EML Payments (EML) H2 2025 Earnings Call August 26, 2025 07:00 PM ET Company ParticipantsAnthony Hynes - Executive ChairmanJames Georgeson - Group CFOJack Lynch - AVPLiam Cummins - Head of Industrial AssetsZheWei Sim - SVPConference Call ParticipantsRoss Barrows - Equity Research AnalystAnthony HynesThank you, Darcy, good morning, everyone. Welcome to the AML Payments Limited FY twenty '25 Results Telecall. I'm Anthony Inds, Executive Chairman. It's great to be here with James Georgeson, our CFO, to report ...

Financial Data and Key Metrics Changes - Revenue for FY 2025 increased by 9% to $220.9 million, with customer revenue (excluding slight interest income) up 3% to $157 million [7][16] - Underlying EBITDA rose by 13% to $58.6 million, at the upper end of the guidance range of $54 million to $60 million [16][19] - Statutory loss after tax for continuing operations was $53 million, impacted by nonrecurring items including a class action settlement [7][19] - Cash balance improved by 46% year-on-year to $59.3 million, reflecting strong operating cash flows [7][19] Business Line Data and Key Metrics Changes - The European segment, the largest, saw total revenue increase by 18% to $128.6 million, driven by a 6% uplift in customer revenue and a 40% increase in interest revenue [20][21] - Asia Pacific segment achieved a modest customer revenue growth of 2%, with existing customer revenue growth at 5% [23][24] - North American segment experienced a 3% decline in total revenue, attributed to lower breakage and soft incentive product performance [26][27] Market Data and Key Metrics Changes - Gross Debit Volume (GDV) in Europe increased by 7% to $6.1 billion, reflecting a return to growth post-restrictions [20][21] - GDV in the Asia Pacific segment decreased by 7%, influenced by a change in customer and product mix [24] - North American GDV grew by 10%, primarily due to increased volume for Vans products [28] Company Strategy and Development Direction - The company is focused on the AML 2.0 transformation strategy, aiming for sustainable double-digit growth over the long term [3][8] - Key initiatives include rebuilding the leadership team, enhancing customer relationships, and expanding the commercial team [4][9] - Project Arlo aims to deliver a single global platform to streamline operations and improve service delivery [43][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the transformation agenda and the ability to drive growth despite challenges [14][39] - The outlook for FY 2026 anticipates underlying EBITDA in the range of $58 million to $63 million, factoring in new business and historical client terminations [40][41] - The company expects to grow its pipeline to over $90 million by December 2025, with a focus on improving conversion dynamics [41][45] Other Important Information - The company has settled the Shine class action provisionally, with court presentation expected in October [6] - A yield lock program has been structured with Citigroup to provide income certainty through a forecast down cycle, covering approximately 45% of floating interest income [5][19] Q&A Session Summary Question: Thoughts on demand from different regions heading into FY 2026 - Management noted seasonality impacts in Australia and consistent growth in government programs in Europe, with new client additions contributing to GDV [47][48] Question: Factors affecting guidance range for underlying EBITDA - Key factors include winning clients from the pipeline and the speed of onboarding, alongside flat overhead costs [50][52] Question: Market growth rates in main verticals - The markets are expected to grow at CAGRs of 10% to 12%, with the company aiming to match this growth over the next few years [56][57] Question: Clarification on top line growth and revenue translation - Management indicated that the growth trajectory is based on financial years, with a better sense of conversion dynamics expected by the end of the year [81][83] Question: Exclusion of Project Arlo costs from underlying EBITDA - Project Arlo costs are excluded due to being a significant one-time investment aimed at transforming existing platforms [86][87]

Shares of Canada Goose, Timberland and Vans parent VF Corp., and footwear maker Rocky Brand surged Tuesday after Baird upgraded the stocks ahead of a "favorable 2026 macro scenario." https://t.co/UTo56D2xIv ...

Core Insights - Rivian Automotive (RIVN) reported a second-quarter 2025 loss of 80 cents per share, missing the Zacks Consensus Estimate of a loss of 65 cents per share but showing improvement from a loss of $1.21 in the same period last year. Revenues reached $1.3 billion, exceeding the Zacks Consensus Estimate of $1.26 billion and reflecting a year-over-year increase of 12.5% driven by growth in software and services revenues [1][9]. Q2 Highlights - Total production for Rivian in the reported quarter was 5,979 units, a decrease from 9,612 units in the year-ago quarter. The company delivered 10,661 units, down from 13,790 units a year ago [2]. Financial Performance - The total gross loss for the quarter was $206 million, an improvement from a gross loss of $451 million in the prior-year quarter. The gross margin for the reported quarter was negative 16%. Adjusted operating expenses totaled $681 million, slightly up from $676 million in the prior-year quarter. Adjusted loss before interest, taxes, depreciation, and amortization was $667 million, significantly better than the $857 million loss in Q2 2024 [3]. Cash Flow and Expenditures - Net cash provided by operating activities for the quarter was $64 million, compared to $754 million used in the prior-year quarter. Capital expenditures for Q2 were $462 million, up from $283 million in the same period last year. Free cash outflow for the quarter was $398 million [4]. Segment Performance - The Automotive segment generated revenues of $927 million, down 13.7% year over year, primarily due to lower sales of first-generation R1 vehicles and vans. The total cost of revenues for this segment was $1,262 million, down 16.7% year over year, resulting in a gross loss of $335 million compared to a gross loss of $441 million in the prior-year quarter [5]. - The Software and Services segment recorded revenues of $376 million, more than tripling year over year, driven by new vehicle electrical architecture, software development services, and increased repair and maintenance services. The total cost of revenues for this segment was $247 million, more than doubling year over year, leading to a gross profit of $129 million compared to a loss of $10 million in the same quarter of 2024 [6]. Financial Position - As of June 30, 2025, Rivian had $4.81 billion in cash and cash equivalents, down from $5.29 billion as of December 31, 2024. Long-term debt stood at $4,436 million, slightly down from $4,441 million at the end of 2024 [7]. 2025 Guidance - Rivian updated its guidance for the full year 2025, expecting to deliver between 40,000 to 46,000 vehicles. The adjusted EBITDA loss is projected to be between $2 billion and $2.25 billion, wider than the previous guidance of a loss of $1.7 billion to $1.9 billion. Capital expenditure expectations remain between $1.8 billion and $1.9 billion [8].

Investment Rating - The industry investment rating is "Positive" and maintained [6] Core Insights - For FY2026Q1 (March 30, 2025 - June 28, 2025), VF achieved revenue of $1.76 billion, a slight decline of 2% year-on-year at fixed exchange rates, which is better than market expectations and the company's prior guidance [2][4] - The gross margin increased by 2.7 percentage points to 53.9%, driven mainly by improved discounts and exchange rate factors [2][4] Revenue Breakdown - **By Brand**: - Vans continued to face pressure with a revenue decline of 15% to $500 million - The North Face grew by 5% to $560 million - Timberland increased by 9% to $260 million [5] - **By Region**: - Revenue in the Americas declined by 3% to $940 million - EMEA saw a decrease of 2% to $550 million - APAC grew by 4% to $270 million, with Greater China down by 6% [5] - **By Channel**: - Direct-to-Consumer (DTC) revenue fell by 4% to $720 million - Wholesale channel revenue remained flat at $1.04 billion [5] Inventory and Tariff Impact - At the end of FY2026Q1, the company's inventory increased by 4% year-on-year to $2.14 billion, maintaining overall healthy inventory quality [10] - Tariff expectations are projected to impact gross profit by $60-70 million in FY2026, with half of this expected to occur in FY2026 [10] Performance Guidance - For FY2026Q2, the company expects revenue to decline by 2%-4% year-on-year at fixed exchange rates, with adjusted operating profit projected between $260 million and $290 million [10]

Core Viewpoint - Despite the implementation of a restructuring plan for nearly two years, the company continues to face losses, particularly with its Vans brand, which has not yet returned to growth [1][3]. Financial Performance - For Q1 of FY2026, the company reported total revenue of $1.8 billion, remaining flat compared to the previous year; operating loss was $56 million, an improvement from an expected loss of $110 million to $125 million [1]. - Vans brand revenue for Q1 of FY2026 was $498 million, down 15% year-over-year, while The North Face brand revenue was $557 million, up 5% year-over-year [1][2]. Brand Performance - The Vans brand has consistently shown declining revenue, with a 16% drop in FY2025, contributing to a total revenue decline of 4% for the company [2]. - The North Face brand has managed to achieve growth, but its single-digit growth is insufficient to support overall company performance amid increasing competition in the outdoor sector [2]. Restructuring Efforts - The restructuring plan initiated in October 2023 includes a significant focus on the Vans brand, which is seen as crucial for the company's turnaround [3]. - The company has appointed a new global president for Vans to accelerate its transformation, although the brand's performance in Q1 of FY2026 indicates that challenges remain [3]. Future Outlook - The management expresses confidence in the ongoing transformation, believing it will lead to sustainable long-term revenue and profit growth [3]. - The company is taking steps to close underperforming Vans stores and reduce discounting to improve brand performance [3]. Strategic Recommendations - To regain market opportunities, the Vans brand needs to enhance product innovation, focus on youth and fashion trends, and leverage digital tools to improve retail efficiency and customer experience [4].

Group 1: Market Overview - The stock market has shown incredible resiliency in 2025, with the S&P 500 nearing new all-time highs despite trade wars and economic uncertainty [1] - There are solid companies trading at reasonable valuations that are worth buying as August approaches, a historically weak month for markets [1] Group 2: Alibaba (BABA) - Alibaba's shares are starting to recover after a slump, driven by an improving Chinese economy and strong demand for cloud services, with potential to double in price within five years [4] - The e-commerce marketplaces Taobao and Tmall reported a 12% year-over-year growth in customer management revenue for the March-ending quarter, primarily from fees charged to third-party merchants [5] - Alibaba's revenue growth in e-commerce is supported by initiatives like the integration of Cainiao logistics and new software service fees [6] - Alibaba Cloud is experiencing rapid growth, with AI-related product revenue increasing at a triple-digit rate for seven consecutive quarters, positioning the company for strong growth over the next decade [7] - The stock is currently trading at a P/E ratio of 13.5, which is considered a bargain compared to the average S&P 500 P/E ratio of 30, indicating potential for significant upside [8] Group 3: Lululemon (LULU) - Lululemon's stock has declined approximately 45% in 2025, but it is viewed as oversold and trading at a bargain price [9] - The company reported a 7% year-over-year sales increase in the fiscal first quarter, but comparable sales were only up 1%, with a 2% decrease in the Americas region [11] - Lululemon's P/E ratio is currently at 14, and it maintains a strong operating margin of 18.5%, despite a slight decline due to tariffs [12] - Sales in China increased by 22% year-over-year in Q1, providing a positive outlook amidst challenges in the Americas market [13] Group 4: VF Corp (VFC) - VF Corp is considered undervalued, with its stock down about 85% from its peak in 2021, making it a potential investment opportunity [14] - The company showed signs of a turnaround in fiscal Q1, with solid growth in core brands like Timberland (up 11%) and The North Face (up 6%), despite a 14% decline in Vans [16] - VF Corp trades at a price-to-sales ratio of 0.5, indicating upside potential if it can achieve a profit margin of 5%, which would equate to a P/E ratio of 10 [17] - Continued progress in the turnaround could lead to the stock doubling or tripling in value [18]

Core Insights - V.F. Corporation (VFC) reported a narrower-than-expected loss per share in Q1 fiscal 2026, with a sales beat and improved earnings year over year despite a dip in revenues [1][3][9] - The company is progressing with its Reinvent program, aiming for cost savings and improved operating profitability [1][13] Revenue Performance - VFC's net revenues for Q1 fiscal 2026 were $1.76 billion, surpassing the consensus estimate of $1.69 billion, with a year-over-year decline of approximately 2% in constant currency [3][4] - The North Face and Timberland brands continued to perform well, while Altra showed strong growth; however, Vans faced challenges due to channel rationalization [2][14] Segment Analysis - Revenues in the Outdoor segment increased by 8% year over year to $812.5 million, while the Active segment saw a decline of 10% to $699.7 million [7] - The All-Other segment reported a revenue increase of 4% year over year to $248.5 million [7] Financial Position - VFC ended Q1 with cash and cash equivalents of $642.4 million and long-term debt of $3.56 billion, with net debt down $1.4 billion from the previous year [8] - The company declared a quarterly dividend of 9 cents per share, payable on September 18, 2025 [8] Future Outlook - For Q2 fiscal 2026, VFC expects revenues to decline by 2% to 4% in constant currency, with adjusted operating income projected between $260 million and $290 million [12] - For the full fiscal 2026, VFC anticipates growth in adjusted operating income and cash flow, driven by strong performance from The North Face, Timberland, and Altra [13][14]

Financial Data and Key Metrics Changes - The company reported Q1 revenue of $1.8 billion, flat on a reported basis and down 2% year-over-year in constant dollars, which was better than the guidance of down 3% to down 5% [31][32] - Adjusted gross margin increased by 200 basis points to 54.1%, driven by higher quality inventory and lower discounts [34] - Adjusted loss per share was $0.24 compared to $0.35 in Q1 of the previous year [35] Business Line Data and Key Metrics Changes - Vans revenue decreased by 15%, with 40% of the decline attributed to channel rationalization actions [12][33] - The North Face grew by 5%, with strong performance in footwear and bags, aiming for higher growth rates in the future [14][32] - Timberland's revenue increased by 9%, reflecting growth across all regions and channels [16][33] Market Data and Key Metrics Changes - The APAC region grew by 4%, while the Americas and EMEA regions saw declines of 3% and 2%, respectively [33] - Excluding Vans, the Americas region was up 3% year-over-year [33] Company Strategy and Development Direction - The company is focused on transforming its operations, improving cost structures, and aiming for growth after two years of resetting [9][11] - A unified product and marketing engine is being built across brands globally, with a focus on premiumization and improved inventory management [10][29] - The company aims to reduce leverage to below 2.5 times by fiscal 2028 while investing in growth [10][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in turning the company back into a growth entity despite current macroeconomic challenges [6][9] - The anticipated impact of tariffs is expected to negatively affect gross profit by $60 million to $70 million in fiscal 2026, but management believes they can mitigate these impacts [38][39] - The company is optimistic about the upcoming back-to-school season and plans to invest more in marketing [110] Other Important Information - The company has changed its segment reporting to better reflect key areas of focus across brands [43] - The company is pursuing a $1.5 billion asset-backed revolving loan to enhance liquidity and flexibility [42] Q&A Session Summary Question: What were the expectations for the Warp Tour and its impact? - Management expected modest impact initially but saw enormous demand with tickets selling out quickly, indicating strong engagement and merchandise sales [49][52] Question: Can you clarify the $60 million to $70 million gross profit impact from tariffs? - Management confirmed that this impact is mostly in the back half of the year and will be offset through pricing and other actions [57][58] Question: What are the long-term views on gross margin improvement? - Management sees opportunities for gross margin improvement across all brands, particularly through premiumization and better product mix [66][70] Question: How do you expect unit volumes to be affected by price increases? - Management indicated that unit volumes might decrease in line with price increases, but the overall impact is uncertain due to industry-wide effects [78][79] Question: What is the outlook for free cash flow and net debt? - Management expects free cash flow to be up year-over-year despite fluctuations in quarterly performance, and net debt is anticipated to decline [118][120]

Core Insights - V.F. Corporation (VFC) is expected to report a year-over-year decline in both revenue and earnings for the first quarter of fiscal 2026, with revenues estimated at $1.7 billion, reflecting an 11.2% decrease from the previous year [1][9] Revenue Performance - The consensus estimate for VFC's loss is set at 34 cents per share, slightly wider than the 33 cents reported in the same quarter last year [2] - Management anticipates a revenue decline of 3-5% on a constant currency basis, primarily due to brand-specific challenges and reduced consumer traffic [3] - Vans brand performance is expected to mirror a 20% decline seen in the previous quarter, significantly impacting overall revenue [4] Operational Challenges - The fiscal first quarter is typically the smallest for VFC and is heavily influenced by Vans' performance, with ongoing strategic resets and store closures affecting results [3][4] - Foreign exchange fluctuations are also expected to negatively impact revenue, adding further pressure [5] Margin and Cost Structure - Despite revenue challenges, gross margin is projected to remain strong due to lower input costs, fewer promotions, and an improved inventory mix, which previously led to a 560 basis-point improvement in gross margin [6][9] - Operating loss is expected to be between $110 million and $125 million for the first quarter, with SG&A expenses forecasted to be flat or slightly down year-over-year due to cost-saving measures [6] Stock Valuation - VFC's stock is currently trading at a forward price-to-earnings ratio of 13.87, which is higher than the industry average of 11.49 [10] - Over the past three months, VFC's shares have increased by 8.2%, outperforming the industry growth of 1.1% [11]