Chewy (NYSE:CHWY) Q3 2026 Earnings Call December 10, 2025 08:00 AM ET Speaker6Hello and welcome to the Chewy third quarter 2025 earnings call. My name is Emily, and I'll be coordinating your call today. After the presentation, you'll have the opportunity to ask any questions, which you can do so by pressing star followed by the number one on your telephone keypad. I will now hand over to our host, Natalie Nowak, to begin. Please go ahead.Speaker7Thank you for joining us on the call today to discuss our thir ...

Financial Data and Key Metrics Changes - The company reported a year-over-year increase in Adjusted EBITDA of $24.8 million, or 22.2%, for Fiscal 2025 [5][12] - Net income for Fiscal 2025 was $73.5 million, an increase of $38.2 million compared to the prior year [12] - Adjusted EBITDA rose to $136.4 million, reflecting an $18.5 million increase in the base business and a $17 million increase from recent acquisitions [13] Business Line Data and Key Metrics Changes - Home heating oil and propane volume increased by 29 million gallons, or 12%, to 283 million gallons for Fiscal 2025 [10][11] - Product gross profit rose by $57 million, or 12%, to $525 million, driven by increased volume and higher margins [11] - Installation and service revenue grew nearly 10% over Fiscal 2024 [4] Market Data and Key Metrics Changes - Temperatures in the company's operational areas were 8% colder than the prior year but 8% warmer than normal [10] - The company experienced a modest rise in net customer attrition, although internal customer satisfaction indicators improved [5][22] Company Strategy and Development Direction - The company aims to grow and diversify by continuing acquisitions in heating oil and propane, while managing customer attrition and maximizing service profitability [7] - The acquisition program remains a key component of the business strategy, with four transactions completed in Fiscal 2025 [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted the difficulty in predicting the impact of the regulatory environment, particularly in New York, on future operations [16] - The company is actively reviewing its sales and marketing strategies to attract more customers amid lower real estate activity [24] Other Important Information - The company invested approximately $81 million in acquisitions and $16 million in unit repurchases during Fiscal 2025 [7] - Delivery, branch, and G&A expenses rose by $36.6 million, largely due to recent acquisitions [11] Q&A Session Summary Question: Thoughts on the regulatory environment in New York - Management indicated it is difficult to predict the impact of the regulatory environment as plans are still in flux [16] Question: Customer attrition trends and future outlook - Management acknowledged a low level of prospect activity and noted that while loss rates are decreasing, new customer gains are a challenge [22][24] Question: Acquisition pipeline and free cash flow concerns - Management confirmed an active acquisition pipeline with several opportunities under review and addressed concerns about free cash flow being lower than expected due to working capital tied up in receivables and inventory [25][27][28]

Core Insights - The company achieved its first positive adjusted EBITDA in Q3, marking a significant milestone in its financial performance [2] - The company aims to maintain profitability while continuing to grow, with a projected top-line growth of approximately 25% annually over the next three years [3] Financial Performance - Achieving positive adjusted EBITDA was a long-term goal for the company, which was reached in Q3 [2] - The company plans to reinvest about two-thirds of incremental gross profit back into the business, allowing one-third to contribute to adjusted EBITDA [3] Future Strategy - After the initial three-year period of growth, the reinvestment strategy is expected to shift to one-third reinvestment and two-thirds contributing to adjusted EBITDA [3] - The company is committed to not reverting to negative adjusted EBITDA in the future [2]

Core Insights - Summit Midstream Corporation (SMC) shares have increased by 10.8% following the release of its Q3 2025 results, outperforming the S&P 500's 1.9% growth during the same period [1] - The company reported a net income of $5 million, a significant recovery from a loss of $197.5 million in the previous year [2] - Total revenues rose by 43% to $146.9 million from $102.4 million year-over-year [2] Financial Performance - Per-share loss narrowed to 13 cents from a loss of $19.25 per share in the prior-year quarter [2] - Adjusted EBITDA increased by approximately 45% to $65.5 million compared to $45.2 million in the prior-year period [2] - Distributable cash flow rose to $36.7 million from $22.1 million a year ago, while free cash flow increased to $16.7 million from $9.7 million [2] Operational Metrics - Average daily natural gas throughput reached 925 MMcf/d, up from 667 MMcf/d in the prior-year period [3] - Liquids throughput was 72 Mbbl/d, slightly above the 70 Mbbl/d recorded a year ago [3] - The Double E Pipeline achieved an average throughput of 712 MMcf/d, compared to 661 MMcf/d a year earlier [3] Segment Performance - Rockies segment adjusted EBITDA rose to $29.0 million from $24.9 million, driven by higher natural gas throughput [4] - Permian segment EBITDA was $8.7 million, slightly above last year's $8.5 million [4] - Mid-Con EBITDA surged to $23.6 million from $7.3 million, primarily due to expanded operations after the Tall Oak acquisition [4] - Piceance segment's EBITDA was $12.5 million compared to $12.8 million in the year-ago quarter [4] Management Commentary - Management highlighted operational momentum and robust customer activity, with 21 new well connections during the quarter [5] - Adjusted EBITDA increased more than 7% from the second quarter, indicating an annualized run-rate of approximately $260 million [5] - Expectations for the year-end adjusted EBITDA are near the low end of the $245 million to $280 million guidance range [5][11] Future Outlook - Management expressed optimism for 2026, citing strong customer engagement and over 120 planned well connections for the first half of the year [6] - Capital spending focused on pad connections and compressor relocations to enhance margins starting in 2026 [6] Factors Influencing Results - Quarterly results benefited from higher natural gas throughput, particularly in the Rockies, where volumes increased 7.5% sequentially [7] - Product margin improved due to stronger realized NGL and condensate pricing, despite softer residue gas prices [7] - The integration of Tall Oak Midstream assets contributed to higher throughput volumes and segment EBITDA [8] Pipeline Performance - The Double E Pipeline's performance was notable, with average throughput increasing compared to both the prior quarter and the year-ago quarter [9] - Higher take-or-pay commitments and stronger Permian basis differentials contributed to record usage levels [10] Capital Expenditures - Year-to-date capital expenditures included $9.5 million for integration efforts and compressor relocation projects [12] - Management expects these initiatives to reduce compressor leasing costs by over $4 million annually starting in 2026 [12]

Financial Data and Key Metrics Changes - Porch Group reported Q3 2025 adjusted EBITDA of $21 million, surpassing the initial target of $50 million for the year, with year-to-date adjusted EBITDA reaching $53.1 million [4][12] - Year-to-date gross profit increased by 119% compared to the previous year, with Q3 gross profit at $94 million and an 82% gross margin [5][12] - Cash flow from operations for Q3 was $29 million, contributing to a total of $71 million year-to-date [4][17] Business Line Data and Key Metrics Changes - Insurance services accounted for 64% of total revenue in Q3, with revenue from this segment at $73.8 million and an adjusted EBITDA margin of 34% [12][14] - Software and data segment revenue increased by 7% year-over-year to $24.6 million, while consumer services revenue rose by 9% to $19.4 million [16][17] - The conversion rate of reciprocal written premium (RWP) to insurance services adjusted EBITDA improved to 18% in Q3, up from 16% in Q2 [10][14] Market Data and Key Metrics Changes - Reciprocal written premium for Q3 was $138 million, reflecting a 14% increase from the previous quarter [20] - The company reported nearly 48,000 policies written in Q3, with an RWP per policy of $2,884 [21] - The reciprocal surplus combined with non-admitted assets increased by over $100 million quarter-over-quarter to $412 million [8][10] Company Strategy and Development Direction - The company aims to generate as much surplus as possible at the reciprocal while growing agent and quote volume to lower prices for new low-risk customers when appropriate [8][19] - The focus remains on maximizing long-term shareholder value rather than rapid premium growth, with a disciplined approach to scaling [32][60] - Investments in data capabilities and product innovation are expected to drive future growth, particularly in the software and data segments [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the full-year adjusted EBITDA target of $70 million, representing a tenfold increase from the previous year [4][18] - The company remains cautious about the housing market, which continues to present headwinds, but anticipates potential recovery in the future [41][42] - The management highlighted the importance of maintaining strong loss ratios and surplus generation to support future growth [57][60] Other Important Information - The company has repurchased $12.8 million of its 2026 convertible notes, resulting in a gain of approximately $400,000 [17] - The board has authorized management to repurchase remaining notes with cash from the balance sheet [17] Q&A Session Summary Question: Insights on reciprocal written premium and competitive landscape - Management emphasized the focus on maximizing long-term shareholder value and the ability to grow premium at a controlled pace without sacrificing margins [32][33] Question: Clarification on fourth quarter guidance and housing market impact - Management noted that while Q3 outperformed expectations, the housing market remains a challenge, and they are cautious about future forecasts [40][42] Question: Update on Home Factors and AI integration - The company is leveraging AI to enhance data insights and is on track to expand its Home Factors product line [48][49] Question: Capital allocation and M&A appetite - Management acknowledged the potential for M&A but did not provide specific details, indicating that having excess capital offers various strategic choices [68][69] Question: Insurance segment expansion and state presence - The company remains in 22 states but sees opportunities for expansion in 2026, with a streamlined process for entering new markets [73][74]

Financial Data and Key Metrics Changes - In H1 2025, revenues reached €928 million, a decrease of 2% organically, despite a strong 6% organic growth in DTC channels [3][4] - Gross profit was €626 million, with a margin of 67.5%, reflecting a 110 basis points improvement driven by a better channel mix [4][5] - Adjusted EBITDA for the group was €69 million, with an EBITDA margin of 7.4%, down 100 basis points compared to H1 2024 [6][7] - Net profit increased to €48 million, up 53% from €31 million in the previous year, attributed to higher financial income and foreign exchange gains [9][10] - Capital expenditure (CapEx) was €54 million, representing about 6% of revenues, primarily focused on store network development [11] Business Line Data and Key Metrics Changes - The Zegna segment generated an adjusted EBITDA of €94 million, with a margin of 14.3%, up from 12.8% in H1 2024, due to higher operating leverage [8] - Thom Browne's adjusted EBITDA fell to €4 million from €20 million in H1 2024, driven by a significant revenue decline in the wholesale channel [8] - Tom Ford Fashion recorded an adjusted EBITDA loss of €90 million, worsening from a €12 million loss last year, due to planned investments in store expansion and IT infrastructure [9] Market Data and Key Metrics Changes - The company noted strong momentum in Europe, the Middle East, and the Americas, while the Greater China Region (GCR) remains challenging and volatile [16] - There are early signs of improvement in GCR, but the company remains cautious about drawing conclusions from recent trends [16] Company Strategy and Development Direction - The company is focusing on expanding its DTC network, with new store openings in key markets like Miami and Shanghai [14] - A marketing campaign for Zegna's Fall-Winter 25 collection has been launched, emphasizing the brand's heritage and new fabric innovations [13] - The company is committed to maintaining strategic investments while managing costs, particularly in the context of a volatile market environment [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging and volatile sector environment but expressed confidence in the actions taken to protect profitability [7][16] - The company is planning for a cautious approach in China, anticipating a "new normal" rather than a rapid recovery [59] Other Important Information - Free cash flow absorption was €23 million in H1 2025, compared to €7 million in the previous year, driven by lower operating cash flow [11] - The net debt at the end of June was approximately €92 million, consistent with the previous reporting period [12] Q&A Session Summary Question: Current performance in terms of margin and expectations for H2 - Management explained that the gross margin improvement is linked to the DTC revenue growth and emphasized the importance of maintaining quality in DTC sales [22][23] Question: Opportunities for margin improvement in the Zegna segment - Management indicated that Zegna's margins could trend between 13% and 14% for the year, with a long-term goal of reaching 15% [32] Question: Current trends in the Chinese market - Management noted early signs of improvement in GCR but remained cautious about the overall recovery, emphasizing the need for a stable environment before making definitive conclusions [16][59] Question: Pricing strategy and consumer response - Management confirmed that price increases have been implemented to offset costs and tariffs, with no significant negative consumer response observed [53][56]

Fleet and Operations - The company has a modern jackup fleet with an average age of approximately 6 years[7] - The fleet utilization is at 100%[7] - The company's Q2 2023 Adjusted EBITDA margin was 45%[7] - The company's contract backlog is $1.83 billion[7] - The company's Q2 2023 technical uptime was 98.7%[37] Market Dynamics - Modern jackup rig utilization is back at 2014 levels, reaching 93.7%[13] - Over 30% of the global jackup fleet is over 30 years old, with over 150 jackups retired since 2015, averaging 38 years of age at retirement[18] - The orderbook for new jackup rigs is at a record low, representing approximately 3% of the total fleet[22] Financial Outlook - The company has 75% contract coverage for 2024 at an average dayrate of $129k/day[29] - The company has 53% contract coverage for 2025 at an average dayrate of $130k/day[29] - The company has 18% contract coverage for 2026-2028 at an average dayrate of $125k/day[29]

Financial Data and Key Metrics Changes - Total revenue increased by 32.1% to $93.1 million compared to $70.5 million in the same period last year, exceeding analyst expectations by approximately 12% [7][17] - Brokerage revenue rose nearly 36% to $88.9 million from $65.4 million year-over-year [8][17] - Gross profit improved to $8.1 million, a 13% increase year-over-year, with a 34% growth excluding divested Daggle Insurance [8][17] - GAAP net loss for Q1 2025 was $5.6 million or $0.24 per share, compared to a loss of $5.9 million or $0.31 per share in Q1 2024 [20] Business Line Data and Key Metrics Changes - The brokerage business closed approximately 9,715 transactions, a 26.1% increase from 7,703 transactions in Q1 2024 [21] - The Real Estate Division's revenue was approximately $88.9 million, a 36% increase attributed to the addition of My Home Group [22] - Mortgage revenue increased by 13% to $2.6 million from $2.3 million year-over-year [15][24] - Cyto revenue increased by 43% to $1 million from $700,000 in Q1 2024 [16][24] Market Data and Key Metrics Changes - Housing inventory rose by 16% in California, 20% in Utah, 28% in Colorado, and 18% in Georgia, indicating a shift towards a more balanced market [14] - Average home prices dropped year-over-year by 2.4% in Florida, 4% in Colorado, 8% in Kansas, and 5% in Illinois [15] Company Strategy and Development Direction - The company is focused on three core drivers for long-term profitability: expanding revenue through strategic growth, enhancing gross margins through agent programs like Elevate, and maintaining cost discipline [26] - The Elevate program aims to enhance agent productivity and drive long-term profitability, with over 120 agents signing up shortly after its soft launch [9][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism despite ongoing economic headwinds, stating that the results reflect discipline and execution [6] - The company expects to achieve adjusted EBITDA profitability in Q2 2025, marking a significant milestone [7][26] - Management remains cautious about broader market volatility but is encouraged by current momentum [27] Other Important Information - The company has reduced expenses by approximately $750,000 per quarter going forward [6] - The cash position at the end of the quarter was $8 million, including $2.7 million in net proceeds from a public offering [25] Q&A Session Summary Question: Can you elaborate on how Elevate enhances profitability? - Management indicated that Elevate's structure allows for a higher gross profit margin per transaction, potentially growing by three to four times compared to traditional programs [32][33] Question: Have discussions with similar-sized agent teams accelerated post-Elevate launch? - Management confirmed increased conversations with various brokerages and technology partners since the Elevate launch, indicating potential partnerships and licensing opportunities [36][38]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $35.2 million, up 21% from Q4 2024 and up 29% from Q1 2024 [7] - A non-cash gain of $120 million was recorded due to the acquisition of a partner's 49.9% interest in Long Ridge, which is excluded from adjusted EBITDA for comparative purposes [8] - Total debt reported was $2.8 billion as of March 31, with corporate level debt unchanged at $572 million [14] Business Line Data and Key Metrics Changes - TransStar reported adjusted EBITDA of $19.9 million, slightly up from $19.4 million in Q4 2024, with stable volumes despite tariff uncertainties [10][15] - Long Ridge generated $18.1 million of EBITDA in Q1, up from $9.9 million in Q4, with a power plant capacity factor of nearly 99% [11][17] - Jefferson's EBITDA was $8 million, down from $11.1 million in Q4, impacted by four storage tanks being off lease [19] - Repauno is launching a Phase II transloading project with $300 million in tax-exempt debt to fund construction, expecting $80 million in annual EBITDA from new contracts [13][21] Market Data and Key Metrics Changes - The company has approximately $190 million of incremental locked-in annual EBITDA under executed agreements, targeting over $400 million in annual EBITDA potential [10] - Repauno is positioned to benefit from increased energy exports to Europe, with recent contracts signed at higher rates [40] Company Strategy and Development Direction - The company is focused on transformational growth in 2025, with strategic objectives including acquisitions and expanding operational capacity [9] - Long Ridge is exploring data center partnerships to generate additional EBITDA while maintaining existing power plant revenues [29] - TransStar aims to diversify revenue through M&A efforts and new freight business opportunities [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the year ahead, citing strong performance and strategic developments across business units [9][22] - The operating environment remains uncertain due to tariffs, but certain segments are positioned to benefit from global trade dynamics [38] Other Important Information - The company plans to refinance corporate bonds and existing preferred stock to reduce fixed charges and increase cash flow for shareholders [14] Q&A Session Summary Question: Timeline for CABERON approvals after public hearing - Management expects a typical thirty-day wait after the hearing date for approvals [26] Question: Types of data center deals at Long Ridge - Management discussed leasing land and providing backup power to data center developers, estimating incremental EBITDA of around $70 million [28][29] Question: Update on the Nippon deal and its implications - Management is optimistic about the Nippon acquisition of US Steel, with positive indications from Washington [32] Question: Impact of tariffs on business - Management noted mixed effects from tariffs, with some segments potentially benefiting from increased energy exports [39] Question: Remaining capacity for contracting at Repauno - Management indicated limited remaining capacity for Phase II but potential upside from Phase I [44][46] Question: Incremental earnings from the 20 MW increase at Long Ridge - Management expects about $8 million of incremental EBITDA from the power plant upgrade, likely to be approved by late 2025 [48]

Financial Data and Key Metrics Changes - The company reported first quarter adjusted EBITDA of $57.5 million and capital expenditures of $20.6 million, with the majority of CapEx spent in the Rockies and Mid Con segments [13] - Net debt stood at approximately $959 million, with available borrowing capacity totaling approximately $354 million at the end of the first quarter [13] Business Line Data and Key Metrics Changes - The Rockies segment generated adjusted EBITDA of $24.9 million, an increase of $1.6 million from the fourth quarter, primarily due to an 8.8% increase in liquids volume throughput [13] - The Mid Con segment reported adjusted EBITDA of $22.5 million, an increase of $9.6 million relative to the fourth quarter, primarily due to the acquisition of Tall Oak and an increase in volume throughput [16] - The Permian Basin segment reported adjusted EBITDA of $8.3 million, an increase of $0.5 million relative to the fourth quarter, due primarily to higher volume throughput on the Double E pipeline [15] Market Data and Key Metrics Changes - In the Rockies segment, 30 new wells were connected during the first quarter, including 22 in the DJ Basin and 8 in the Williston Basin [9] - Average daily volumes on the Double E pipeline grew by 8% quarter over quarter, averaging close to 700 million cubic feet per day [11] Company Strategy and Development Direction - The company remains focused on executing strategic objectives and maintaining a strong balance sheet to navigate the current macroeconomic environment [6] - The acquisition of Moonrise Midstream is expected to provide additional operating synergies and capacity for future growth in the DJ Basin [7] Management's Comments on Operating Environment and Future Outlook - Management noted a significant reduction in crude oil prices, which may dampen activity levels in the second half of the year, particularly in the crude-oriented Rockies segment [7] - The outlook for the natural gas side remains strong, which could mitigate potential downside exposure associated with the crude segment [8] Other Important Information - The Board of Directors reinstated the cash dividend on the Series A preferred stock, marking a step towards reinstating the common dividend in the future [7] - The company connected 41 wells during the first quarter, maintaining an active customer base with six active drilling rigs and over 100 drilled but uncompleted wells [7] Q&A Session Summary Question: What is the outlook for the second half of the year regarding completion schedules? - Management indicated that while there may be minor revisions, customers expect second half completion schedules to largely remain intact despite potential price slippage [10] Question: How is the company addressing the current crude price environment? - The company is in close communication with its customer base to evaluate implications of the current crude price environment on well completion activities [9]