERFORM

HPC Focus. Management is placing greater emphasis on the HPC segment given the near-term potential of the business, its higher margin profile, and growing pipeline of opportunity. Management continues to believe the business could obtain a $100 million annualized revenue run rate by the end of 2024.

Realization of Pipeline. The Company is adding staff in its HPC segment, including a head of sales, to realize more of the Company’s growing pipeline in the segment. It has already come to fruition with the Boosteroid agreement announcement and management noted that other potential clients are not far behind. We expect the addition of more salespeople in the near term and won’t be surprised to see more agreement announcements sooner rather than later.

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Great Lakes Dredge & Dock (GLDD/$8.78 | Price Target: $11)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
More New Business
Rating: OUTPERFORM

Recent DOD Awards. Great Lakes has been awarded over $120 million in two new contracts since August 9th, according to the Department of Defense daily contract release. We believe the additional awards highlight the amount of opportunity available to Great Lakes.

Mobile Harbor. Yesterday, Great Lakes was awarded a $65.9 million firm-fixed-price contract to deepen and widen Mobile Harbor, with an estimated completion date of April 27, 2025. Fiscal 2020 civil construction funds and fiscal 2024 civil operation and maintenance funds in the amount of $65.9 million were obligated at the time of the award. The U.S. Army Corps of Engineers, Mobile, Alabama, is the contracting activity.

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Hemisphere Energy (HMENF/$1.27 | Price Target: $2.35)
Mark Reichman [email protected] | (561) 999-2272
Second Quarter Financial Results Exceed Expectations; Increasing Estimates
Rating: OUTPERFORM

Second quarter financial results. Hemisphere Energy reported second-quarter net income of C$10.4 million or C$0.10 per share compared to $5.8 million or $0.06 per share during the prior year period. We had forecast net income of C$9.5 million or C$0.09 per share. Year-over-year, revenue rose 52.2% to C$28.9 million driven by an increase in average daily production to 3,628 barrels of oil equivalent per day (BOE/d) compared to 2,883 during the prior year quarter and our estimate of 3,500. The average sales price per BOE increased to C$87.65 compared to C$72.48 in the second quarter of 2023. Adjusted funds flow from operations increased to C$13.6 million compared to C$8.1 million during the prior year period.

Updating estimates. We increased our 2024 adjusted funds flow (AFF) and earnings per share (EPS) estimates to C$45.4 million and C$0.35, respectively, from C$44.3 million and C$0.34. Our revisions are driven by the better than expected second quarter financial results. Our third and fourth quarter production estimates of 3,600 and 3,775 BOE/d are unchanged. We have increased our 2025 production estimate to 3,625 BOE/d from 3,504 and raised our AFF and EPS estimates to C$42.6 million and C$0.32, respectively, from C$41.1 million and C$0.30.

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NN Inc (NNBR/$3.62 | Price Target: $6)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Some Insider Buying
Rating: OUTPERFORM

Insider Buying. We are always interested to see insider buying, especially around current trading levels for the stock. Last week, three NN directors acquired a total of 32,550 NNBR shares at average prices in the $3.41 to $3.64 range. Such concentrated open market purchases are a positive, in our view.

Insider 1. First up, on August 14th Director Joao Faria disclosed the purchase of 20,000 NNBR shares at an average cost of $3.41 per share. Mr. Faria now owns 277,843 NNBR shares. Prior to last week, Mr. Faria’s most recent open market purchase was back in May 2023 when he acquired 30,000 NNBR shares at an average cost of $1.74.

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Noble Capital Markets Research Report Tuesday, August 20, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – First Look at the Second Quarter

Bit Digital (BTBT/$2.99 | Price Target: $5.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
First Look at the Second Quarter
Rating: OUTPERFORM

Results. Revenue for the quarter totaled $29.0 million, a 220% increase from last year of $9.0 million due to the inclusion of the HPC business. We estimated revenue of $24.9 million. Driven by an $11.5 million unrealized loss on digital assets, adjusted EBITDA was a negative $3.8 million from a positive $1.9 million last year. Net loss for the quarter was $12.0 million, or $0.09/sh, from a loss of $2.4 million, or $0.03/sh, the prior year.

A Temporary Setback. The Company’s anchor HPC client is temporarily delaying its purchase order to potentially upgrade the servers to have newer generation Nvidia GPUs. The contract may be amended to provide for the newer GPUs. We believe the delay to only be temporary as Nvidia’s new Blackwell architecture is expected to be released later in the year or in early 2025.

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Noble Capital Markets Research Report Monday, August 19, 2024

Companies contained in today’s report:

GeoVax Labs (GOVX)/OUTPERFORM – Raising Price Target To $10 Based On Program Progress

GeoVax Labs (GOVX/$7.06 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
Raising Price Target To $10 Based On Program Progress
Rating: OUTPERFORM

GeoVax Has Made Substantial Clinical and Manufacturing Process. We are raising our Price Target on GEOX to $10 based on the recent progress that has driven the stock through our previous $6 target. The company recently announced a DARPA grant for CM04S1 and its Phase 2 plans for Gedeptin in HNSCC. Last week, Mpox news highlighted recent advances in GeoVax’s manufacturing platform and its MVA-based vaccine for smallpox and Mpox.

Mpox News Draws Attention To GeoVax’s MVA Manufacturing Platform. On August 14, WHO declared Mpox to be a “public health emergency of international concern”, or PHEIC, due to a new type of Mpox (formerly monkeypox) spreading in West Africa. The new type is more infectious and more fatal than the type seen 2022. The previous virus spread through sexual contact (bodily fluids), while the current strain has also spread to health care workers through contact with patients’ clothing and bedding.

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Noble Capital Markets Research Report Friday, August 16, 2024

Companies contained in today’s report:

Conduent Inc (CNDT)/OUTPERFORM – Nearing the Trough, Looking Towards the Future
InPlay Oil (IPOOF)/OUTPERFORM – Updating Estimates to Reflect Revised Guidance
QuoteMedia Inc. (QMCI)/OUTPERFORM – Revenue Remains Lackluster
Traws Pharma (TRAW)/OUTPERFORM – Traws Reports 2Q24 and Gives Post-Acquisition Update
Xcel Brands (XELB)/OUTPERFORM – Near Term Moving Parts, But 2025 Revenue Trends Appear Favorable

Conduent Inc (CNDT/$3.29 | Price Target: $7)
Patrick McCann, CFA [email protected] | (314) 724-6266
Michael Kupinski [email protected] | (561) 994-5734
Nearing the Trough, Looking Towards the Future
Rating: OUTPERFORM

Q2 beat. The company delivered solid Q2 with revenue of $828 million, slightly better than our forecast of $812 million, and adj. EBITDA of $35 million, 84% better than our estimate of $19 million. Importantly, we believe the company is nearing the trough of its operating results as its divestiture activity appears to be winding down.

Favorable trends emerging. Importantly, the Commercial segment, the company’s largest by revenue, appears to be trending positively. Management highlighted that new business signings rebounded in Q2. Additionally, the Transportation segment is positioned for sequential revenue growth in the back half of the year, buoyed by a large contract in Australia.

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InPlay Oil (IPOOF/$1.63 | Price Target: $6)
Mark Reichman [email protected] | (561) 999-2272
Updating Estimates to Reflect Revised Guidance
Rating: OUTPERFORM

Second quarter financial results. InPlay Oil reported second quarter net income of C$5.4 million or C$0.06 per compared to C$4.3 million or C$0.05 per during the prior year period. We had forecast net income of C$3.6 million or C$0.04 per share. Average quarterly production increased 2.2% to 8,657 barrels of oil equivalent per day (boe/d) compared to 8,474 in the second quarter of 2023.

Corporate guidance. InPlay trimmed its 2024 production guidance to a range of 8,700 to 9,000 boe/d from 9,000 to 9,500, and lowered expectations for crude oil prices. Lower production reflects foregone production from a Glauconite well that was drilled but experienced casing failure, downtime, and a decision to bring wells on later in the year. Expense guidance is mostly unchanged on a dollar per barrel of oil equivalent basis. Adjusted funds flow is expected to be in the range of C$80 million to C$85 million compared to prior guidance of C$90 million to C$97 million.

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QuoteMedia Inc. (QMCI/$0.19 | Price Target: $0.3)
Michael Kupinski [email protected] | (561) 994-5734
Hans Baldau [email protected] |
Revenue Remains Lackluster
Rating: OUTPERFORM

Weak Q2 Results. The company reported revenue of $4.7 million and adjusted EBITDA of $0.5 million, lighter than our estimates of $5.0 million and $0.9 million, respectively. Figure #1 Q2 Variance highlights the company’s results against our expectations. Revenues stayed flat from the first quarter and decreased by 1.0% from the year earlier Q2 2023. 

Lackluster revenue outlook. Management indicated the lackluster revenue trends appear to be continuing into the third quarter in spite of a building pipeline of business. We believe that the company is being buffeted by clients switching to cheaper data alternatives (although this is low margin business) and lower volumes. 

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Traws Pharma (TRAW/$0.36 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
Traws Reports 2Q24 and Gives Post-Acquisition Update
Rating: OUTPERFORM

Operations Were Integrated During The Second Quarter. Traws Reported a 2Q24 loss of $123.1 million or $(4.87) per share, including a $117.5 million charge for in-process research and development related to the acquisition of Transfynydd. Excluding the charge, net loss would have been around $5.7 million or about $(0.22) per share. The company ended the quarter with $16.4 million in cash, which we expect to fund operations and clinical milestone announcements through the end of 2024.

Influenza Program Is In Phase 1.TRX100 (tivoxavir marboxil) is a cap-dependent endonuclease inhibitor for influenza. Inhibition of this enzyme in the influenza virus inhibits viral replication of both influenza A and B strains. Early dosing studies have shown safety and tolerability, with data to support a single oral dose for therapeutic or prophylactic use. A Phase 1 dose single-dose escalation study is currently in progress.

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Xcel Brands (XELB/$0.6801 | Price Target: $2)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Near Term Moving Parts, But 2025 Revenue Trends Appear Favorable
Rating: OUTPERFORM

Q2 Results. Total company revenues of $2.95 million was in line with our $3.0 million estimate. Adj. EBITDA, which was essentially flat at a loss of $40,000, was in line with our loss estimate of $44,000. Q2 reflected sequential quarterly improvement from the Q1 adj. EBITDA loss of $1.6 million. 

A Lot of moving parts. We anticipate some noise in Q3 from the absence of Lori Goldstein’s brand. But, we expect a lift in Q4 revenue from holiday spending, particularly in Jewelry. Furthermore, the company has a lot in the pipeline; a launch of a food and kitchen products brand in Q1, expansion of Christie Brinkley’s brand, TWRHLL, including a possible launch into two big box retailers, and contributions from Halston, slated for Spring of 2025.

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Noble Capital Markets Research Report Thursday, August 15, 2024

Companies contained in today’s report:

Cocrystal Pharma (COCP)/OUTPERFORM – 2Q24 Reported With Focus On Influenza
QuoteMedia Inc. (QMCI)/OUTPERFORM – Revenue Remains Lackluster
Schwazze (SHWZ)/OUTPERFORM – Post Call Notes and Updated Model
SKYX Platforms (SKYX)/OUTPERFORM – Setting the Table for Future Revenue Growth
Snail (SNAL)/OUTPERFORM – Looking Beyond The Noise
Unicycive Therapeutics (UNCY)/OUTPERFORM – 2Q24 Reported With Guidance For NDA Submission By End Of August
Xcel Brands (XELB)/OUTPERFORM – Its Transformation Appears To Be Working

Cocrystal Pharma (COCP/$1.7 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
2Q24 Reported With Focus On Influenza
Rating: OUTPERFORM

Clinical Programs Reported Strong Progress. Cocrystal reported a 2Q24 loss of $5.3 million or $(0.54) per share, with $18.1 million in cash on June 20, 2024. The Phase 2a human challenge study testing the influenza vaccine CC-42344 is on schedule to report results later in 2025. During the quarter, preclinical testing for CC-42344 showed efficacy against the avian influenza A (H5N1), a new strain that has infected dairy cattle and has jumped to humans. Separately, CDI-988 reached a Phase 1 clinical milestone and is expected to report full top-line results for coronavirus and norovirus in late 2024/early 2025.

CC-42344 Moves Forward. CC-42344 is a vaccine for influenza that works through inhibition of PB2, a viral enzyme needed for early steps in the reproduction cycle of the influenza virus. CC-42344 has completed enrollment in a Phase 2a study testing the vaccine in human volunteers in the UK. Data is expected later in 2024, to be followed by an IND for clinical studies in the US. An inhaled version is currently in toxicology studies, with Phase 1 studies for prophylactic and post-exposure therapeutic use planned for 2025.

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QuoteMedia Inc. (QMCI/$0.18 | Price Target: $0.4)
Michael Kupinski [email protected] | (561) 994-5734
Hans Baldau [email protected] |
Revenue Remains Lackluster
Rating: OUTPERFORM

Weak Q2 Results. The company reported revenue of $4.7 million and adjusted EBITDA of $0.5 million, lighter than our estimates of $5.0 million and $0.9 million, respectively. Figure #1 Q2 Variance highlights the company’s results against our expectations. Revenues stayed flat from the first quarter and decreased by 6.0% from the year earlier Q2 2023.

Slow start to the year. Management indicated following its first quarter results that client churn at the tail end of 2023 contributed to the slow start in 2024. As of the first quarter, the company anticipated a strong finish to the year as its pipeline was expected to improve. We expect more details on the second half following its investor call at 2pm ET, call number is 800.274.8461.

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Schwazze (SHWZ/$0.2 | Price Target: $4)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Post Call Notes and Updated Model
Rating: OUTPERFORM

Audit. Schwazze and its auditor are working diligently to complete the necessary re-audit of the 2023 financials. While management did not provide a timetable, we believe the process will be completed in the near-term. No material misstatements have been uncovered to date. Once audited financials are filed, we expect the Company to apply for re-listing of its shares.

Re-Scheduling. We continue to expect re-scheduling to occur in the near-term, which will have a positive impact on the entire industry. Schwazze continues to believe the elimination of 280e taxes will have a significant impact on cash flows for the Company. The Company also will seek to refile past tax returns to capture prior excess taxes paid under 280e.

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SKYX Platforms (SKYX/$1 | Price Target: $5)
Patrick McCann, CFA [email protected] | (314) 724-6266
Michael Kupinski [email protected] | (561) 994-5734
Setting the Table for Future Revenue Growth
Rating: OUTPERFORM

Execution on target. The company reported a solid quarter, in line with our revenue estimate and better than our adj. EBITDA loss estimate. Q2 revenue was $21.4 million, roughly in line with our estimate of $22.0 million, while an adj. EBITDA loss of $2.1 million was better than our forecast of a loss of $4.0 million. In our view, the sequential revenue growth, coupled with a diminishing cash burn should serve as a favorable indicator of the company’s ability to execute its growth strategy, while targeting a swing towards profitability in 2025.  

Expanding distribution channels. Recently, the company announced that its products would become available at Home Depot. Products are already live on Home Depot’s website and various products are expected to arrive in a select number of stores in the coming months. We view this as a significant expansion that furthers the company’s ability to reach both the retail and professional channels at scale. As such, we believe the inclusion of SKYX products at Home Depot could accelerate revenue growth in both customer verticals.

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Snail (SNAL/$0.76 | Price Target: $6)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Looking Beyond The Noise
Rating: OUTPERFORM

Q2 results. The company reported Q2 revenue of $21.6 million, and adj. EBITDA of $3.1 million, both of which were lower than our forecasts of $27.8 million and $7.4 million, respectively. In our view, there were multiple factors contributing to the shortfall, such as deferred revenue in the quarter, as well as lower than expected revenue from ARK: Survival Ascended (ASA) on Microsoft Game Pass.

Deferred revenue. Notably, deferred revenue is largely related to the five DLC packages included in the sale of ASA, of which four have not been released yet. Furthermore, as DLC packages included in ASA are released, the company will defer less revenue from future ASA sales. In our view, reducing deferred revenue will provide investors with a clearer picture of company operating results.

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Unicycive Therapeutics (UNCY/$0.32 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
2Q24 Reported With Guidance For NDA Submission By End Of August
Rating: OUTPERFORM

OLC Data and NDA Dominated 2Q24. Unicycive reported 2Q24 income of $3.0 million or $0.08 per share and a loss of $(0.15) on a fully diluted basis. Loss from operations for 2Q24 was $7.4 million, with a gain of $16.8 million from the change in fair value of warrant conversion. This offsets a charge of $11.8 million in 1Q24, bringing the six-month total for fair value of warrant conversion to $5.0 million. Cash on June 30 was $41.8 million, which we expect to fund operations into 2H25.

Pivotal Study Met Its Endpoints and Showed Patients Reaching Target Levels. As discussed in our Research Note on June 26, Unicycive reported results from its OLC pivotal study met its tolerability and safety endpoints with data that compares favorably with Fosrenol (lanthanum carbonate). Over 90% of the patients were able to lower their serum phosphate to target levels, with 70% reaching target at the lowest dose tested. We believe these results could make OLC highly competitive in the marketplace.

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Xcel Brands (XELB/$0.7 | Price Target: $2.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Its Transformation Appears To Be Working
Rating: OUTPERFORM

In line Q2. Total company revenues of $2.95 million was in line with our $3.0 million estimate. Adj. EBITDA, which was essentially flat at a loss of $40,000 was in line with our loss estimate of $44,000. See Figure #1 Q2 Results for highlights. Q2 reflected sequential quarterly improvement from the Q1 adj. EBITDA loss of $1.6 million. 

Behind the numbers. In our view, the recent results reflect the company’s progress toward its high margin licensing model. But, the quarter also reflected the revenue from Lori Goldstein, which was sold on June 30. As such, Q3 will reflect the absence of revenue from that brand. Notably, the company’s developing brands, Christie Brinkley and C. Wonder, appear to be performing well and may offset a large portion of the anticipate revenue impact. 

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Noble Capital Markets Research Report Wednesday, August 14, 2024

Companies contained in today’s report:

Bitcoin Depot (BTM)/OUTPERFORM – Rolling Out the Kiosks
FreightCar America (RAIL)/OUTPERFORM – Strong 2Q Operational and Financial Results; Increasing Estimates
Harte Hanks (HHS)/OUTPERFORM – A Deeper Dive Into The Latest Quarter; Stock Over Reacts
Lifeway Foods (LWAY)/OUTPERFORM – Setting Another Record
PDS Biotechnology (PDSB)/OUTPERFORM – PDS 2Q24 Financial Results Recap A Productive Quarter
Schwazze (SHWZ)/OUTPERFORM – A First Look into 2Q24 Results
Snail (SNAL)/OUTPERFORM – First Look At Q2 Results

Bitcoin Depot (BTM/$1.57 | Price Target: $7)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] | (314) 724-6266
Rolling Out the Kiosks
Rating: OUTPERFORM

Q2 beats expectations. The Company reported Q2 revenue of $163.1 million, beating our estimate of $147.6 million by 10.5%, and adj. EBITDA of $12.7 million, 37.1% above our estimate of $9.2 million. While revenue and adj. EBITDA were down 17.4% and 36.1% from the prior year period, respectively, we view 2024 as a transitional year and the Q2 results favorably. 

Kiosk deployment ahead of schedule.  Importantly, the company had 8,068 kiosks deployed at the end of Q2, surpassing its goal of having 8,000 kiosks deployed by year end. With more than 10,000 total owned kiosks (deployed and warehoused) and a strong pipeline of potential new partners, we are estimating the number of kiosk deployed at year end to be 9,000.

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FreightCar America (RAIL/$4.17 | Price Target: $5)
Mark Reichman [email protected] | (561) 999-2272
Strong 2Q Operational and Financial Results; Increasing Estimates
Rating: OUTPERFORM

Second quarter financial results. FreightCar America generated second quarter adjusted net income to common stockholders of $1.772 million or $0.05 per share compared to $0.424 million or $0.02 per share during the prior year period. We had forecast $1.582 million and $0.05 per share. Revenue and rail car deliveries increased to $147.4 million and 1,159 compared to $88.6 million and 760 during the second quarter of 2023. On a year-over-year basis, adjusted EBITDA increased 50.6% to $12.1 million. While EPS was in line with our estimates, railcar deliveries, revenues and adjusted EBITDA were above our estimates.

Full Year 2024 corporate guidance. Management raised its full year 2024 guidance ranges. Railcar deliveries are expected to be in the range of 4,300 to 4,700, revenue is expected to be in the range of $560 million to $600 million, and adjusted EBITDA is expected to be in the range of $35 to $39 million. Previously, railcar deliveries were expected to be in the range of 4,000 to 4,400, revenue was expected to be in the range of $520 million to $572 million, and adjusted EBITDA was expected to be in the range of $32 million to $38 million.

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Harte Hanks (HHS/$7.29 | Price Target: $17.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
A Deeper Dive Into The Latest Quarter; Stock Over Reacts
Rating: OUTPERFORM

Installing a sales organization. We believe that the management team is focused on positioning the company for a swing toward revenue and cash flow growth. To that end, the company has hired high profile senior management that is transforming it into a sales and customer centric company.

A healthy revenue indicator. Management indicated that its pipeline of business is building and ahead of last year. We believe that the company’s investment into building its sales infrastructure, which began late last year, is likely to show improving revenue trends in the second half 2024.

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Lifeway Foods (LWAY/$16.66 | Price Target: $20)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Setting Another Record
Rating: OUTPERFORM

Another Record Quarter. Net sales for the second quarter were $49.2 million, a new record for the Company, and marks the 19th consecutive quarter of year-over-year growth. Net sales also were above our estimate of $46.5 million. Gross margin was 27.0%, down from 28.8% last year but above the first quarter’s 25.8%. Net income was $3.8 million, or $0.25/sh, above last year’s $3.2 million or $0.21/sh and our estimate of $2.6 million or $0.17/sh.

Kefir the Driver. Once again, sales of drinkable kefir drove quarterly results. In 2Q24, drinkable kefir sales rose 30.8% to $41.0 million from $31.3 million in 2Q23. Drinkable kefir sales accounted for 83% of total revenue, up from 80% in the year ago period.

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PDS Biotechnology (PDSB/$3.05 | Price Target: $17)
Robert LeBoyer [email protected] | (212) 896-4625
PDS 2Q24 Financial Results Recap A Productive Quarter
Rating: OUTPERFORM

FDA Alignment Allows Phase 3 To Move Forward. PDS Biotech announced a loss of $8.3 million or $(0.23) per share for 2Q24. Cash at June 30, 2024, was $57.7 million, which we estimate to be sufficient to fund operations into 2H25. The company announced FDA alignment on the design of the Phase 3 VERSATILE-003 Plus trial, with preparations underway to begin the trial by year-end.

Meeting Results Confirmed Three-Arm Design Of Phase 3. PDS held a Pre-Phase 3 meeting with the FDA to get alignment on the design and analysis of the Phase 3 VERSATILE-003 Plus trial with the additional treatment arm testing the Triplet Combination of Versamune HPV, PDS01ADC, and Keytruda. The company’s immediate focus will be to start the VERSAMUNE-003 doublet arm by YE2024 while conducting the dose optimization stage separately. The design of the trial was discussed in our Research Note on July 9.

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Schwazze (SHWZ/$0.22 | Price Target: $4)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A First Look into 2Q24 Results
Rating: OUTPERFORM

Results. Revenue of $43.2 million increased 2% y-o-y and was in-line with our $43 million estimate. Gross profit margin fell to 44% from 54.4% a year ago, but was in-line with our 43.6% projection. The GM decline reflects ongoing pricing pressure in both Colorado and New Mexico, as well as a greater mix of 3rd-party products in New Mexico and higher medical sales in Colorado. Schwazze reported a net operating loss of $2.7 million and a net loss of $13.9 million, or $0.20/sh. We were at a net loss of $0.19/sh.

Quarter Highlights. Schwazze generated sequential quarterly growth across all key financial metrics during the quarter. The Company continued to focus on sharper pricing and promotional strategies to drive store traffic and market share in both Colorado and New Mexico. Wholesale margins continued to show improvement.

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Snail (SNAL/$0.73 | Price Target: $6)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] | (314) 724-6266
First Look At Q2 Results
Rating: OUTPERFORM

Q2 results. The company reported Q2 revenue of $21.6 million, and adj. EBITDA of $3.1 million, both of which were lower than our forecasts of $27.8 million and $7.4 million, respectively, as illustrated in Figure #1 Q2 Results. In our view, there were multiple factors contributing to the shortfall, such as deferred revenue in the quarter, as well as lower than expected revenue from ARK: Survival Ascended (ASA) on Microsoft Game Pass.

Closing the gap. Notably, there is a technology gap between many potential ASA users’ PC hardware and the advanced processing power needed for the game, which uses Unreal Engine 5. This technology disparity has inhibited some users from migrating from the original game, ARK: Survival Evolved (ASE), to ASA, dampening ASA sales. However, an update to Unreal Engine 5 that is expected to take place in Q3. Should the update help bridge the technology gap, it could catalyze accelerated adaption of ASA. 

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Noble Capital Markets Research Report Tuesday, August 13, 2024

Companies contained in today’s report:

FreightCar America (RAIL)/OUTPERFORM – Solid 2Q Operational and Financial Results; 2024 Corporate Guidance Raised
SKYX Platforms (SKYX)/OUTPERFORM – Solid Q2 Punctuated by Reduced Cash Burn

FreightCar America (RAIL/$3.57 | Price Target: $4.5)
Mark Reichman [email protected] | (561) 999-2272
Solid 2Q Operational and Financial Results; 2024 Corporate Guidance Raised
Rating: OUTPERFORM

Second quarter financial results. FreightCar America generated second quarter adjusted net income to common stockholders of $1.772 million or $0.05 per share compared to $0.424 million or $0.02 per share during the prior year period. We had forecast $1.582 million and $0.05 per share. Revenue and rail car deliveries increased to $147.4 million and 1,159 compared to $88.6 million and 760 during the second quarter of 2023. On a year-over-year basis, adjusted EBITDA increased 50.6% to $12.1 million. While EPS was in line with our estimates, railcar deliveries, revenues and adjusted EBITDA exceeded our estimates of 980, $127.1 million, and $9.5 million, respectively. The weighted average diluted share count of ~32.3 million was also higher than our estimate of 31.1 million. Second quarter free cash flow amounted to $55.9 million based on net cash flows provided by operating activities of $57.2 million and $1.3 million of net cash flows used in investing activities.

Full Year 2024 corporate guidance. Management raised its full year 2024 guidance ranges. Railcar deliveries are expected to be in the range of 4,300 to 4,700, revenue is expected to be in the range of $560 million to $600 million, and adjusted EBITDA is expected to be in the range of $35 to $39 million. Previously, railcar deliveries were expected to be in the range of 4,000 to 4,400, revenue was expected to be in the range of $520 million to $572 million, and adjusted EBITDA was expected to be in the range of $32 million to $38 million.

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SKYX Platforms (SKYX/$0.99 | Price Target: $5)
Patrick McCann, CFA [email protected] | (314) 724-6266
Michael Kupinski [email protected] | (561) 994-5734
Solid Q2 Punctuated by Reduced Cash Burn
Rating: OUTPERFORM

Q2 in line. The company reported Q2 revenue of $21.4 million, roughly in line with our estimate of $22.0 million. Adj. EBITDA of a loss of $2.1 million was better than our forecast of a loss of $4.0 million, primarily driven by lower-than-expected SG&A expenses. Figure #1 Q2 Results illustrates the quarterly performance.

Key expansion to Home Depot. Following the conclusion of Q2, the company announced that its products would become available at Home Depot, the industry leader in the home improvement market. In our view, this is a significant step for the company as Home Depot has both retail consumers and professional contractors. Consequently, we believe the inclusion of SKYX products at Home Depot could accelerate revenue growth in both customer verticals. The Home Depot expansion also serves to validate the SKYX technology, given that Home Depot is a global industry leader.

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Noble Capital Markets Research Report Monday, August 12, 2024

Companies contained in today’s report:

Comstock Inc. (LODE)/OUTPERFORM – Upgrading Our Investment Rating to Outperform from Market Perform
CoreCivic, Inc. (CXW)/MARKET PERFORM – A Solid Quarter
EuroDry (EDRY)/OUTPERFORM – Our Estimates Reflect a Strong Finish to 2024; Rating Remains Outperform
GDEV Inc (GDEV)/OUTPERFORM – Why An Upswing In Bookings Matters
Kelly Services (KELYA)/OUTPERFORM – Riding Out the Market Conditions
Kratos Defense & Security (KTOS)/OUTPERFORM – Review of 2Q24 Results

Comstock Inc. (LODE/$0.1508 | Price Target: $2.6)
Mark Reichman [email protected] | (561) 999-2272
Upgrading Our Investment Rating to Outperform from Market Perform
Rating: OUTPERFORM

Proposed transaction with SBC Commerce. Comstock executed an indicative term sheet for $325 million, or $315 million net of transaction fees, in funding through SBC Commerce LLC (SBCC), a U.S. based private equity group. The transaction is contingent on final due diligence and applicable regulatory approvals and is expected to close in tranches over the next two to three months. At this point, we assume the transaction will close successfully within the contemplated time frame.

Infusion of growth capital to accelerate commercialization. The transaction provides a clear valuation marker for each of the company’s fuels, metals, and mining businesses and secures growth capital to accelerate commercialization efforts. SBCC will acquire Comstock’s industrial and commercial real estate and water rights in Nevada for $50 million, or $47 million net of transaction expenses.

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CoreCivic, Inc. (CXW/$12.44)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Solid Quarter
Rating: MARKET PERFORM

2Q24. Revenue came in at $490.1 million, up from $463.7 million a year ago and above our $482 million estimate. Increased occupancy and per diem rates drove the increase. Adjusted EBITDA was $83.9 million, up from $72.1 million, and our $74.6 million estimate. EPS was $0.17, adjusted EPS $0.20, and NFFO $0.42, compared to $0.13, $0.12, and $0.33, respectively, in 2Q23.

New Contract. In late July, CoreCivic received a Notice of Intent to Award a new management contract from the state of Montana to care for additional residents. The Company expects to receive 120 residents in the 3Q24. If the State needs additional capacity, the State may approve the utilization of any other facility CoreCivic owns or operates.

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EuroDry (EDRY/$21 | Price Target: $30)
Mark Reichman [email protected] | (561) 999-2272
Our Estimates Reflect a Strong Finish to 2024; Rating Remains Outperform
Rating: OUTPERFORM

Second quarter financial results. Eurodry Ltd. reported an adjusted second-quarter net loss to controlling shareholders of $447.4 thousand or ($0.17) per share compared to an adjusted net loss of $1.3 million or ($0.48) per share during the prior year period. Adjusted EBITDA increased to $5.0 million compared to $2.5 million during the prior year period. While financial results improved on a year-over-year basis due to higher revenue, driven by an increased average time charter equivalent rate, voyage and drydocking expenses were above our estimates.

Updating estimates. We forecast 2024 EBITDA of $20.7 million and a net loss of ($0.65) per share. The third quarter will be a heavy quarter for drydocking and our revisions are driven primarily by higher drydocking expenses and fewer voyage days. We anticipate the company to post a net loss in the third quarter but finish the year with a strong fourth quarter due, in part, to lighter drydocking activity.

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GDEV Inc (GDEV/$2.91 | Price Target: $6)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] | (314) 724-6266
Why An Upswing In Bookings Matters
Rating: OUTPERFORM

Initiating coverage with an Outperform rating. We are initiating coverage of GDEV, a global gaming company, with an Outperform rating and a $6 price target. Our favorable rating is based on an improved fundamental outlook and compelling stock valuation. After a post pandemic revenue slump as gaming activity returned to more normalized levels, the company now appears to be turning a corner towards revenue growth again. In our view, the story of GDEV’s improving fundamentals is under the radar, representing an opportunity for investors. 

A leading player in the attractive gaming industry. GDEV is the largest independent, publicly traded gaming company that is profitable, generates cash flow, and has a solid balance sheet. The company’s revenues are diverse geographically, by platform, and by titles. 

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Kelly Services (KELYA/$19.43 | Price Target: $27)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Riding Out the Market Conditions
Rating: OUTPERFORM

2Q Results. The sale of the European business and the Motion Recruitment Partners acquisition affected revenue, as revenue declined to $1.06 billion from $1.22 billion last year, but in-line with our estimate of $1.07 billion. Net income for the quarter was $4.6 million, or $0.13/sh, from $7.5 million, or $0.20/sh, a year ago, as the Europe staffing sale contributed to the decrease. We estimated net income of $14.9 million or $0.42/sh.

Growth and Stability. While the uncertain market conditions continue to impact Kelly’s segments, management noted that segments saw sequential stabilization, while others continued to grow such as Education. We believe the stabilization indicates the bottom of demand for some of Kelly’s services, and management’s expectation of modest improvement in most of its segments in the second half gives this credence.

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Kratos Defense & Security (KTOS/$19.73 | Price Target: $22)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Review of 2Q24 Results
Rating: OUTPERFORM

Accelerating Growth. Kratos’ second quarter results reflect the successful execution of the Company’s strategy, in our view. The quarter was characterized by organic growth in key areas such as unmanned jet drone systems, turbine technologies, microwave products, and C5ISR.

Alignment. A hardware and software rich technology company, Kratos is well aligned to address increased global defense budgets in the areas such as air defense, missiles, radar, space, satellite, hypersonic engines, propulsion systems, C5ISR, microwave electronics, drones, cyber, and training systems.

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Noble Capital Markets Research Report Friday, August 9, 2024

Companies contained in today’s report:

GoHealth, Inc. (GOCO)/OUTPERFORM – Is there a Tailwind in the Forecast?
Graham Corp (GHM)/OUTPERFORM – A Deeper Dive into 2Q24 Results and Updated Model
Harte Hanks (HHS)/OUTPERFORM – Investment In Sales Not Yet Kicking In Gear
NN Inc (NNBR)/OUTPERFORM – Reports Second Quarter Results
Ocugen (OCGN)/OUTPERFORM – 2Q24 Reported With Summary Of Progress In Clinical Trials
Saga Communications (SGA)/OUTPERFORM – Political A Big Swing Factor

GoHealth, Inc. (GOCO/$9.15 | Price Target: $22)
Patrick McCann, CFA [email protected] | (314) 724-6266
Michael Kupinski [email protected] | (561) 994-5734
Is there a Tailwind in the Forecast?
Rating: OUTPERFORM

Q2 results below estimates. The company reported Q2 revenue and adj. EBITDA of $105.9 million and a loss of $12.3 million, respectively, below our estimates. Our revenue and adj. EBITDA estimates were $144.0 million and a loss of $6.3 million, respectively.

Preparing for AEP. The company has been testing Plan Fit Save, an initiative whereby it is compensated by health plan carriers for improving customer retention when GoHealth recommends consumers to keep their existing plans. We believe the combination Plan Fit Save, as well as the prospect for disruption to health plan benefits in the upcoming Annual Enrollment Period, could set the company up for a strong finish to the year.

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Graham Corp (GHM/$28.71 | Price Target: $35)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Deeper Dive into 2Q24 Results and Updated Model
Rating: OUTPERFORM

2Q24 Results. The improved top and bottom lines reflect Graham’s successful operating strategy, in our view. The first quarter can be characterized by solid growth, consistent improvement, and strengthened profitability. We also would note the expansion of Graham’s defense business has reduced the Company’s economic sensitivity.

New Orders. Graham’s Barber-Nichols segment reported the receipt of three new awards, totaling in excess of $65 million. An extension of work for the MK48 Mod 7 Heavyweight torpedo program, received in the first quarter; a new program for the Columbia-class submarine; and a contract to provide cryogenic recirculation pumps for space vehicles. We believe these awards demonstrate the Company’s capabilities to successfully compete in its key markets.

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Harte Hanks (HHS/$8.21 | Price Target: $17.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Investment In Sales Not Yet Kicking In Gear
Rating: OUTPERFORM

Mixed Q2 results. Revenues of $45.0 million was slightly below our $47.5 million estimate. In spite of the lighter than expected revenues, the company delivered on adj. EBITDA expectations at $3.6 million, reflecting benefits from its cost efficiency strategy developed last year. Figure #1 Q2 Results highlights the quarter versus our estimates. 

A healthy revenue indicator. Management indicated that its pipeline of business is building and ahead of last year, but that there is a long tail to convert to revenue. We believe that the company’s investment into building its sales infrastructure and culture, which began late last year, has yet to be converted into enhanced revenue. The hoped for impact of the investment may be pushed out a quarter or two.

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NN Inc (NNBR/$3.37 | Price Target: $6)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports Second Quarter Results
Rating: OUTPERFORM

2Q24. Net sales totaled $123 million, down 1.8% y-o-y. We were at $118 million. Adjusted EBITDA was $13.4 million, up from $10.5 million last year and above our $12.2 million estimate. The second quarter was the fourth consecutive quarter of improved y-o-y performance. NN reported an adjusted net loss of $0.02/sh, compared to an adjusted net loss of $0.08/sh in 2Q23. We were at an adjusted loss of $0.05/sh.

Transformation Program. NN is seeing the benefits of its transformation initiatives, which are yielding observable momentum across key focus areas of profitability enhancement, operational performance, and accelerated new business wins. Notably, on a trailing-twelve-month basis, NN has delivered adjusted EBITDA of  $49.2 million, an improvement of 28.7% y-o-y.

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Ocugen (OCGN/$1.28 | Price Target: $8)
Robert LeBoyer [email protected] | (212) 896-4625
2Q24 Reported With Summary Of Progress In Clinical Trials
Rating: OUTPERFORM

Ocugen reported a 2Q24 loss of $10.3 million or $(0.04) per share. During the quarter, the first patient was treated in the Phase 3 liMeliGhT (pronounced “limelight”) trial for OCU400 in retinitis pigmentosa (RP). Separately, the Phase 1/2 OCU410 trial for geographic atrophy in dry AMD completed dosing of its third cohort and began Phase 2. Cash on June 30 was $15.7 million, excluding $32.6 million raised in a public offering on August 2. Based on our quarterly estimates, we project cash to last until 2H25 with about $40 million in cash at the end of 3Q24.

OCU400 Began The Phase 3 liMeliGht Trial and Expanded Access. During the quarter, the first patient in the Phase 3 liMeliGhT trial testing OCU400 in retinitis pigmentosa (RP) was treated. The trial has one arm testing OCU400 in patients that have the RHO mutation and another arm with any of several gene mutations associated with RP. Each arm will have 75 patients for a total target enrollment of 150 patients.

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Saga Communications (SGA/$16 | Price Target: $24)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Political A Big Swing Factor
Rating: OUTPERFORM

Delivers on expectations. The company reported Q2 revenue of $28.7 million and adj. EBITDA of $4.4 million, both of which were in line with our estimates of $28.8 million and $4.6 million, respectively as illustrated in Figure #1 Q2 Results. Notably, the revenue estimate was achieved in spite of weaker than expected Political advertising. 

Pacings appear weak. Management indicated that Q3 revenues are pacing down mid single digits, which, we believe, may be conservative given that there is limited visibility on Political advertising. The weak revenue outlook reflects, however, lackluster core advertising which appears to be impacted by the current macroeconomic headwinds.  

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Noble Capital Markets Research Report Thursday, August 8, 2024

Companies contained in today’s report:

Cadrenal Therapeutics (CVKD)/OUTPERFORM – 2Q24 Financial Report Confirms Discussions With Abbott For Tecarfarin Development
Conduent Inc (CNDT)/OUTPERFORM – Post-Transition Business Coming into Focus
CoreCivic, Inc. (CXW)/MARKET PERFORM – A Peek into the Second Quarter
Euroseas (ESEA)/OUTPERFORM – Strong Second Quarter Financial Results; Increasing Estimates
Graham Corp (GHM)/OUTPERFORM – First Look at the First Quarter
Great Lakes Dredge & Dock (GLDD)/OUTPERFORM – Solid 2Q24 Sets Up Rest of the Year
Kratos Defense & Security (KTOS)/OUTPERFORM – A Look at the Second Quarter
Seanergy Maritime (SHIP)/OUTPERFORM – Second Quarter Earnings Exceed Expectations
The GEO Group (GEO)/OUTPERFORM – 2Q24 – Delivering Steady Operational and Financial Performance
The ODP Corporation (ODP)/OUTPERFORM – An Overreaction To A Difficult Quarter
Townsquare Media (TSQ)/OUTPERFORM – Digital On A Favorable Revenue Trajectory

Cadrenal Therapeutics (CVKD/$0.41 | Price Target: $4)
Robert LeBoyer [email protected] | (212) 896-4625
2Q24 Financial Report Confirms Discussions With Abbott For Tecarfarin Development
Rating: OUTPERFORM

LVAD Development Takes The Spotlight Cadrenal reported 2Q24 loss of $2.4 million or $(0.15) per share. Tecarfarin development in ESRD with AFib continues, and the FDA granted Orphan Drug Designation for tecarfarin in implanted circulatory support devices, such as LVADs. The company also confirmed that it was in discussions with Abbott (ABT, Not Rated) to develop tecarfarin as an anticoagulant for LVAD patients. We believe this disclosure could lead to a development agreement between the two companies.

Discussions With Abbott Confirmed. Abbott makes the HeartMate 3 LVAD device and has presented data from its ARES-HM3 study highlighting the need for an improved anticoagulant in LVAD patients. This presentation was discussed in our Research Note on June 5. While a collaboration has not been announced, confirmation of discussions for a pivotal trial testing tecarfarin in LVAD patients is good news.

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Conduent Inc (CNDT/$3.08 | Price Target: $7)
Patrick McCann, CFA [email protected] | (314) 724-6266
Michael Kupinski [email protected] | (561) 994-5734
Post-Transition Business Coming into Focus
Rating: OUTPERFORM

Q2 beat. The company reported Q2 results that were better than our estimates. Revenue of $828 million was better than our forecast of $812 million and adj. EBITDA of $35 million exceeded our estimate of $19 million. Figure #1 Q2 Results illustrates how the results compared with our estimates. Notably, upheaval to the business caused by the divestitures underway make for choppy near term quarterly results. In our view, investors should focus more on how the company will look after the transition.At the trough? With adj. EBITDA margins of 4.2% in the quarter, we believe the company’s results are roughly at a trough. Management indicated that margins will likely improve sequentially in future quarters as the company

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CoreCivic, Inc. (CXW/$12.26)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Peek into the Second Quarter
Rating: MARKET PERFORM

Second Quarter Results. Total revenue was at $490.1 million, above our forecast of $482 million and above last year’s $463.7 million. Occupancy rates helped the increase in revenue, as occupancy increased to 74.3% from 70.3% in the prior year. Management’s cost initiatives are also taking root, as net income was $19.0 million, or $0.17 per diluted share, compared to $14.8 million or $0.13 last year. We estimated net income of $14.4 million or $0.13 per diluted share.

New Contract. CoreCivic was awarded a new management contract in July from the state of Montana to house additional residents at the Company’s facilities. The Company expects that 120 additional residents will be housed in the Saguaro Correctional Facility in Eloy, Arizona. We believe the new contract with the state shows the Company’s flexibility to accommodate additional residents and demand for CoreCivic’s services.

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Euroseas (ESEA/$40.15 | Price Target: $60)
Mark Reichman [email protected] | (561) 999-2272
Strong Second Quarter Financial Results; Increasing Estimates
Rating: OUTPERFORM

Second quarter financial results. Euroseas Ltd. generated second quarter adjusted net income of $34.3 million or $4.92 per share compared to $29.0 million or $4.17 per share during the prior year period. Net revenues increased 23.1% to $58.7 million, while adjusted EBITDA increased 38.1% to $42.3 million. During the second quarter, the company owned and operated an average of 21.26 vessels earning an average time charter equivalent rate of $31,639 per day compared to 18 vessels earning an average time charter equivalent rate of $30,151 per day during the prior year period.

Updating estimates. We have increased our 2024 EBITDA and EPS estimates to $13.24 and $132.0 million, respectively, from $100.0 million and $9.70. We raised our 2025 EBITDA and EPS estimates to $99.4 million and $7.80, respectively, from $90.4 million and $6.80. Our revisions are based on the company’s strong second quarter financial results and higher average time charter equivalent rates in 2024 and 2025.

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Graham Corp (GHM/$27.84 | Price Target: $35)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
First Look at the First Quarter
Rating: OUTPERFORM

Strong Results. Net sales for the quarter were $50.0 million, above the prior year’s $47.6 million and in-line with our estimate of $50.0 million. Higher margin defense sales helped increase revenue as well as gross margin, as gross margin increased to 24.8% from 23.1% last year and above our forecast of 22.0%. Net income totaled $3.0 million, or $0.27/sh, compared to $2.6 million or $0.25/sh last year. We estimated net income of $1.6 million or $0.15/sh.

New Facility. In an effort to support the U.S. Navy’s shipbuilding schedule, the Company received a $13.5 million investment during fiscal 2024 to expand its Batavia, N.Y. production capabilities. The Company is expecting to break ground on the facility in August 2024. We believe the expansion of the facility can facilitate the needs of the U.S. Navy and also potential non-U.S. Navy customers, should the Company have excess capacity.

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Great Lakes Dredge & Dock (GLDD/$8.58 | Price Target: $11)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Solid 2Q24 Sets Up Rest of the Year
Rating: OUTPERFORM

2Q24. Revenue totaled $170.1 million, up from $132.7 million a year ago. We had forecast $166 million. Higher capital and coastal protection project revenues drove the increase. Gross margin improved to 17.5% from 13.5%. Adjusted EBITDA for the quarter increased $9.2 million to $25.8 million. Great Lakes recorded net income of $7.67 million, or EPS of $0.11, compared to $1.73 million, or $0.03/sh in 2Q23.

Backlog. Quarter-end dredging backlog totaled $807.9 million, with an additional $273.1 million in low bids and options pending award and another $44.6 million of offshore wind backlog. Post quarter-end, Great Lakes was the low bidder on approximately $181.6 million of additional work.

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Kratos Defense & Security (KTOS/$20.07 | Price Target: $22)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Look at the Second Quarter
Rating: OUTPERFORM

Continued Strong Results. Revenue was reported at $300.1 million, beating out our estimate of $270 million by a wide margin and last year’s revenue of $256.9 million. Organic growth was 16.7%. Net income totaled $7.9 million from a prior net loss of $2.7 million last year. We estimated net income of $0.4 million. Adjusted EBITDA was $29.9 million.

KUS. For the quarter, Unmanned Systems was the star performer, generating revenues of $85.8 million, as compared to $52.1 million in the second quarter of 2023, with organic revenue growth of 61.8% driven primarily by increased domestic target drone production and a certain international target drone delivery which contributed $17.4 million.

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Seanergy Maritime (SHIP/$9.95 | Price Target: $13)
Mark Reichman [email protected] | (561) 999-2272
Second Quarter Earnings Exceed Expectations
Rating: OUTPERFORM

Second quarter financial results. Seanergy reported second-quarter adjusted net income of $15.3 million or $0.77 per share compared to $3.3 million or $0.18 per share during the prior year period. Unadjusted for stock compensation and loss on extinguishment of debt, EPS amounted to $0.68. We had forecast net income of $12.5 million or $0.61 per share. The variance to our estimate was largely revenue driven with greater fleet utilization of 99.7% versus our 99.4% assumption and a modestly higher average time charter equivalent rate (TCE). Expenses were also below our estimates in several categories, including voyage expenses.

Updating estimates. Despite strong second quarter results, we lowered our 2024 EBITDA and EPS estimates to $101.1 million and $2.35, respectively, from $108.7 million and $2.77. Our revised estimates reflect a reduction in operating days in the second half due to drydocking and lower average time charter equivalent rates. While the overall supply/demand outlook remains strong, some uncertainty exists beyond 2024, particularly with respect to demand in China. 

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The GEO Group (GEO/$12.12 | Price Target: $17)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
2Q24 – Delivering Steady Operational and Financial Performance
Rating: OUTPERFORM

2Q24 Results. Revenue of $607.2 million compared to $593.9 million last year, with all business segments except BI showing y-o-y growth. Adjusted EBITDA came in at $124.1 million versus $119.3 million. Reported net loss was $0.25/sh, versus EPS of $0.20/sh las year. Excluding one-time refi costs, adjusted EPS of $0.23 versus $0.24 last year. We were at a loss of $0.22 and EPS of $0.26, respectively.

Stable, At Higher Levels. GEO ICE populations were stable at approximately 13,000 in the quarter, but up 30% from the year ago. U.S. Marshals populations remained in the 9,000 neighborhood, up some 8% over last year. With current ICE bed utilization some 4,500 beds below the 41,500 authorized level, there is room for additional growth if funding materializes.

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The ODP Corporation (ODP/$24.56 | Price Target: $35)
Joe Gomes, CFA [email protected] | 561-999-2262
Jacob Mutchler [email protected] |
An Overreaction To A Difficult Quarter
Rating: OUTPERFORM

2Q24 Results. The Company reported lackluster operating results that were largely driven by a challenging macroeconomic environment. Revenue of $1.72 billion, adj. EBITDA of $57 million, and net income of negative $4 million, or negative $0.12 per share, all experienced y-o-y decreases. Notably, ODP shares were down roughly 35% at market close, which, in our opinion was an overreaction, spurred on by recessionary concerns.

Veyer gains traction. During the earnings call management highlighted that Veyer received a verbal agreement from a large e-commerce company that has the potential to nearly double the segment’s top line. Notably, the agreement pertains to warehousing and the company’s well established supply chain. Importantly, we view the contract as a significant development that has the ability to favorably alter the Company’s trajectory.

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Townsquare Media (TSQ/$11.09 | Price Target: $21)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Digital On A Favorable Revenue Trajectory
Rating: OUTPERFORM

In line quarter. The company delivered on expectations for its second quarter. Total company revenues of $118.2 million, down a modest 2.5% from the year earlier quarter, was in line with our $117.7 million estimate. Adj. EBITDA in the quarter was $26.2 million, in line with our $26.8 million estimate and within the company’s guidance range of $26.0 million to $27.0 million. 

Digital on a recovery trajectory. Its Interactive business is sequentially gaining subscribers and its programmatic business, Ignite, had solid 9% revenue growth in Q2. With easier National Digital comps and with improving revenue trends in its Interactive business, we expect its Digital segment to return toward revenue growth in the second half.

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Noble Capital Markets Research Report Wednesday, August 7, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – July Production Released
Century Lithium Corp. (CYDVF)/OUTPERFORM – Bringing the Final Step In-House
Commercial Vehicle Group (CVGI)/OUTPERFORM – Q2 Results: A Closer Look
GeoVax Labs (GOVX)/OUTPERFORM – GeoVax Highlights Trial Progress In 2Q24 Report
Information Services Group (III)/OUTPERFORM – In a More Stable Environment
V2X (VVX)/OUTPERFORM – Set Up For 2H24 Growth

Bit Digital (BTBT/$2.91 | Price Target: $5.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
July Production Released
Rating: OUTPERFORM

AI and Staking. Bit Digital had 256 servers generating revenue during the quarter and earned an estimated $4.3 million of revenue during the month. The staking side had approximately 17,184 ETH actively staked, flat with last month, and earned a blended APY of approximately 3.3% on its staked ETH in the month of July, slightly down from last month’s 3.5%.

Mining Side. The Company produced 60.5 BTC in the month, a slight 1.9% decrease from the previous month. The active hash rate was roughly 2.46 EH/s, a decline from 2.57 EH/s in June. With the active goal of 6.0 EH/s at the end of 2024, we anticipate a ramp up in the hash rate during the last few months of the year.

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Century Lithium Corp. (CYDVF/$0.1847 | Price Target: $2.35)
Mark Reichman [email protected] | (561) 999-2272
Bringing the Final Step In-House
Rating: OUTPERFORM

Lithium carbonate production at the pilot plant. Century Lithium successfully added a lithium carbonate stage at the company’s lithium extraction facility which is part of the company’s Angel Island Mine project. Recall that Century recently changed the name of its Clayton Valley Lithium project to Angel Island Mine to distinguish it from other projects. Previously, concentrated lithium solutions from the pilot plant were treated by Saltworks Inc. at their facility in Richmond, British Columbia to produce samples of battery grade lithium carbonate.

Following through on the feasibility study. Adding the lithium carbonate stage at the pilot plant satisfies one of the recommendations contained in the recently published feasibility study. Being able to produce battery grade lithium on site further demonstrates the commercial viability of the project and will also help the company to better optimize the process from the direct lithium extraction (DLE) phase through to production of the final product. Century successfully treated 200 liters of concentrated lithium solution and produced 20 kilograms of high-grade lithium carbonate on site.

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Commercial Vehicle Group (CVGI/$3.98 | Price Target: $8)
Joe Gomes, CFA [email protected] | 561-999-2262
Jacob Mutchler [email protected] |
Q2 Results: A Closer Look
Rating: OUTPERFORM

Electrical Systems. To our surprise, the segment had a difficult quarter, revenue decreased $13.5 million, or 21.2%. The decrease was largely attributed to a slow down in the construction and agriculture industries, and new contract wins taking longer to ramp up and at lower than expected volumes. In our view, the company is well positioned to capitalize on the industry rebound, anticipated to take place in 2025 & 2026.

Vehicle Solutions. The segment experienced a decrease of $11.8 million, or 7.7%, from the prior year period, which was primarily driven by softer demand and reorganization. Notably, the company anticipated a more drastic decline in the business and closed a plant, shifting manufacturing to three other existing facilities, which should improve cost structure over the long-term.

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GeoVax Labs (GOVX/$1.8 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
GeoVax Highlights Trial Progress In 2Q24 Report
Rating: OUTPERFORM

GeoVax Made Significant Advances In 2Q24. GeoVax reported a 2Q24 loss of $5.1 million or $(1.99) per share. The company reviewed the progress made during the quarter, including the DARPA grant for the Phase 2 CM04S1 trial, two CM04S1 trials in immunocompromised cancer patients, and announcement of the Phase 2 Gedeptin trial design.

Financial Results Reflect First Grant Revenues. During 2Q, GeoVax recognized $0.3 million in revenues from work related to the Phase 2 CM04S1 trial. Revenue is recognized as the work is completed on a cost-reimbursement basis, with billings recorded as receivables. The company had $1.6 million in cash on June 30 and plans to raise capital in the near future.

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Information Services Group (III/$3.17 | Price Target: $8)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
In a More Stable Environment
Rating: OUTPERFORM

Improved Metrics. Although performance decreased from the prior year, the Company improved sequentially. Stable revenue and lower costs led to higher a gross margin of 39.5% compared to 36.1% in the first quarter. The increased margin led to profitability in the quarter compared to a net loss last quarter. These improvements show ISG’s efficiency in the continued down environment while the Company prepares for clients to resuming spending, in our view.

Geographies. Although the regions are down from the prior year, most of ISG’s geographies are showing stability. Both the Americas and Europe are experiencing stability in their pipelines even as the uncertain macro environment continues. We would note management believes spending will resume more quickly in the Americas segment, primarily the U.S., with a return to spending as soon as the fourth quarter.

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V2X (VVX/$45.75 | Price Target: $62)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Set Up For 2H24 Growth
Rating: OUTPERFORM

2Q24 Results. Record revenue of $1.07 billion, up 9.7% from $977.9 million in 2Q23. We had estimated $1.02 billion. Adjusted EBITDA totaled $72.3 million, or a 6.7% margin, compared to $77.8 million and 8.0% last year, driven by contract mix. V2X reported a GAAP net loss of $6.5 million, or a loss of $0.21/sh, versus net income of $1.8 million, or $0.06/sh, in 2Q23. Adjusted EPS was $0.83 versus $1.10. We had estimated adjusted EPS at $0.87.

Revenue Drivers. Revenue growth in the quarter was achieved through continued expansion of existing business in the Pacific and Middle East regions, as well as new programs. Revenue growth in both areas grew by 29% year-over-year. Notably, in the quarter V2X had over $500 million of on contract growth.

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Noble Capital Markets Research Report Tuesday, August 6, 2024

Companies contained in today’s report:

Commercial Vehicle Group (CVGI)/OUTPERFORM – First Look at 2Q24
Information Services Group (III)/OUTPERFORM – A Look at the Second Quarter

Commercial Vehicle Group (CVGI/$4.73 | Price Target: $12)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
First Look at 2Q24
Rating: OUTPERFORM

Still Challenging. 2Q24 revenue declined 12.3% y-o-y to $229.9 million due to softening global customer demand. We had projected $237.5 million. Operating income was $0.8 million and adjusted operating income totaled $5.7 million, down 65.9% y-o-y. CVGI reported a net loss of $1.6 million, or $0.05/sh, and adjusted net income of $2.1 million, or EPS of $0.06. We had forecast adjusted EPS of $0.21. Adjusted EBITDA of $10 million was down 51.9% y-o-y and short of our $16 million estimate.

Drivers. Second quarter results were challenged due to multiple factors. In particular, continued softening in the construction and agricultural end markets and reduced volumes in new business win launches, impacting the key growth segment in Electrical Systems. CVG also experienced operational inefficiencies in the Vehicle Solutions segment resulting from a new product launch with a major customer across multiple sites, as well as activities to prepare the Cab Structures business for sale.

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Information Services Group (III/$3.16 | Price Target: $8)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Look at the Second Quarter
Rating: OUTPERFORM

2Q Results. Reported revenues totaled $64.3 million, slightly below our estimate of $65 million. Clients are continuing to delay projects, as these are being pushed further. Net income was better than expected at $2.0 million, or $0.04 per diluted share, compared to $2.3 million or $0.05 last year. We estimated a net loss of $0.2 million or breakeven EPS.

Silver Lining. The continued headwind of client decision making has offered a light at the end of the tunnel for management. An increase in contract value through ISG Tango, now exceeding $4 billion from $2.6 billion in the previous quarter, offers a sign that clients are allocating more towards projects in our view. The increase in overall contract value showcases management’s belief in increasing business spending as the year progresses.

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Noble Capital Markets Research Report Monday, August 5, 2024

Companies contained in today’s report:

ACCO Brands (ACCO)/OUTPERFORM – 2Q 2024: A Closer Look
Cumulus Media (CMLS)/MARKET PERFORM – Green Shoots Wither Amidst Economic Uncertainty
Haynes International (HAYN)/MARKET PERFORM – Tempering Expectations for the Remainder of FY 2024 and FY 2025

ACCO Brands (ACCO/$4.65 | Price Target: $12)
Joe Gomes, CFA [email protected] | 561-999-2262
Jacob Mutchler [email protected] |
2Q 2024: A Closer Look
Rating: OUTPERFORM

Segment results. Americas revenue totaled $292.3 million in Q2, a decrease of 13.1% from the prior year period. Comparable sales were down 12.7%. International revenue was $146.0 million in Q2, a decrease of 7.1% from the prior period. Comparable sales decreased 5.1%. While revenue was modestly below our estimates, largely due to soft demand for business and consumer office products and a shift from lower margin products, we believe the Company’s outlook is favorable.

Cost reduction efforts. The company made significant progress towards its cost reduction target of $60 million in annualized savings, with $10 million in cost reductions realized so far this year, and $20 million of savings expected for full year 2024. Notably, the Company reduced inventory levels by 17% from the prior year with its technology enabled SKU rationalization

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Cumulus Media (CMLS/$1.62)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Green Shoots Wither Amidst Economic Uncertainty
Rating: MARKET PERFORM

Mixed Q2 results. The company reported revenue of $204.8 million, slightly lighter than our expectations of $206.2M. Due to cost cuts, adj. EBITDA was $25.2 million, finishing ahead of our estimates by $2.1M. Digital revenues advanced 5%, but was slower than the 7% in the first quarter. 

Lackluster pacing outlook. Management indicated that third quarter revenue pacing is disappointingly down low single digits, in spite of the anticipated influx of Political advertising. We believe that spot advertising is down mid single digits, with Network likely to be down double digits, similar to the second quarter. 

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Haynes International (HAYN/$59.6)
Mark Reichman [email protected] | (561) 999-2272
Tempering Expectations for the Remainder of FY 2024 and FY 2025
Rating: MARKET PERFORM

Third quarter financial results. Haynes reported third-quarter fiscal 2024 net income of $8.1 million or $0.63 per share compared to $8.8 million or $0.68 per share during the prior year period. Adjusted EBITDA was $17.1 million compared to $18.7 million during the prior year period and declined as a percentage of net revenues. Third-quarter results were negatively impacted by raw material headwinds and lower mill production volumes due to fewer orders and company initiatives to reduce inventory.

Updating estimates. We have lowered our 2024 EBITDA and EPS estimates to $68.5 million and $2.52, respectively, from $77.3 million and $3.00. The revisions reflect third quarter financial results and management expectations that fourth quarter revenue and earnings will be like the third quarter due to the unfavorable impact of lower production volumes. Our 2025 EBITDA and EPS estimates were lowered to $90.5 million and $3.82, respectively, from $99.5 million and $4.15 to reflect lower revenue and margin expectations in 2025, particularly during the first half of the year.

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Noble Capital Markets Research Report Friday, August 2, 2024

Companies contained in today’s report:

ACCO Brands (ACCO)/OUTPERFORM – Reports 2Q24 Results
Commercial Vehicle Group (CVGI)/OUTPERFORM – A Strategic Sale
DLH Holdings (DLHC)/OUTPERFORM – A Transitionary Quarter
FreightCar America (RAIL)/OUTPERFORM – Multi-Year Tank Car Conversion Contract Provides a Solid Path Toward Tank Car Production
Haynes International (HAYN)/MARKET PERFORM – Third Quarter Negatively Impacted by Lower Production and Raw Material Headwinds

ACCO Brands (ACCO/$4.98 | Price Target: $12)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Reports 2Q24 Results
Rating: OUTPERFORM

2Q24 Results. Reported results continue to be impacted by soft demand for ACCO products. In addition, the previously disclosed exit of certain lower margin business, primarily in the back-to-school categories, and a one-time impairment charge related to goodwill and intangible assets negatively impacted reported results.

Details. Revenue of $438.3 million was down 11.2% on a reported basis y-o-y, with comp sales off 10.2%, reflecting softer global business and consumer demand, although computer accessories saw growth. We had projected revenue of $455 million, in-line with consensus. Reported operating loss was $111.2 million reflecting $165.2 million of non-cash impairment charges. Adjusted operating income was $64.6 million, down from $66.2 million in 2Q23. GAAP net loss was $125.2 million, or $1.29/sh, with adjusted net income of $36.6 million, or $0.37/sh. In 2Q23, ACCO reported net income of $26.4 million, or $0.27/sh, and adjusted net income of $36.5 million, or $0.38/sh.

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Commercial Vehicle Group (CVGI/$5.1 | Price Target: $12)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Strategic Sale
Rating: OUTPERFORM

Cab Structures. Yesterday, after the market close, Commercial Vehicle Group (CVG) announced the sale of its Kings Mountain, NC Cab Structures business. This is another step in the Company’s strategic plan to lessen the impact of the highly cyclical Class 8 truck business.

Details. Net proceeds of the transaction are expected to be $40 million, with closure in the second half of 2024. We expect the majority of the net proceeds to be used for debt paydown and other general corporate purposes. CVG did not release unit financial performance, but we do expect management to update its full-year 2024 outlook to reflect the impact of the business unit divesture during its 2Q24 earnings conference call on August 6th.

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DLH Holdings (DLHC/$10.39 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Transitionary Quarter
Rating: OUTPERFORM

Environment. The government continues to delay its decision making process on various contract awards, as management notes that although decisions do take time, they have been abnormally long in 2024. Coinciding with this is the VA’s decision on its CMOP locations, which provides a good and bad aspect for DLH. The good is a likely extension of DLH’s ID/IQ contract with the VA, but the bad is that the VA is reducing responsibilities within the awards, not allowing the Company to differentiate from its competitors.

Expanding Markets. As the government delays its decisions, management is focused on its three markets in digital transformation & cyber security, science research & development, and systems & engineering & integration. These markets have had growth to their budget in recent years and we believe they provide DLH with future opportunities to expand its pipeline and add to its total proposals outstanding, a focus of management.

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FreightCar America (RAIL/$3.49 | Price Target: $4.5)
Mark Reichman [email protected] | (561) 999-2272
Multi-Year Tank Car Conversion Contract Provides a Solid Path Toward Tank Car Production
Rating: OUTPERFORM

Expansion into tank car conversions. FreightCar America has entered into a multi-year contract to convert over 1,000 existing DOT-111 tank cars to DOT-117R (retrofit) tank cars over a two-year period. In addition to further diversifying its product offerings, the expansion into tank car conversions provides a solid path toward M-1002 tank car facility certification by the Association of American Railroads and the production of DOT-117 tank cars. 

Ensuring the safe transportation of flammable liquids. The completed tank cars will receive new exterior tank jackets, thermal protection, full height head shields, top fittings protection and upgraded bottom outlet valves. As part of a federally mandated program, all tank cars transporting Class 3 flammable liquids, such as refined products, crude oil and ethanol, are required to meet DOT-117 or equivalent specifications by May 1, 2029.

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Haynes International (HAYN/$59.66)
Mark Reichman [email protected] | (561) 999-2272
Third Quarter Negatively Impacted by Lower Production and Raw Material Headwinds
Rating: MARKET PERFORM

Third quarter financial results. Haynes reported third-quarter fiscal 2024 net income of $8.1 million or $0.63 per share compared to $8.8 million or $0.68 per share during the prior year period. Adjusted EBITDA was $17.1 million compared to $18.7 million during the prior year period and declined as a percentage of net revenues. Third-quarter results were negatively impacted by raw material headwinds and lower mill production volumes due to fewer orders and company initiatives to reduce inventory. Strong operating cash flow of $52.5 million supported reducing the balance of the company’s credit facility by $24.2 million during the first nine months of fiscal 2024.

Merger Update. With respect to Haynes’ proposed merger with North American Stainless, Inc., a wholly owned subsidiary of Acerinox S.A., required approvals in the United States have been obtained. Following favorable decisions by European countries reviewing the transaction from a foreign direct investment (FDI) perspective, the company expects to obtain remaining required clearances

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Noble Capital Markets Research Report Thursday, August 1, 2024

Companies contained in today’s report:

Codere Online (CDRO)/OUTPERFORM – Casino Games A Key Driver
DLH Holdings (DLHC)/OUTPERFORM – A Look into the Third Quarter
FAT Brands (FAT)/OUTPERFORM – Overview of 2Q24 Operating Results
GeoVax Labs (GOVX)/OUTPERFORM – Gedeptin Phase 2 Head and Neck Trial Design Announced
MustGrow Biologics Corp. (MGROF)/MARKET PERFORM – Tack On Another Approval

Codere Online (CDRO/$8.2 | Price Target: $14)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] | (314) 724-6266
Casino Games A Key Driver
Rating: OUTPERFORM

Adj. EBITDA positive. Q2 overachieved expectations with revenue growth a strong 39% to €54.4 million (vs our €47.6 million estimate) and with positive adj. EBITDA of €1.3 million (vs. our flat estimate). The results benefited from a favorable sports calendar, as well as strong customer growth for its casino games. Casino revenue accounted for 59% of total company revenue, up from 56% in Q1. 

Spain and Mexico deliver strong revenue performance. The company exhibited favorable operating momentum in its latest Q2 quarter. Net gaming revenue increased a solid 39% to €54.4 million, nicely above our estimate of €47.6 million. The quarterly revenue represented a sequential quarterly revenue improvement from the first quarter at €53.0 million and an acceleration in revenue growth from 34% in Q1. 

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DLH Holdings (DLHC/$11.57 | Price Target: $21)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Look into the Third Quarter
Rating: OUTPERFORM

3Q Results. Revenue was reported at $100.7 million, below our estimate of $103 million and down from the prior year of $102.2 million. Net income was $1.1 million, or $0.08 per diluted share, compared to $1.7 million, or $0.12 last year. EBITDA was roughly $10.0 million versus $11.4 million in the prior year, or a margin of 10.0% and 11.1%, respectfully, in range of management’s expectations.

Delays. The GRSi acquisition continues to experience anticipated runoff of DLH’s small business set-aside awards, as these contracts transitioned towards small businesses impacting overall revenue. The government evaluation process also has resulted in delays for new business revenue for the Company in fiscal 2024. However, with the budgets passed earlier in the year for various government departments, including the VA and HHS, we expect DLH to be awarded new contracts sooner rather than later.

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FAT Brands (FAT/$5.25 | Price Target: $25)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Overview of 2Q24 Operating Results
Rating: OUTPERFORM

Note: FAT Brands has entered into an Equity Distribution Agreement with Noble Capital Markets relating to the potential sale of up to $10.335 million of Class A common stock and/or 8.25% Series B Cumulative Preferred stock. As a result, this report will just focus on a review of FAT Brands’ second quarter operating results.

2Q24 Results. FAT’s 2Q24 results were very similar to 1Q24 results. While we had hoped for some sequential improvement, given the overall industry challenges seen so far this reporting season, relatively flat results are not too bad. Revenue totaled $152 million, flat sequentially and up 42.4% y-o-y. Adjusted EBITDA totaled $15.7 million versus $23.1 million last year, with the decline reflecting lower employee retention credits this quarter. FAT reported a net loss of $41.3 million, or $2.43 per share, compared to a loss of $8.7 million, or a loss of $0.53/sh in 2Q23.

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GeoVax Labs (GOVX/$2.08 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
Gedeptin Phase 2 Head and Neck Trial Design Announced
Rating: OUTPERFORM

Gedeptin Will Be Tested As A Neoadjuvent. GeoVax announced the design of the Phase 2 trial testing Gedeptin in head and neck cancer. As planned, a Clinical Advisory Panel completed its data review from the clinical trials and made its design recommendation. The trial will test Gedeptin in combination with an immune checkpoint inhibitor (ICI) before surgery in head and neck squamous cell carcinoma (HNSCC) patients after first recurrence. The trial is expected to start in 1H25.

Trial Will Use A Single Cycle Of Gedeptin Before Surgery. The trial will enroll patients with HNSCC after first relapse. Patients will be treated with a single cycle of Gedeptin/fludarabine and a checkpoint inhibitor, followed by surgery. This adds Gedeptin’s intracellular activation of a chemotherapy agent to kill cancer cells with the immune response of the checkpoint inhibitor. The planned enrollment is 36 patients with a primary endpoint of pathological response rate.

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MustGrow Biologics Corp. (MGROF/$0.54)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Tack On Another Approval
Rating: MARKET PERFORM

Another State. MustGrow announced the Company has received the Idaho State Department of Agriculture approval for TerraSante, allowing the product to commence sales in the state. The state follows the existing Organic OMRI Listed certifications in Oregon and Washington. Idaho now joins the list of states to authorize product sales, including the aforementioned Oregon and Washington and California.

Market Size. Idaho provided approximately $1.3 billion in crop production from potatoes in 2023, an increase from $1.2 billion in 2022, as potatoes are the state’s top crop. Other commodities the state provides includes barley, alfalfa hay, peppermint oil, and food trout. Overall, the state’s crop production was $3.3 billion in 2021.

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Noble Capital Markets Research Report Wednesday, July 31, 2024

Companies contained in today’s report:

Alliance Resource Partners (ARLP)/OUTPERFORM – ARLP Updates 2024 Guidance; Revising Estimates
SKYX Platforms (SKYX)/OUTPERFORM – Coming to Home Depot

Alliance Resource Partners (ARLP/$24.45 | Price Target: $28)
Mark Reichman [email protected] | (561) 999-2272
ARLP Updates 2024 Guidance; Revising Estimates
Rating: OUTPERFORM

Second quarter financial results. Alliance reported second quarter EBITDA and earnings per unit (EPU) of $177.7 million and $0.77, respectively, compared to $249.2 million and $1.30 during the prior year period. We had forecast EBITDA and EPU of $196.9 million and $0.86. Revenue declined 7.6% to $593.4 million due to lower coal sales volumes, which declined 11.8% due to transportation delays that were partially offset by higher coal sales price realizations which increased 3.8% to $65.30 per ton. Alliance experienced a $3.7 million, or $0.03 per unit, decrease in the fair value of the partnership’s digital assets. Roughly 500,000 tons of coal sales were deferred and are expected to be made up during the remainder of the year.

Updated 2024 corporate guidance. Management updated its 2024 guidance which calls for lower coal sales volumes and higher oil and gas royalty volumes. The lower coal sales guidance is based on uncertainty associated with coal export sales. While the guidance for coal sales volume was lowered, sales price realization expectations were increased at the midpoint of guidance.

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SKYX Platforms (SKYX/$1.07 | Price Target: $5)
Patrick McCann, CFA [email protected] |
Michael Kupinski [email protected] | (561) 994-5734
Coming to Home Depot
Rating: OUTPERFORM

Collaboration with Home Depot. Yesterday, the company announced a collaboration with Home Depot, the industry leader in the home improvement market. The announcement marks the first time the company’s products will be available at a big box retailer. In addition, all of the company’s current product offerings will be available on the Home Depot website. 

Step forward for professional sales channel. In addition to serving retail consumers, Home Depot is a leading supplier for professional contractors. As such, we believe the inclusion of SKYX products at Home Depot could accelerate the adoption of the smart ceiling receptacle and SkyPlug products by commercial contractors.

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Noble Capital Markets Research Report Tuesday, July 30, 2024

Companies contained in today’s report:

Eledon Pharmaceuticals (ELDN)/OUTPERFORM – Eledon Announces Patient Enrollment Milestone and Confirms Timeframe For Completion
Xcel Brands (XELB)/OUTPERFORM – A Set Up For 2025

Eledon Pharmaceuticals (ELDN/$2.85 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
Eledon Announces Patient Enrollment Milestone and Confirms Timeframe For Completion
Rating: OUTPERFORM

Eledon Announced It Has Reached Two-Thirds Patient Enrollment Milestone. Eledon has enrolled its 80thpatient in the Phase 2 BESTOW trial testing tegoprubart against tacrolimus for prevention of kidney transplant rejection. The trial is expected to reach its full enrollment of 120 patients by YE2024 as expected.

The BESTOW Trial Is Designed To Compare Tegoprubart To Tacrolimus. The Phase 2 BESTOW trial is an open-label active-comparator trial comparing tegoprubart directly against tacrolimus, the standard of care in kidney transplantation. The primary endpoint is superior mean eGFR (a measure of kidney graft function) at 12 months post-transplant, with additional endpoints to provide clinically meaningful measures for comparison with tacrolimus.

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Xcel Brands (XELB/$0.7028 | Price Target: $2.5)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
A Set Up For 2025
Rating: OUTPERFORM

In line Q2 preliminary results. The company announced limited, preliminary operating results from Q2. Revenue in the quarter is expected to be $3.0 million, modestly below our estimate of $3.6 million, and adj. EBITDA of negative $40,000 was in line with our estimate of negative $64,000. 

LOGO sale finalized. The sale of the LOGO brand was finalized on June 30, and the company is expected to recognized a one time gain of $3.8 million. We estimate that Lori Goldstein accounted for roughly $5 million in annual revenues and $2 million in adj. EBITDA. However, after earn-outs, we estimate that the company was losing money on the brand.

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Noble Capital Markets Research Report Monday, July 29, 2024

Companies contained in today’s report:

EuroDry (EDRY)/OUTPERFORM – Updating Estimates; Rating Remains an Outperform
Tonix Pharmaceuticals (TNXP)/OUTPERFORM – A Mid-Summer Month’s Progress: Tonmya Gets Fast Track Review and Antiviral Gets $34 Million Grant
V2X (VVX)/OUTPERFORM – Some New Awards; Refined Projections

EuroDry (EDRY/$22.3 | Price Target: $30)
Mark Reichman [email protected] | (561) 999-2272
Updating Estimates; Rating Remains an Outperform
Rating: OUTPERFORM

Eurodry operates a competitive fleet. EuroDry Ltd. owns and operates dry bulk carriers that transport major bulks, including iron ore, coal, grains, and minor bulks such as bauxite, phosphate, and fertilizer. Eurodry’s fleet is comprised of 13 dry bulk carriers, including five Panamax, five Ultramax, two Kamsarmax, and one Supramax dry bulk carriers all of which are in operation. The total cargo carrying capacity of the company’s 13 dry bulk carriers is 918,502 deadweight tonnes (dwt). The average age of the fleet is 13.5 years. The orderbook in the sector is nearing a 20-year low and demand growth for drybulk vessels appears strong through at least the remainder of 2024. Some uncertainty exists beyond 2024, particularly with respect to bulk commodity demand in China.

Updating estimates. We have lowered our 2024 EBITDA and EPS estimates to $23.8 million and $1.54, respectively, from $28.1 million and $2.05. The revisions reflect fewer available days in the second and third quarters due to drydocking, along with modestly lower time charter equivalent rates.

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Tonix Pharmaceuticals (TNXP/$0.55 | Price Target: $1.5)
Robert LeBoyer [email protected] | (212) 896-4625
A Mid-Summer Month’s Progress: Tonmya Gets Fast Track Review and Antiviral Gets $34 Million Grant
Rating: OUTPERFORM

Tonix Announced Two Significant Developments In Late July. Tonmya (TNX-102 SL) has received Fast Track Review designation from the FDA. This designation is awarded to products that can make significant impact on serious medical conditions. The designation provides important benefits for Tonmya including eligibility for Accelerated Approval and Priority Review Fast Track Review. The NDA application for approval is expected to be filed in 2H24.

Fast Track Review Is A Significant Distinction. The FDA awards Fast Track Review to drugs that treat serious conditions with unmet needs. It is given when the FDA believes the drug is either providing a therapy where none exists and/or has meaningful advantages over existing therapies. We have long believed the Tonmya Phase 3 data meets both requirements.

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V2X (VVX/$51.8 | Price Target: $62)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Some New Awards; Refined Projections
Rating: OUTPERFORM

New Awards. Returning to a continuing theme, V2X recently has been awarded some significant new and re-compete business. We believe the awards demonstrate the Company’s ability to compete, and win, in the converged environment.

GMR Award. Notably, on July 22nd V2X secured a $48.5 million ID/IQ contract with the U.S. Army for V2X’s Gateway Mission Router. This is a significant award, in our view, as it highlights V2X’s ability to deliver cutting edge solutions to its partners and expands the number of platforms on which GMR can reside. In addition, margins on the GMR product should be additive to the Company’s overall margin profile.

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Noble Capital Markets Research Report Friday, July 26, 2024

Companies contained in today’s report:

Ocugen (OCGN)/OUTPERFORM – Ocugen Completes Phase 1 Dosing For OCU410 In Dry AMD
Resources Connection (RGP)/OUTPERFORM – Highlights from the Company’s 10-K Filing
Travelzoo (TZOO)/OUTPERFORM – Entering A New Growth Phase

Ocugen (OCGN/$1.63 | Price Target: $8)
Robert LeBoyer [email protected] | (212) 896-4625
Ocugen Completes Phase 1 Dosing For OCU410 In Dry AMD
Rating: OUTPERFORM

Escalating Dose Stage Has Completed Dosing. Ocugen reported completion of the escalating dose stage of its Phase 1/2 ArMaDa trial testing OCU410 in Geographic Atrophy (GA), a late-stage complication of dry age-related macular degeneration (dry AMD). OCU410 uses Ocugen’s “master regulatory gene” approach, with a single injection to deliver the nuclear receptor gene RAR-related orphan receptor A (RORA). This gene regulates pathways that lead to dry age-related macular degeneration.

Next Stage In Phase 1/2 Trial Expected In 3Q24. The Phase 1/2 ArMaDa trial is testing OCU410 in geographic atrophy (GA), a lesion secondary to dry AMD at 14 retina surgical centers in the US. The first stage of the trial administered three escalating doses of OCU410. The second stage will randomize patients into three arms at a ratio of 1:1:1 to compare the medium and high dosage levels to a control group. Endpoints will be efficacy and safety.

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Resources Connection (RGP/$11.6 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Highlights from the Company’s 10-K Filing
Rating: OUTPERFORM

10-K Filed. We had the opportunity to review the Company’s 10-K filed earlier in the week. Some key takeaways from the 10-K include the Company’s continuation of its pristine balance sheet, solid cash flow generation, and the return of capital to shareholders.

Pristine Balance Sheet. The Company continues to have plenty of liquidity to work with, as RGP’s total liquidity at year end was $283 million, with no outstanding debt. We believe the Company can utilize the liquidity in the balance sheet towards acquisitions should the opportunity present itself to RGP. Outside of acquisitions, management can utilize its liquidity towards organic growth, including its technology transformation initiative, in our view.

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Travelzoo (TZOO/$9.35 | Price Target: $18)
Michael Kupinski [email protected] | (561) 994-5734
Joshua Zoepfel [email protected] |
Entering A New Growth Phase
Rating: OUTPERFORM

In line quarter. Second quarter results were largely in line with our estimates. Q2 revenue of $21.1 million was a touch below our estimate of $22.4 million, and roughly flat with the prior year period. Adj. EBITDA in the quarter was $4.9 million, above our estimate of $4.4 million by roughly 11.0%, as a result of lower marketing expenses and higher gross margin. Gross margins were 88.1%, better than our 86.2% estimate.

A focus on subscribers. The Company introduced an annual $40 paid subscription for its travel deals at the beginning of the calendar year. All of its 30 million legacy members will be introduced to the paid model beginning in 2025. Management plans to add new benefits for the paid membership, although it did not yet identify what those benefits might be.  

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Noble Capital Markets Research Report Thursday, July 25, 2024

Companies contained in today’s report:

Maple Gold Mines (MGMLF)/OUTPERFORM – Hitting its Stride and Gaining Momentum

Maple Gold Mines (MGMLF/$0.06 | Price Target: $0.2)
Mark Reichman [email protected] | (561) 999-2272
Hitting its Stride and Gaining Momentum
Rating: OUTPERFORM

Augmenting the leadership team. Effective immediately, Maple Gold Mines Ltd. appointed Mr. Darwin Green, P. Geo., to its Board of Directors. Mr. Ian Cunningham-Dunlop, P. Eng., has been appointed Vice President, Technical Services effective on or before August 1, 2024. Both have impressive credentials which are summarized in the body of this note. As Mr. Kiran Patankar, CEO, has taken quick actions to reposition the company for successful outcomes, Mr. Green and Mr. Cunningham-Dunlop will strengthen the company’s ability to execute. Maple’s Chief Geologist and Engineer will report to Mr. Cunningham-Dunlop.

Upcoming events. We expect the company to hold a meeting of its Board of Directors ahead of releasing its second quarter financial results to the market in early August. On September 9, the company will host its annual meeting of shareholders at which time Maple Gold shareholders will vote on the recent joint venture restructuring transaction with Agnico Eagle Mines Limited (NYSE: AEM). Maple is also expected to provide a more detailed exploration update and plan later in the year prior to commencement of the company’s drilling program.

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Noble Capital Markets Research Report Tuesday, July 23, 2024

Companies contained in today’s report:

Seanergy Maritime (SHIP)/OUTPERFORM – Two Time Charters with Costamare Bulkers Inc.; Updating Estimates

Seanergy Maritime (SHIP/$9.7 | Price Target: $14)
Mark Reichman [email protected] | (561) 999-2272
Two Time Charters with Costamare Bulkers Inc.; Updating Estimates
Rating: OUTPERFORM

M/V Iconship. In mid-June, Seanergy announced the delivery of the M/V Iconship and the simultaneous commencement of its employment. The M/V Iconship is on a time-charter with Costamare Bulkers, Inc. for ~22 months. The daily hire is based at a premium over the Baltic Capesize Index (BCI). The company has the option to convert the daily hire from index-linked to fixed for a period of two to twelve months based on prevailing Capesize forward freight agreements (FFA).

M/V Lordship. The M/V Lordship, a scrubber-fitted Capesize dry bulk vessel built in 2010, has also been fixed on a time-charter with Costamare. The time-charter is expected to commence around the end of July, following the vessel’s scheduled drydocking, for a period of ~22 months.

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Noble Capital Markets Research Report Monday, July 22, 2024

Companies contained in today’s report:

Resources Connection (RGP)/OUTPERFORM – Full 2024 Review and Updated Projections

Resources Connection (RGP/$11.2 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Full 2024 Review and Updated Projections
Rating: OUTPERFORM

Full Year Results. For the twelve months ended May 25, 2024, RGP posted revenue of $632.8 million, a decline of 18.4% y-o-y. Same day constant currency revenue fell 18.8% y-o-y. Gross margin was 38.9% versus 40.4% in FY23. GAAP net income was $21 million, or $0.62/sh., compared to $54.4 million, or $1.59 last year. Adjusted EPS was $0.93 versus $2.00. Adjusted EBITDA in FY24 totaled $51.5 million, down from $100.2 million a year ago.

Setting Foundation. Management continues to control what they can while setting the foundation for an expected industry upturn. While the timing of the upturn is difficult to predict, we believe clients will become more willing to start spending on new projects as economic certainty becomes clearer. We believe the first interest rate reductions by the Federal Reserve will be a signal of improved clarity and will provide clients comfort to start new projects.

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Noble Capital Markets Research Report Friday, July 19, 2024

Companies contained in today’s report:

Cocrystal Pharma (COCP)/OUTPERFORM – CDI-988 Reaches Milestone In Phase 1 Trial For Norovirus and Coronavirus
Lifeway Foods (LWAY)/OUTPERFORM – The Family Feud Continues
Resources Connection (RGP)/OUTPERFORM – A 4Q24 Beat; Stabilization, Waiting for Upturn

Cocrystal Pharma (COCP/$2.35 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
CDI-988 Reaches Milestone In Phase 1 Trial For Norovirus and Coronavirus
Rating: OUTPERFORM

CDI-988 Completes Phase 1 SAD Trial. Cocrystal announced that CDI-988 has completed the single ascending dose stage of the Phase 1 trial for CDI-988, its oral protease inhibitor in development for norovirus and coronavirus. The trial was designed to test the safety and tolerability of CDI-988, as well as its pharmacokinetics. The results justify moving forward to the multiple ascending dose (MAD) stage, expected later in FY2024.

SAD Study Was Designed To Test Basic Safety. The SAD trial was a double-blind trial to test a single oral administration of escalating doses ranging from 100 mg to 600 mg of CDI-988. The objectives were to determine basic safety, tolerability, and pharmacokinetics including food effects. There were no serious adverse events or treatment-emergent adverse events, with no laboratory or exam abnormalities. Safety and tolerability were considered sufficient to continue to the next stage of the trial.

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Lifeway Foods (LWAY/$12.26 | Price Target: $20)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
The Family Feud Continues
Rating: OUTPERFORM

New Demands. Ludmila and Edward Smolyansky renewed their demands for the immediate termination of Lifeway CEO Julie Smolyansky as well as the resignation of the majority of the Board. According to a press release issued yesterday, “The Smolyanskys believe these actions are necessary to avoid further underperformance and mismanagement of Company assets, and that new leadership can deliver swift and significant changes to shareholders.”

More. The release goes on to state, “it is impossible for the brand to achieve its full potential and value in the short and long term, and for Lifeway to move forward,” Julie Smolyansky must get out of the way. The Smolyanskys posted a related presentation at www.lifebacktolifeway.com, but the website did not appear to be working properly when we viewed it. Once again, the Smolyanskys call for an operational and strategic review of the business.

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Resources Connection (RGP/$10.62 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A 4Q24 Beat; Stabilization, Waiting for Upturn
Rating: OUTPERFORM

4Q24 Results. Revenue of $148.2 million was above our forecast of $140 million, consensus $141 million, and management’s $137-$142 million guide. Adjusted EBITDA totaled $13.1 million, or an 8.8% margin, versus our estimate of $5.5 million. GAAP net income was $10.5 million, or $0.31/sh, and adjusted EPS was $0.28. We had forecast a GAAP loss of $0.02/sh and adjusted EPS of $0.07/sh. Consensus was $0.00 and $0.07, respectively.

Drivers. The top line was driven by a stabilization in the overall business, although clients remain cautious on spending on new projects. Gross margin of 40.2% was above the 37.5%-38% guide. Run rate SGA came in at $46.5 million, well below the $50-$52 million guide, and an 11% y-o-y improvement.

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Noble Capital Markets Research Report Wednesday, July 16, 2024

Companies contained in today’s report:

Hemisphere Energy (HMENF)/OUTPERFORM – Increasing Expectations for 2024 and 2025

Hemisphere Energy (HMENF/$1.32 | Price Target: $2.35)
Mark Reichman [email protected] | (561) 999-2272
Increasing Expectations for 2024 and 2025
Rating: OUTPERFORM

Updating estimates. We increased our 2024 adjusted funds flow (AFF) and earnings per share (EPS) estimates to C$44.3 million and C$0.34 from C$40.9 million and C$0.30. Our revisions are driven by higher crude oil price assumptions and a redistribution of quarterly production estimates. While we have assumed higher oil prices in the second and third quarters, our model assumes prices weaken in the fourth quarter. We increased our 2025 AFF and EPS estimates to C$41.1 million and C$0.30, respectively, from C$31.4 million and C$0.21 based on higher production volume and crude oil price assumptions. We think our 2025 estimates could be conservative if the company can increase annual production within its targeted range of 10% to 20%.

Normal course issuer bid (NCIB). Hemisphere renewed its NCIB to purchase up to 8,255,766 common shares, representing ~10% of the current public float, for cancellation. The NCIB commenced on July 14 and will terminate on July 13, 2025. Under its previous NCIB, which authorized the repurchase of 8,670,636 shares and terminated July on 13, the company purchased 4,074,400 shares on the open market at a weighted average price of C$1.425. Shares are generally purchased opportunistically during periods of weakness.

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Noble Capital Markets Research Report Tuesday, July 16, 2024

Companies contained in today’s report:

Comstock Inc. (LODE)/MARKET PERFORM – Comstock Metals Prepares to Scale Up

Comstock Inc. (LODE/$0.16)
Mark Reichman [email protected] | (561) 999-2272
Comstock Metals Prepares to Scale Up
Rating: MARKET PERFORM

Industry-scale facility. Comstock Metals secured a long-term lease on a 100,000 square foot building in Silver Springs, Nevada. The facility, located on the same campus as Comstock’s operating demonstration plant, will be able to process up to 100,000 tons per year of end-of-life solar panels. Comstock Metals recently received approval for a conditional use permit from the Lyon County, Nevada Board of County Commissioners for the operation and material storage of solar panels at this facility. 

On or ahead of schedule. Comstock’s demonstration facility is operating two shifts and expects to add a third shift during the third quarter. The company is advancing the full design and remaining permitting of its first industry-scale facility. Having fully secured the site lease and the county permit, the company has started to work on pre-engineering and state permitting processes so the remaining permit applications can be submitted

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Noble Capital Markets Research Report Friday, July 11, 2024

Companies contained in today’s report:

Aurania Resources (AUIAF)/OUTPERFORM – Crunchy Hill Adds Another Layer of Excitement to the 2024 Exploration Program
AZZ Inc (AZZ)/OUTPERFORM – Increasing Our Estimates and Price Target

Aurania Resources (AUIAF/$0.345 | Price Target: $0.5)
Mark Reichman [email protected] | (561) 999-2272
Crunchy Hill Adds Another Layer of Excitement to the 2024 Exploration Program
Rating: OUTPERFORM

Kuri-Yawi epithermal gold target. Aurania’s 2024 exploration program will focus on the Kuri-Yawi epithermal gold target, including an induced polarization (IP) geophysical survey and drilling three drill holes later in the year totaling approximately 1,800 meters of drilling. 

Awacha porphyry copper target. An Anaconda mapping program has been completed in the southern part of Aurania’s Awacha porphyry copper target area and exploration teams continue to map the remaining area. Having signed an agreement with the indigenous community that allows full access, the northern portion of the Awacha copper porphyry target will be mapped with the goal of preparing it for drilling in the future. 

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AZZ Inc (AZZ/$81.15 | Price Target: $100)
Mark Reichman [email protected] | (561) 999-2272
Increasing Our Estimates and Price Target
Rating: OUTPERFORM

First quarter financial results. For the fiscal year 2025, AZZ reported adjusted first quarter net income of $44.0 million or $1.46 per share compared to $33.4 million or $1.14 per share during the prior year period and our estimate of $38.9 million or $1.32. The consensus EPS estimate was $1.30. Adjusted EBITDA increased 10.2% to $94.1 million representing 22.8% of sales versus 21.8% of sales during the first quarter of FY 2024. Sales of $413.2 million exceeded our $402.6 million estimate and the 24.8% gross margin as a percentage of sales exceeded our estimate of 24.1%.

Balance sheet continues to strengthen. During the first quarter, AZZ generated strong operating cash flows of $71.9 million and further reduced debt by $25 million and is on track to achieve its goal of reducing debt by $60 million to $90 million during the fiscal year. At quarter end, the company’s net leverage was 2.8x trailing twelve months EBITDA. Cash and cash equivalents amounted to $10.5 million. During the quarter, AZZ returned capital to common shareholders in the form of cash dividend payments totaling $4.3 million.

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Noble Capital Markets Research Report Thursday, July 11, 2024

Companies contained in today’s report:

AZZ Inc (AZZ)/OUTPERFORM – Fiscal Year 2025 Starts Off Strong
Unicycive Therapeutics (UNCY)/OUTPERFORM – Patient Survey Data From Pivotal Trial Shows Patients Prefer OLC

AZZ Inc (AZZ/$76.51 | Price Target: $95)
Mark Reichman [email protected] | (561) 999-2272
Fiscal Year 2025 Starts Off Strong
Rating: OUTPERFORM

First quarter financial results. For the fiscal year (FY) 2025, AZZ reported adjusted first quarter net income of $44.0 million or $1.46 per share compared to $33.4 million or $1.14 per share during the prior year period and our estimate of $38.9 million or $1.32 per share. The consensus EPS estimate was $1.30. Adjusted EBITDA increased 10.2% to $94.1 million representing 22.8% of sales versus 21.8% of sales during the first quarter of FY 2024. Sales of $413.2 million exceeded our $402.6 million estimate and a 24.8% gross margin as a percentage of first quarter sales exceeded our estimate of 24.1%. AZZ reiterated its prior fiscal year guidance with sales expected to be in the range of $1.525 billion to $1.625 billion, adjusted EBITDA in the range of $310 million to $360 million, and adjusted diluted EPS in the range of $4.50 to $5.00. 

Balance sheet continues to strengthen. During the first quarter, AZZ generated operating cash flow of $71.9 million and the company further reduced debt by $25 million and is on track to achieve or exceed its goal of reducing debt by $60 million to $90 million during the fiscal year. At quarter end, the company’s net leverage was 2.8x trailing twelve months EBITDA. Cash and cash equivalents amounted to $10.5 million. During the quarter, AZZ returned capital to common shareholders in the form of cash dividend payments totaling $4.3 million.

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Unicycive Therapeutics (UNCY/$0.49 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
Patient Survey Data From Pivotal Trial Shows Patients Prefer OLC
Rating: OUTPERFORM

Pivotal Trial Included A Patient Satisfaction Survey. In late June, Unicycive released safety, efficacy, and dosing data from its Pivotal trial for OCL. As discussed on our Research Note on June 26, over 90% of the patients were able to reach target serum phosphate levels. The trial included a pre-specified patient survey asking about ease of use, satisfaction, and overall preference that shows patients prefer OLC over their current phosphate binders. We see this as an important point that could make it the best treatment in a $1 billion drug category.

We Consider Patient Preference To Be A Strong Point. OLC was developed as an improved formulation of Fosrenol (lanthanum citrate) that would require fewer and smaller pills. This was intended to improve compliance and maintain phosphate levels in the proper range. The Pivotal study for the NDA application showed sufficient safety, tolerability, and effective dose levels, with a pre-specified patient survey to collect post-treatment opinions.

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Noble Capital Markets Research Report Wednesday, July 10, 2024

Companies contained in today’s report:

CoreCivic, Inc. (CXW)/MARKET PERFORM – Updated Model
Euroseas (ESEA)/OUTPERFORM – Increasing Estimates Based on Higher Charter Rates
GeoVax Labs (GOVX)/OUTPERFORM – Looking Forward To Continued Progress In 2H24

CoreCivic, Inc. (CXW/$13.22)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Updated Model
Rating: MARKET PERFORM

Model Updates. We updated our model to reflect the upcoming loss of the South Texas contract in mid-August. While a significant loss, we believe the ongoing increase in ICE detainees elsewhere could help soften the South Texas blow and we remain hopeful additional state and local contracts could be signed.

Details. As a reminder, South Texas generates approximately $40 million in quarterly revenue and generates approximately $0.10 per share in quarterly EPS. We assumed half of a quarter impact for 3Q24 and a full quarter impact in 4Q24. We kept the majority of the rest of the model consistent, although there may be some cost savings initiatives CoreCivic is able to put in place. We held our 2Q24 estimates the same.

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Euroseas (ESEA/$38.86 | Price Target: $55)
Mark Reichman [email protected] | (561) 999-2272
Increasing Estimates Based on Higher Charter Rates
Rating: OUTPERFORM

M/V Joanna charter. Euroseas Ltd. executed a new time charter contract for its 1,732 twenty-foot equivalent (teu) feeder containership, M/V Joanna, for a minimum period of 23 months to a maximum period of 25 months at an average gross daily rate of $16,500. The rate is higher than its current charter rate of $13,500 per day which ends in August. The charter for M/V Joanna will commence at the end of October 2024. The charter is expected to contribute EBITDA of ~$6.4 million during the minimum contracted period and increases the company’s remaining 2024 and 2025 charter coverage to 92% and 40%, respectively.

M/V Pepi Star charter. The company executed a time charter contract for the M/V Pepi Star, an 1,800 teu feeder containership currently under construction, for a minimum period of 23 to a maximum period of 25 months at a gross daily rate of $24,250. The time charter contract rate is higher than what we had previously forecast. The new charter will commence in mid-July upon delivery of the vessel from the shipyard. The charter is expected to contribute EBITDA in the amount of ~$12.3 million during the minimum contracted period.

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GeoVax Labs (GOVX/$2.52 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
Looking Forward To Continued Progress In 2H24
Rating: OUTPERFORM

GeoVax Reached Important Milestones For Both Platforms During 1H2024. The first half of 2024 has been a transformational period for GeoVax. A Phase 2 trial testing CM04S1 as a booster vaccine for COVID-19 reported initial data in February, then received a BARDA grant to conduct a large Phase 2b in June. The Gedeptin gene therapy program in head and neck cancer reported interim Phase 1/2 data showing successful proof-of-concept. Both programs are moving forward with additional milestones in 2H24.

BARDA Grant Allocates $367 Million For A Phase 2b Trial. In June, GeoVax announced that it has received a grant from BARDA to conduct a Phase 2b trial testing CM04S1 as a booster vaccine to protect healthy patients from COVID-19. As discussed in our Research Note on June 28, the grant terms include payments to GeoVax for clinical supplies and regulatory costs of $24.3 million (which could be increased to $45 million). The balance will be payable to Allucent, the CRO that will conduct the trial.

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Noble Capital Markets Research Report Tuesday, July 9, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – June Numbers Released; Raising Price Target
PDS Biotechnology (PDSB)/OUTPERFORM – Midyear Review: Has PDS Turned The Corner?
Schwazze (SHWZ)/OUTPERFORM – A Move to the OTC Expert Market

Bit Digital (BTBT/$3.77 | Price Target: $5.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
June Numbers Released; Raising Price Target
Rating: OUTPERFORM

BTC Mining. Bit Digital produced 61.7 BTC during June, a 2.5% decrease from 63.3 in the previous month. The active hash rate was 2.57 EH/s versus 2.54 EH/s the prior month. We expect to see an increase in active hash rate in the second half of the year as the Company becomes more opportunistic in deploying efficient miners.

AI/ETH. The Company had 256 servers actively running, similar to last month, and earned an estimated $4.1 million of unaudited revenue from its anchor contract during the month. Approximately 17,184 ETH was actively staked as of June 30, 2024, flat with last month. Bit Digital earned 3.5% blended APY on its staked ETH, up from 3.1% last month.

PDS Biotechnology (PDSB/$3.23 | Price Target: $17)
Robert LeBoyer [email protected] | (212) 896-4625
Midyear Review: Has PDS Turned The Corner?
Rating: OUTPERFORM

Amended Phase 3 Clinical Trial Will Test Two Drugs. During 2Q24, the design of the Phase 3 trial testing Versamune HPV with Keytruda added a second treatment arm to test Versamune, PDS01ADC, and Keytruda against the active control arm of Keytruda alone. We believe this new trial design answers several questions that have caused PDSB to stagnate over the past year. A meeting with the FDA to ensure alignment on the trial design is expected during July 2024.

Thoughtful Consideration Has Led To Improved Trial Design. There are several points from the Phase 2 trial data that lead us to believe that adding the third arm to Phase 3 study improves its design. We believe the Triple-combination could have more rapid enrollment, produce data for product approvals, and support extensive use as a first-line therapy.

Schwazze (SHWZ/$0.22 | Price Target: $4)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Move to the OTC Expert Market
Rating: OUTPERFORM

A Move. We had an opportunity to speak with management regarding the announcement that the OTC Market Group will move trading of SHWZ shares to the OTC Expert Market from OTC QX as a result of the Company’s delinquent 10-Q filing for the period ending March 31, 2024. We believe the move to be temporary and does not have an impact on the long-term investment potential of SHWZ shares.

Why? As we noted previously, Schwazze has been caught up in the BF Borgers case. Schwazze replaced Borgers as the Company’s accountant in April, before the SEC case against Borgers was announced. The Company’s new accountant Baker Tilly is re-auditing Schwazze’s 2023 financial statements, but the review will take longer than the OTC Market Group’s 45 day late filing grace period. We are hopeful the review will be completed in the August/September time frame.

Noble Capital Markets Research Report Monday, July 8, 2024

Companies contained in today’s report:

Harte Hanks (HHS)/OUTPERFORM – Recent Move Improves Free Cash Flow
InPlay Oil (IPOOF)/OUTPERFORM – Expectations for the Remainder of 2024

Harte Hanks (HHS/$8.72 | Price Target: $20)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Recent Move Improves Free Cash Flow
Rating: OUTPERFORM

Terminating pension plan 1. On June 25, the company announced it had executed its plan to terminate its Qualified Pension Plan 1. Notably, the company made a one time contribution of $6.1 million to the plan and transferred $71.9 million of plan assets to Nationwide. The company will make payments to plan members until July 31, and will have no further payment obligations beginning on August 1. We view the successful termination of Plan 1 as a favorable development that should positively impact cash flow.

Benefits of termination. With the termination of  Plan 1 the company’s pension liability payment is expected to be approximately $1.2 million annually, which is a significant reduction from previous years. Prior to the termination of Plan 1, the company was contributing $3.0 million – $4.0 million annually to pension liabilities.

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InPlay Oil (IPOOF/$1.62 | Price Target: $6)
Mark Reichman [email protected] | (561) 999-2272
Expectations for the Remainder of 2024
Rating: OUTPERFORM

Looking ahead. While first quarter production was 5% lower than the prior year period, we expect a stronger second quarter due to wells that went into production in late March and early April and stronger crude oil prices. InPlay plans to drill and bring new production online in the third quarter of 2024 that is focused on high oil-weighted properties. The oil-weighted production from new wells is expected to benefit from higher realized oil prices forecasted for the balance of the year.

Updating estimates. We have increased our 2024 and 2025 EPS estimates to $0.18 and $0.26, respectively, from $0.16 and $0.23. Our estimates reflect modestly higher production in the second and third quarters of 2024 and higher crude oil prices. We forecast adjusted funds flow of $91.0 million in 2024 and $99.4 million in 2025. Depending on the company’s production profile, we think our estimates may prove conservative.

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Noble Capital Markets Research Report Wednesday, July 3, 2024

Companies contained in today’s report:

NN, Inc. (NNBR)/OUTPERFORM – Strengthening the Balance Sheet

NN, Inc. (NNBR/$3 | Price Target: $6)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Strengthening the Balance Sheet
Rating: OUTPERFORM

Facility Sale. Last night after the market closed, NN disclosed the sale of its lone plastics products plant, known as Industrial Molding Corporation (IMC), to Davalor Mold Company, a wholly owned portfolio company of Blackford Capital. Total net cash proceeds will be approximately $16 million. The business was non-core to NN.

Use of Proceeds. NN will use the net proceeds from the sale to pay down debt. At the end of the first quarter, NN had $151.5 million of long-term debt outstanding. All else equal, we would anticipate the Company to pay down its term loan, which had an all in interest rate of 14.3% at the end of 1Q, compared to the ABL rate of 7.42%. A $16 million payment would result in over $2 million of interest cost savings.

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Noble Capital Markets Research Report Tuesday, July 2, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – Noble Consumer Virtual Conference
Comtech Telecommunications (CMTL)/MARKET PERFORM – Noble Consumer Virtual Conference
Information Services Group (III)/OUTPERFORM – Noble Consumer Virtual Conference
Resources Connection (RGP)/OUTPERFORM – Noble Consumer Virtual Conference

Bit Digital (BTBT/$3.39 | Price Target: $4.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Bit Digital CEO Sam Tabar at the Noble Capital Emerging Growth Conference on June 27th. The presentation and Q&A session can be found at https://www.channelchek.com/videos/bit-digital-btbt-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Bit Digital AI. The $100 million annual run rate goal is within reach as the expanded HPC services contract is now at a $92 million annualized revenue run-rate. The pipeline here is growing and we anticipate additional customers before year-end. Notably, HPC revenue generates significantly higher margins than the mining business, partially due to an energy cost that is 15x less. Management’s goal is to become a leading provider of AI infrastructure as a service to the EMEA region.

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Comtech Telecommunications (CMTL/$3.09)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: MARKET PERFORM

Conference. We hosted Comtech Communications CFO Michael Bondi at the Noble Capital Emerging Growth Conference on June 26th. Mr. Bondi’s presentation and a Q&A session can be accessed at https://www.channelchek.com/videos/comtech-telecommunications-cmtl-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Company Wins. Management highlighted key contract wins of the past twelve months including the $544 million GFSR contract, nearly $50 million of Army SATCOM solutions, and numerous NG911 awards, including Massachusetts, Washington, and North Central Texas. These awards will not only drive future operating results but are a testament

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Information Services Group (III/$3.06 | Price Target: $8)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Information Services Group CEO Michael Connors and CFO Michael Sherrick at the Noble Capital Emerging Growth Conference on June 26th. The entire presentation and Q&A session can be found at https://www.channelchek.com/videos/isg-iii-noble-capital-markets-virtual-consumer-tmt-conference-replay . The following are key highlights of the presentation.

Recurring Revenue. ISG highlighted its goal of reaching $150 million in recurring revenue. The Company had recurring revenue of $125 million in 2023, a 16% uplift from 2022. ISG is already off to a good start in 2024 as approximately half of the Company’s $64.3 million of first quarter revenue was recurring. We believe that the Company can achieve its goal.

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Resources Connection (RGP/$10.66 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Resources Connection CEO Kate Duchene and CFO Jennifer Ryu at the Noble Capital Emerging Growth Conference on June 26th. Management’s presentation as well as a Q&A session can be found at https://www.channelchek.com/videos/resources-connection-inc-rgp-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Poised to Capitalize on the Upcycle. With client decision timetables extending during 2023, management mitigated costs but retained key consultants in anticipation of a return to normal business trends. North America, which carries a higher margin profile than its International segment, appears poised to break out, with RGP in discussions with clients about budgets and looking at assessments.

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Noble Capital Markets Research Report Monday, July 1, 2024

Companies contained in today’s report:

Haynes International (HAYN)/MARKET PERFORM – Key U.S. Regulatory Approval; Updating Estimates
Schwazze (SHWZ)/OUTPERFORM – Noble Consumer Virtual Conference
Townsquare Media (TSQ)/OUTPERFORM – Virtual Conference Highlights

Haynes International (HAYN/$58.7)
Mark Reichman [email protected] | (561) 999-2272
Key U.S. Regulatory Approval; Updating Estimates
Rating: MARKET PERFORM

Key U.S. regulatory approval. Haynes International announced that clearance has been obtained from the Committee on Foreign Investment in the United States (CFIUS) related to the planned merger with North American Stainless, Inc. The merger remains subject to approvals from regulatory authorities in the United Kingdom and Austria. All other regulatory approvals and clearances have been obtained where the applicable authorities have asserted jurisdiction. The company continues to expect that the merger will close in the fourth calendar quarter of 2024.

Chief Operating Officer appointment. Mr. Marlin (Marty) Losch has been named Chief Operating Officer, a newly created role, and will have responsibility for all commercial and operational activities. Mr. Losch joined the company in 1988 and previously served as Vice President of Sales and Distribution. Mr. Losch has held various positions of increasing responsibility in marketing, quality engineering, and production. Mr. Losch’s expanded role should be helpful to Mr. Michael Shor, President and CEO, as Mr. Shor focuses more attention on closing the company’s merger with North American Stainless Inc, a division of Acerinox S.A. Additionally, we expect the appointment to enhance post transaction integration.

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Schwazze (SHWZ/$0.395 | Price Target: $4)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Schwazze Chairman Justin Dye at the Noble Capital Emerging Growth Conference on June 27th. The entire presentation with Q&A can be found at https://www.channelchek.com/videos/schwazze-shwz-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Improving Outlook. Schwazze is seeing improvement in both Colorado and New Mexico from a competitive standpoint. In Colorado, pricing continues to stabilize, which will prove positive to both the top line and gross margin dollars. In New Mexico, enhanced enforcement of illegal operators and the illicit market is beginning to produce results, which will benefit Schwazze over the longer-term, in our view.

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Townsquare Media (TSQ/$10.96 | Price Target: $21)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Virtual Conference Highlights
Rating: OUTPERFORM

Virtual conference highlights. On June 26, the company’s CEO Bill Wilson and CFO Stuart Rosenstein presented at Noble’s Virtual Consumer/TMT conference. Mr. Wilson highlighted the company’s transformation to a digital first business, unique value proposition, favorable growth outlook and sizeable return of capital to shareholders. A replay of the company’s presentation can be viewed here.

Favorable outlook. With Q2 nearly finished, Mr. Wilson highlighted the company is on track to hit Q2 guidance, experience sequential revenue growth over Q1, and expectation to hit full year revenue and adj. EBITDA guidance. Notably, we anticipate the company will gain positive momentum and experience sequential growth in the back half of the year, as high margin political revenue kicks in.

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Noble Capital Markets Research Report Friday, June 28, 2024

Companies contained in today’s report:

FreightCar America (RAIL)/OUTPERFORM – Poised for Greater Scale and Margin Expansion
GeoVax Labs (GOVX)/OUTPERFORM – CRO Partnership For Clinical Trial Allows Sponsored Phase 2b Trial To Move Forward

FreightCar America (RAIL/$3.66 | Price Target: $4.5)
Mark Reichman [email protected] | (561) 999-2272
Poised for Greater Scale and Margin Expansion
Rating: OUTPERFORM

Initiating coverage with an Outperform rating. FreightCar America, Inc. is a diversified manufacturer of railroad cars and rail car components. The company designs and manufactures a broad variety of railroad car types for the transportation of bulk commodities and containerized freight products primarily in North America. These include open top hoppers, covered hoppers, gondolas, and intermodal and non-intermodal flat cars. FreightCar America and its predecessors have been manufacturing railroad cars since 1901.

Unique competitive advantages. FreightCar America is a pure play manufacturer that has unique manufacturing capabilities that allow it to respond to customer orders with short lead times due to its ability to set up a production line to batch produce orders and quickly change over to the next line for a different product type. Its engineering capabilities allow it to offer tailored solutions in areas unmet by competitors.

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GeoVax Labs (GOVX/$3.55 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
CRO Partnership For Clinical Trial Allows Sponsored Phase 2b Trial To Move Forward
Rating: OUTPERFORM

Partnership For BARDA-Funded Trial Announced. GeoVax announced a partnership with Allucent, a global clinical management organization (CRO), to conduct the Phase 2 clinical trial for CM04S1. The trial has been awarded approximately $357 million in funding through Project NextGen, with about $24.3 million going to GeoVax and the balance to fund the clinical trial costs. We see the partnership as an important step toward the start of the clinical trial, as well as another scientific validation for CM04S1 and the GeoVax manufacturing technologies.

The Partnership Allows The Trial To Begin As Expected. Under the grant, GeoVax is the trial sponsor with responsibility for manufacturing and providing vaccine supplies. The grant also requires a CRO to conduct the trial and manage its clinical operations. The announcement of the partnership with Allucent, a global CRO that can provide these services allows the trial to move forward with a possible starting date during summer 2024.

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