John Bajkowski
is the president of AAII.
AP
DCO
DFSCX
GSL
HURC
KE
KTCC
NAESX
ORN
PANL
PERI
RCKY
RYAM
SIF
STRT
VFINX
VPG
The Model Shadow Stock Portfolio is reviewed quarterly to determine portfolio sales and additions, a practice put in place since the portfolio’s inception in 1993.
Occasionally, a special situation arises that requires more immediate action. On July 23, Model Shadow Stock Portfolio holding New Home Company Inc. announced that it had entered into a definitive merger agreement to be acquired by Apollo Funds, which is managed by affiliates of Apollo Global Management Inc. Under the terms of the agreement, Apollo Funds offered to acquire all outstanding shares of New Home Company for $9.00 per share in cash.
The tender offer was set to expire at the end of September 7, 2021. The acquisition transforms the company into a privately held enterprise, so shareholders needed to tender their shares or sell their stock ahead of the tender offer expiration.
The model portfolio position in New Home Company was sold, and a sell alert was issued on August 16. New Home Company was sold since the market price largely reflected the acquisition price of $9.00 per share, and we could be ready to reinvest the proceeds ahead of the quarterly portfolio review.
The quarterly review cycle of the Model Shadow Stock Portfolio is tied to the reporting cycle of most domestic publicly traded firms. After the reporting cycle is complete, holdings are examined for violating the earnings, valuation, size and age rules of the Model Shadow Stock Portfolio.
The review begins with an examination of the breakpoints for the smallest and cheapest deciles of domestically listed stocks. The primary Model Shadow Stock Portfolio selection criteria target the intersection of the smallest 10% of domestic stocks as measured by market capitalization, along with the “cheapest” 10% of domestic stocks as measured by the price-to-book-value (P/B) ratio. These decile breakpoints are determined by examining domestic companies that are listed on the New York Stock Exchange (NYSE) and then applying the size and value breakpoints for stocks listed on all domestic exchanges.
We used AAII’s Stock Investor Pro to examine the decile maximums and are leaving them unchanged. The NYSE price-to-book cutoff was 1.06 at the end of August, down from 1.11 in June, not significant enough to warrant a revision. The maximum minimum initial price-to-book ratio for determining qualifying stocks remains at 1.10. Stocks are sold for valuation if they exceed three times the minimum initial price-to-book ratio at the time of a quarterly portfolio review. A price-to-book cutoff of 1.10 is used to screen for stocks to add to the Model Shadow Stock Portfolio and 3.30 (1.10 × 3) is the maximum price-to-book ratio to keep stocks in the portfolio.
The NYSE market-cap cutoff for the lowest decile was $460 million at the end of August, compared to $470 million in June. Here again the size change was not significant enough merit an adjustment. The maximum minimum initial market capitalization for determining qualifying stocks remains at $500 million. Stocks are sold for valuation if they exceed three times the minimum initial market cap at the time of a quarterly portfolio review. A market-cap cutoff of $500 million is used to screen for stocks to add to the Model Shadow Stock Portfolio and $1,500 million ($500 million × 3) is the maximum market cap to keep stocks in the portfolio.
The other major factor that leads to portfolio turnover is tied to negative earnings. If a company reports trailing 12-month earnings from continuing operations that are negative, the stock is placed on probation; if a subsequent quarter has negative earnings prior to trailing 12-month earnings becoming positive, the stock is sold. When available, adjusted (non-GAAP) earnings are used to put stocks on probation or sell them. These are earnings that have been adjusted to eliminate the impact of nonrecurring events such as markdown of inventory or goodwill. These are earnings reported in the media and firms reporting consensus estimates. The I/B/E/S adjusted earnings reported in Stock Investor Pro are used for Model Shadow Stock Portfolio decisions when they are available.
A stock can also be sold if it has been held over four years, if it also no longer meets the initial rules for qualifying and has not gained at least 10% annually from its purchase price and there is a new qualifying stock to replace it.
After conducting the quarterly review of the Model Shadow Stock Portfolio, Hibbett Inc. (HIBB) was removed from the tracking portfolio during regular trading hours on Thursday, September 9. With the proceeds from the sale of Hibbett and New Home Company, as well as the cash held in the portfolio, there were enough funds to purchase three new holdings at a level roughly matching the average position—Dixie Group Inc. (DXYN), Rayonier Advanced Materials 
(RYAM) and VOXX International Corp. (VOXX).
Hibbett Inc. (HIBB)
Hibbett has been bumping up against the valuation and size maximums of the Model Shadow Stock Portfolio for some time now. Hibbett, formerly Hibbett Sports, is a leading athletic-inspired fashion retailer with nearly 1,100 Hibbett Sports and City Gear specialty stores. Hibbett, headquartered in Birmingham, Alabama, operates stores in 35 states nationwide primarily in small and mid-sized markets in the South, Southwest, Mid-Atlantic and the Midwest regions of the U.S.
Hibbett has benefited from increased at-home recreational activity triggered by the coronavirus pandemic. The stock is trading at around 15% off of its 52-week high price but is up over 85% for the year as of September 7. At the time of our quarterly review, Hibbett exceeded the market-cap sell cutoff of $1.5 billion with a market cap of $1.58 billion. It is the policy of the Model Shadow Stock Portfolio to sell a stock once its market cap reaches three times the initial purchase limit, which is now $500 million.
As of September 7, 27 stocks met the initial selection criteria for the Model Shadow Stock Portfolio. This is up from 20 passing companies last month. AAII members can see and research which companies are currently passing the initial selection criteria in the Shadow Stock Ideas table on AAII.com. The list of new Shadow Stock Ideas is updated daily—Tuesday through Saturday.
Seven stocks already in the Model Shadow Stock Portfolio passed the updated criteria at the time of the review: Ampco-Pittsburgh Corp. (AP), Hurco Companies Inc. (HURC), Key Tronic Corp. (KTCC), Mesa Air Group (MESA), Orion Group Holdings Inc. (ORN), SIFCO Industries Inc. (SIF) and Strattec Security Corp. (STRT).
The remaining 20 stocks were examined to ensure adequate liquidity, timely financial filings and appropriate industry and foreign considerations. A real estate investment trust (REIT) and a limited partnership were excluded. A company headquartered in China was excluded from consideration. Six stocks were also excluded from consideration because their average daily dollar trading volume was too low, indicating that they might be difficult to purchase without severely impacting the share price. The Shadow Stock Portfolio Rules on AAII.com provides guidance of factors to consider when selecting stocks for your portfolio.
Price momentum is used as the tiebreaker among qualifying stocks. The remaining stocks were ranked using the weighted relative strength ranking, which considers price performance over the last year but places a higher weight on the most recent quarterly price performance.
With the proceeds from Hibbett and New Home Company sales and the existing cash position of the Model Shadow Stock Portfolio, there were enough funds to take a position in three companies at roughly the average position size for the existing holdings in the tracking portfolio. The portfolio additions are:
Dixie Group Inc. (DXYN)
Dixie Group is a marketer and manufacturer of carpet and rugs to high-end residential customers through the Fabrica International, Masland Residential and Dixie Home brands. High-end carpet and rugs for commercial applications are marketed by AtlasMasland.
Dixie Group has a book value per share of $4.34 as of June 26. If you wish to stay within the 1.10 price-to-book-value maximum, you should pay no more than $4.77 per share (4.34 × 1.10). However, if the stock price has moved up after being added to the portfolio, you can still purchase the stock unless the price-to-book ratio goes above 1.21, which equates to a price of $5.25 per share. To calculate the maximum purchase price based on the maximum desired price-to-book ratio, multiply the current book value per share ($4.34 for Dixie Group) by the maximum price-to-book ratio to be considered for the Model Shadow Stock Portfolio (currently 1.10, or 1.21 for loosened consideration).
Rayonier Advanced Materials (RYAM)
Rayonier Advanced Materials is global supplier of high-purity cellulose specialties products, a natural polymer for the chemical industry. The company’s facilities in the U.S., Canada and France can produce over one million metric tons of high purity cellulose products for use in a wide range of industrial and consumer products such as filters, cosmetics, textiles and pharmaceuticals. Additionally, the company produces lumber for use in building and construction, as well as pulp and paper products used in packaging, print and writing materials.
Rayonier Advanced Materials has a book value per share of $12.36 as of June 26. If you wish to stay within the 1.10 price-to-book-value maximum, you should pay no more than $13.60 per share (12.36 × 1.10). However, if the stock price has moved up after being added to the portfolio, you can still purchase the stock unless the price-to-book ratio goes above 1.21, which equates to a price of $14.95 per share.
VOXX International Corp. (VOXX)
VOXX International is an international manufacturer and distributor in the automotive electronics, consumer electronics and biometrics industries. VOXX International’s segments include automotive electronics, consumer electronics and biometrics. The automotive electronics segment designs, manufactures, distributes and markets rear-seat entertainment devices, automotive security, mobile multimedia devices, location-based services, turn signal switches, obstacle-sensing systems, cruise control systems, heated seats and satellite radio products. The consumer electronics segment designs, manufactures, distributes and markets home theater systems; outdoor, cinema, flat panel, wireless and Bluetooth speakers; remote controls; karaoke products; personal sound amplifiers; infant and nursery products; and digital consumer products. The biometrics segment designs, markets and distributes iris identification and biometric security-related products.
VOXX International has a book value per share of $16.90 as of May 31. If you wish to stay within the 1.10 price-to-book-value maximum, you should pay no more than $18.59 per share (16.90 × 1.10). However, if the stock price has moved up after being added to the portfolio, you can still purchase the stock unless the price-to-book ratio goes above 1.21, which equates to a price of $20.45 per share.
The next quarterly review of the Model Shadow Stock Portfolio will take place following the end of November 2021. Any changes to the portfolio will be announced at the time they are made in our Model Shadow Stock Portfolio Update emails (sign up at www.aaii.com/email).
The Model Shadow Stock Portfolio bounced back during August with a 2.4% gain for the month. However, large-cap growth was the leading segment during the month with the Nasdaq 100 index gaining 4.3%, followed by a 3.0% gain for the S&P 500 index. The Vanguard Small Cap index fund (NAESX) was up 2.0% during August, while the DFA U.S. Micro Cap fund (DFSCX) also gained 2.0% for the month.
The Model Shadow Stock Portfolio is now up 44.4% for the year, while the S&P 500 as measured by the performance of the Vanguard S&P 500 Index fund (VFINX) is up 21.5% year to date. The Vanguard Small Cap Index fund is up 16.9% for the year and the DFA U.S. Micro Cap fund is up 26.4% for the year.
Growth stocks outperformed value stocks during August in the large-cap segment, while value trumped growth among mid-cap and small-cap stocks.
In the large-cap segment, growth stocks were up 4.2% during August, giving them an 23.6% gain year to date for 2021. Large-cap value stocks were up 1.7% during August and are now up 19.2% for the year.
In the mid-cap segment, growth stocks are up 15.0% for the year, after gaining 1.4% during August. Mid-cap value stocks are up 25.7% for the year, after gaining 2.4% during the month.
Small-cap growth stocks are up 6.9% year to date, while small-cap value stocks are up 25.4%. Small-cap growth stocks gained 1.8% during August, while small-cap value stocks gained 2.7% during the month.
The financial sector was the market leader during August with a 5.1% gain for the month and 31.5% gain year to date on the strength of the insurance companies within the sector. The communications services sector was a close second with a 5.0% monthly gain boosted by the strength of the media and entertainment components of the sector.
Declining oil prices pushed the volatile energy sector down 2.0% during August, yet it remains up 30.8% for the year. Concerns over the manufacturing constraints and transportation hurt the industrials sector which was up only 1.2% during August, followed by consumer staples (up 1.4%) and materials which were hamstrung by weak performance of household and personal products stocks.
Since its inception in 1993, the AAII Model Shadow Stock Portfolio has a compound annual average return of 15.3% versus the Vanguard 500 Index fund’s gain of 10.5% per year on average over the same period. Over the same period, the Vanguard Small Cap Index fund posted an average annual gain of 10.7%.
Big 5 Sporting Goods Corp. (BGFV) was the top performer for the month of August, returning 26.8%. It recently reported second-quarter earnings of $1.63 per share, beating expectations. Read more about the company’s earnings report below.
Kimball Electronics Inc. (KE) was the second-best performer in the month of August, with a return of 18.5%. The company reported its fourth-quarter earnings, which substantially beat market expectations. It also reported significant year-over-year revenue growth. Read more about Kimball Electronics’ fourth-quarter performance below.
SIFCO Industries Inc. (SIF) was the worst-performing stock during the month of August, declining by 27.4%. In August, the company reported its fiscal-year 2021 fourth-quarter results, posting disappointing earnings per diluted share of $0.04 versus $0.39 per diluted share in the comparable quarter of 2020. Read more about SIFCO Industries below.
Ampco-Pittsburgh Corp. (AP) was the second-worst-performing stock for the month of August, declining 23.0% during the month. It recently reported second-quarter earnings per share of $0.06, the same amount reported in the comparable quarter of 2020. Read more about Ampco-Pittsburgh below.
Here are some news highlights from August for the holdings in the Model Shadow Stock Portfolio:
Ampco-Pittsburgh Corp. (AP) reported second-quarter 2021 earnings per share of $0.06. An I/B/E/S consensus estimate was not available for the company. Net sales for the quarter were $92.4 million. Net income was $1.06 million.
“Sales and earnings for the second quarter improved sequentially and exceeded prior year, when we idled our facilities to manage the sharp drop in demand and to preserve liquidity due to the pandemic,” said CEO Brett McBrayer. “Now, a year later, we have seen capacity utilization in the global rolled steel sector returning to pre-pandemic levels, while raw material prices have risen. Order activity continues to improve, and we expect to see a full top-line recovery to pre-pandemic sales in 2022. We have been managing through supply chain and logistical challenges which have impacted our operations. Some of our customers are likewise facing similar challenges and, as a result, have pushed out deliveries to match their current production capabilities. In the third quarter, we will execute plant maintenance shutdowns to prepare our machinery for higher production levels.”
Ampco-Pittsburgh also amended and extended its revolving credit facility to ensure liquidity for its strategic capital expenditures and to support anticipated growth in working capital.
Big 5 Sporting Goods Corp. (BGFV) reported second-quarter 2021 earnings per share of $1.63 which beat the I/B/E/S consensus estimate of $1.08 per share by 50.9%. Revenue was $598.8 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $52.9 million for the second quarter.
“Our second-quarter results exceeded expectations, as we achieved another quarter of record sales and earnings results,” said chairman, president and CEO Steven Miller. “Same-store sales for the fiscal-2021 second quarter were up 31.2% versus the prior-year period and were up 33.4% versus the fiscal-2019 second quarter, reflecting a continuation of strong broad-based demand across our product mix. For the second quarter, we generated record net income of $36.8 million with $88.7 million of operating cash flow. Our bottom-line results benefited from further expansion of our merchandise margins, as well as operating with a cost structure that is meaningfully enhanced compared to pre-pandemic. Although we are cycling the peak of the 2020 COVID-19 related sales surge and we are being impacted by the widely reported supply chain disruptions and staffing challenges in the retail industry, we have continued to produce strong sales growth and margins versus historical pre-pandemic levels.”
Big 5 Sporting Goods also declared a 39% increase to its regular quarterly dividend to $0.25 per share. The company has increased its dividend in each of the last four quarters. The dividend is payable on September 15 to shareholders of record as of August 30.
Container Store Group Inc. (TCS) reported third-quarter 2021 earnings per share of $0.36, beating the $0.09 per share I/B/E/S consensus estimate by $0.27 per share. Revenue was $245.3 million, reflecting a 61.7% year-over-year increase.
Adjusted EBITDA increased by 644% for the first quarter of 2021, now standing at $33.5 million.
“We are very pleased to have delivered record-setting first-quarter results from both a net sales and profitability perspective,” said president and CEO Satish Malhotra. “Results were driven by a team commitment to transform the lives of customers through the power of organization, and alignment on executing key priorities alongside cost and promotional discipline. We are very encouraged by the early strides we are making on our strategic priorities of deepening our relationship with customers, expanding our reach and strengthening our capabilities. We are in the early stages of our path to $2 billion in net sales, but our progress to date further solidifies our confidence in our ability to drive strong results.”
Delta Apparel Inc. (DLA) reported second-quarter 2021 earnings per share of $0.96, which beat the I/B/E/S consensus estimate of $0.68 per share by 41.2%. Revenue was $256.32 million, beating estimates by almost $32 million, an increase of 33.7% year over year.
Net sales totaled $118.7 million, reflecting a 65.3% increase year over year. Gross profit improved dramatically year over year, jumping from $3 million in the prior-year third quarter to $30 million in the third quarter of 2021. During the third quarter, gross margin grew to 25.5%.
“We are thrilled with our performance during the quarter as it highlights the benefits of our broad channels of distribution, the demand in the market for the unique products and services we offer, and the efficiencies we can achieve with our vertically integrated operations,” said chairman and CEO Robert Humphreys. “We believe the momentum we are experiencing is just the beginning and, coupled with our ongoing strategic initiatives, positions us well for continued growth and profitability expansion.”
Ducommun Incorporated (DCO) reported second-quarter 2021 earnings per share of $0.74, which beat the I/B/E/S consensus estimate of $0.65 per share by 14.7% or $0.10. Revenue was $160.2 million, reflecting an 8.7% year-over-year increase.
Net income was $8.4 million. Gross profit was $36.8 million in the third quarter of 2021. During the second quarter, gross margin grew to 23%.
“The highlight of the quarter and the year was the recent announcement that Ducommun was selected as an Airbus Detail Parts Partner for the first time in our history and, in tandem, the company was awarded a five-year contract to provide titanium for key products on the A320 and A330 platforms,” said chairman, president and CEO Stephen Oswald. “This is a significant validation and endorsement for our industry-leading titanium business and a major milestone for the company, strengthening our position as a supplier to Airbus. Given this backdrop, and the overall improving commercial aerospace market dynamics, we are optimistic about growth acceleration in future quarters. Ducommun also has the operating footprint and capacity and is ready to serve the expected higher build rates as the commercial aerospace recovery continues to take hold.”
Global Ship Lease Inc. (GSL) reported second-quarter 2021 earnings per share of $0.66, which beat the I/B/E/S consensus estimate of $0.56 per share by 17.2%. Revenue was $82.87 million, beating estimates by $3.8 million and reflecting a 16.1% year-over-year increase.
“Moving into the summer months, the containership charter market has continued to reach new heights, driven by strong underlying containerized trade and an ongoing tightness in the supply of ships,” said executive chairman George Youroukos. “These strong fundamentals, combined with continued port congestion and a generally overburdened logistics supply chain, have resulted in effectively full employment of the global fleet, which has, in turn, driven charter rates to record highs and has led to extended charter durations, now several times what they have been throughout the last decade.”
Youroukos continued, “Looking forward, we are very encouraged to see a highly constrained supply of containerships through at least 2023/2024, particularly in the mid-sized asset classes where we focus, and a prospective long tail of containership demand supported by both high consumer demand for imported goods and anticipated restocking simply to restore retail inventories to more normalized levels. We also factor in the tougher environmental regulations that are set to come into effect starting in January 2023. Compliance with these new regulations will not only have a positive environmental impact by reducing emissions but will also require much of the global containership fleet to slow down substantially, thus reducing effective capacity, with a one knot reduction in speed equating to a reduction of approximately [5% to 6%] in fleet capacity.”
Key Tronic Corp. (KTCC) reported fourth-quarter 2021 net income per share of $0.02. An I/B/E/S consensus estimate was unavailable. Revenue was $132.6 million, reflecting a 14% year-over-year increase.
Operating income grew to $9.5 million during 2021 from $6.8 million year over year. Gross margin grew from 7.8% in 2020 to 8.1% in 2021. Similarly, operating margin showed growth, increasing from 1.5% in 2020 to 1.8% in 2021.
“We’re pleased with the increasing customer demand during fiscal 2021 and our successful launch of major new programs,” said president and CEO Craig Gates. “We are especially grateful for the dedication and resilience of Key Tronic employees during the past fiscal year—a year of record revenue and increased operating margins in spite of significant headwinds including the global pandemic, government shutdowns, unprecedented winter storms, worldwide component shortages and transportation bottlenecks. While production has been hindered by many unusual challenges, we continued to ramp up our new programs and we’re extremely encouraged by new program wins and our expanding customer base. During the fourth quarter of fiscal 2021, we won new programs involving consumer products, exercise equipment and residential building products.”
Kimball Electronics Inc. (KE) reported fourth-quarter 2021 earnings per share of $0.58, which beat the I/B/E/S consensus estimate of $0.43 per share by 34.9%. Revenue was $329 million, beating estimates by $9 million, an increase of 15% year over year.
Net income for the fourth quarter totaled $14.4 million, or $0.57 per share. Cash flow from operations was $26.3 million, this quarter being the fifth consecutive quarter where it was more than $20 million.
“We are very pleased with our operating results for the fourth quarter and the strong finish to a record-setting fiscal-year 2021,” said chairman and CEO Donald Charron. “Our team remains laser-focused on fulfilling commitments made to our customers as we work through the ongoing challenges caused by the pandemic and the global parts shortage. Despite the headwinds, we delivered strong top-line growth, excellent margin expansion, and impressive earnings growth with adjusted Q4 EPS increasing 71% over the same period last year. I could not be more proud of our team and how we’re creating quality for life.”
Mesa Air Group (MESA) reported third-quarter 2021 earnings per share of $0.11, which beat the I/B/E/S consensus estimate of $0.10 per share by 10.0%. Revenue was $125.16 million, missing estimates by $6.25 million, but increased by 71.2% year over year.
Net income for the fourth quarter totaled $14.4 million, or $0.57 per share. Cash flow from operations was $26.3 million, this quarter being the fifth consecutive quarter where it was more than $20 million.
“We had a strong quarter as a result of the rebound in air traffic that led to a sharp increase in block hours compared to the prior-year period, as well as last quarter,” said chairman and CEO Jonathan Ornstein. “This time last year we faced a more difficult environment due to the pandemic that led to a significant reduction in air travel. I am proud of our team’s ability to work through these challenges, as evidenced by our fiscal third-quarter results. While travel demand remains below pre-pandemic levels and supply chain disruptions have compounded the challenges we face in the current environment, we continue to press forward. We are also committed to ushering in the next generation of sustainable air travel. This is already beginning with new ventures such as our recent one with Heart Aerospace.”
Pangaea Logistics Ltd. (PANL) reported second-quarter 2021 adjusted earnings per diluted share of $0.44, which increased year over year from the $0.07 earnings per diluted share reported in the second quarter of 2020. Earnings per share beat the I/B/E/S consensus estimate of $0.22 per share by 95.5%. Net sales of $145.5 million increased by 106.7% over the same quarter of 2020.
Net income for the second quarter was $19.2 million, a 540% increase over $3.0 million reported in the comparable quarter of 2020. Earnings before interest and taxes (EBIT) totaled $22.2 million versus $5.3 million in the comparable quarter of 2020. Gross income also increased despite the increased cost of goods sold (COGS). In 2020, COGS was 66.7% of sales, versus in 2021 COGS totaled 74.7% of sales. This increase was offset partially by the increased revenue, but it is something to take note of for future earnings estimates.
“Our second-quarter results were record-breaking,” said CEO Ed Coll. “Market levels not seen in over a decade helped push our EBITDA above $21 million for the quarter, and our net income was $19.2 million, while EPS was $0.44 for the quarter. Forward freight contracts, purchased to protect long cargo positions, added $6.1 million of unrealized gains to net income for the quarter because FFA [forward freight agreement] markets moved sharply upward, and our accounting treatment requires the mark-to-market adjustment to be included in this quarter. We will continue to be opportunistic in expanding our platform in ways that add value for our customers and, in turn, enhance shareholder value.”
The company also declared a normal quarterly cash dividend of $0.035 per share, to be paid on September 15 to shareholders of record as of August 30. Pangaea Logistics did not comment on the outlook for the rest of 2021, but I/B/E/S currently estimates the company to earn $1.09 per diluted share for full-year 2021.
Penn Virginia Corp. (PVAC) reported second-quarter 2021 adjusted earnings per diluted share of $1.05, which decreased year over year from the $1.29 adjusted earnings per diluted share reported in the second quarter of 2020. Earnings per share beat the I/B/E/S consensus estimate of $0.79 per share by 32.7%. Net sales of $124.7 million increased by 174.1% over the same quarter of 2020.
Reported net income was $3 million, a massive increase over the net loss of $94.7 million in the second quarter of 2020. Gross income for the quarter was $103.1 million, a 265.5% increase over $28.2 million in the comparable quarter of 2020. EBIT was $13.1 million, an increase over reported EBIT of –$86.9 million in the comparable period of 2020. The massive gains can be partially attributed to the increased revenue, but the company also posted large impairments of oil and gas properties of $35.5 million on their 2020 income statement.
“This quarter has been one of the best-performing quarters for the Penn Virginia team to date and could not have been achieved without the tireless efforts of our entire employee base,” said president and CEO Darrin Henke. “It’s not often that within one month, we get to announce we significantly exceeded production expectations, lowered our capital costs, improved our operating costs, announced a transformational merger, gained access to high yield capital markets, expanded liquidity and had one of our highest free cash flow quarters in recent history.”
The company did not provide outlook for the rest of fiscal-year 2021, but I/B/E/S currently estimates the company to have adjusted earnings per diluted share $3.59 for the full fiscal-year 2021.
Perion Network Ltd. (PERI) reported second-quarter 2021 earnings per diluted share of $0.19, which increased year over year from the $0.04 diluted earnings per share reported in the second quarter of 2020. Earnings per share beat the I/B/E/S consensus estimate of $0.18 per share by 5.6%. Net sales of $109.7 million represented an 81.9% increase compared to the same quarter of 2020.
Gross income of $103.5 million was recorded for the quarter, an 86.8% increase over $55.4 million in the comparable quarter of 2020. Total operating income reported was $8.9 million, a significant increase over the operating loss of $2.6 million reported in the comparable period of 2020. Net income reported by the company totaled $7.1 million, a 422.7% increase over the net loss of $2.2 million in the second quarter of 2020.
“This quarter’s performance is another indicator that we are executing on our disciplined strategic plan and positioned to achieve our three-year targets a year earlier than expected,” said CEO Doron Gerstel. “Based on the strength behind our growth—significantly more dollars spent per campaign and a healthy increase in new clients.”
The company also updated its guidance for the rest of 2021, and improved 2022 guidance. The company expects to have revenues between $415 million and $430 million for 2021, a 28% projected year-over-year growth rate. For 2022, the company expects revenues of $490 million to $520 million, a 20% projected growth rate.
Rocky Brands Inc. (RCKY) reported second-quarter 2021 earnings per diluted share of $0.99, which increased year over year from $0.44 adjusted earnings per diluted share reported in the second quarter of 2020. Earnings per share beat the I/B/E/S consensus estimate of $0.83 per share by 19.7%. Net sales of $131.6 million represented a 134.2% increase compared to the same quarter of 2020.
Net income reported by the company totaled $3.9 million, a 62.5% increase over the $2.4 million net income in the second quarter of 2020. Gross income for the quarter was $49.2 million, a 152.3% increase over $19.5 million in the comparable quarter of 2020. Total operating income was $8.4 million, an increase over operating income of $3.1 million for the comparable period of 2020.
“Our business exhibited tremendous strength in the second quarter … The combination of innovative product introductions, enhanced consumer engagement and effective inventory management are fueling market share gains in our work, western and outdoor markets,” said chairman, president and CEO Jason Brooks. “At the same time, the newest additions to our brand portfolio, in particular The Original Muck Boot Company and XTRATUF are performing very well, contributing to our exceptional growth. I am confident that we are well positioned to continue capitalizing on our current momentum and successfully integrating our recent acquisition to unlock even greater earnings power from our operating model in the years ahead.”
The company did not disclose any outlook for the rest of 2021, but I/B/E/S currently estimates the company to have diluted earnings per share of $5.69 for the full year of 2021.
The company also declared a dividend during the month of $0.155 per share, a 10.7% increase over the previous declaration, payable on September 16 to shareholders of record as of August 31.
SIFCO Industries Inc. (SIF) reported third-quarter 2021 earnings per diluted share of $0.04, which decreased year over year from $0.39 earnings per diluted share reported in the third quarter of 2020. Net sales of $25.3 million was 9.0% lower than the same quarter of 2020.
Net income was $0.3 million, a decrease from $2.3 million net income in the third quarter of 2020. EBIT was $0.4 million, a decrease from EBIT of $2.5 million reported in the comparable period of 2020. Gross income for the quarter was $3.3 million, a decrease from $3.9 million gross income for the comparable quarter of 2020.
“The SIFCO team continues to focus on safety, delivery, quality, cost and continuous improvement,” said CEO Peter Knapper. “While the company saw more of an impact in its third quarter of fiscal 2021 from the effects of the COVID-19 pandemic due to the longer lead times for certain of our products, we continue to work with and support our customers as the A&E [aerospace and energy] markets begin to react to the recovery that is underway.”
Currently, the company does not have any financial outlook for the rest of 2021, or any forward-looking statements. During the month, the stock for the company decreased over 25% off the heels of these poor financial statements.
Strattec Security Corp. (STRT) reported fourth-quarter 2021 earnings per diluted share of $0.75, which increased year over year from the $2.80 loss per diluted share reported in the fourth quarter of comparable periods. Earnings per share fell short of the I/B/E/S consensus estimate of $1.04 per share by 15.4%. Net sales of $110 million increased 161.2% over the same quarter of 2020.
Net income was $4.3 million, an increase over the $12.4 million net loss in the fourth quarter of 2020. Gross income for the quarter was $15.3 million, an increase over the gross loss of $7.8 million for the comparable quarter of 2020. EBIT was $4.7 million, an increase over EBIT of –$15.8 million reported in the comparable period of 2020.
“Over the last few months, our sales and profits have been reduced because of customers temporarily shutting down their assembly plants,” said president and CEO Frank Krejci. “This is due to the widely reported shortages of semiconductor chips, not because of reduced demand. In fact, inventories on dealer lots and car rental agencies are at abnormally low levels … After a tumultuous fiscal 2020 in which our associates worked to overcome the negative effects of the pandemic, we have experienced the positive benefits of their efforts in our financial results for fiscal 2021. We believe their continuing dedicated efforts to win more new business, implement structural efficiencies and pursue new technologies for expanded opportunities will serve the company well in fiscal 2022 and the years ahead.”
Fiscal-year 2021 set a company record for both net income and diluted earnings per share. For full-year 2021, the company reported net sales of $485.3 million compared to $385.3 million reported in the prior year. Net income for 2021 was $22.5 million versus a net loss of $7.6 million in 2020. Diluted earnings per share were $5.85 for the year ended 2021 compared to a diluted loss per share of $2.04 during the prior year.
Vishay Precision Group Inc. (VPG) reported second-quarter 2021 adjusted diluted earnings per share of $0.49, which increased year over year from $0.19 adjusted earnings per diluted share reported in the second quarter of 2020. Earnings per share beat the I/B/E/S consensus estimate of $0.35 per share by 41.6%. Net sales of $75.3 million increased 27.4% over the same quarter of 2020.
Net income was $3.9 million, a 116.7% increase over $1.8 million net income in the second quarter of 2020. Gross income for the quarter was $29.8 million, a 29.0% increase over $23.1 million in the comparable quarter of 2020. EBIT was $4.6 million, an increase over EBIT of $2.7 million reported in the comparable period of 2020.
“Second-fiscal-quarter sales of $75.3 million marked another solid quarter for VPG,” said CEO Ziv Shoshani. “Demand trends across our business were strong, as orders grew 23.3% sequentially to $105.4 million, which includes $7.1 million of backlog of Diversified Technical Systems Inc. (DTS), which we added to the VPG platform on June 1, 2021. This resulted in a book-to-bill ratio of 1.40, which underscores our optimism for the second half of the year.”
The company expects to grow quarter over quarter, projecting revenues in the range of $81 million to $87 million for the third fiscal quarter of 2021.
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