Alex Fuhrman

Alex Fuhrman from Lucid Capital Markets asked about the market strategy for the mixed rare earth carbonate (MREC) product under the revised flow sheet, specifically addressing the current lack of heavy rare earth separation capacity in North America and the company's expectations for future capacity development or potential applications for mixed rare earth products.

Answer

Jason Fannin, Chief Commercial Officer, explained that the market for MREC would depend on its TREO content. He acknowledged the limited North American separation capacity but noted active engagement with industry players and strong government focus on developing this supply chain. He expressed confidence that sufficient separation capacity would be available by the time Ramaco's MREC product is ready, given the project timeline.

Alex Fuhrman asked about the strategy behind selling rare earths as a mixed rare earth carbonate (MREC), where this product is expected to go, and the company's anticipation of future heavy rare earth separation capacity in North America or potential applications for mixed rare earth products.

Answer

Jason Fannin, Chief Commercial Officer, explained that the destination of MREC will depend on its TREO content, which is still developing. He acknowledged that most North American separation capacity is currently pilot-scale but noted increasing government emphasis on this supply chain. Given the project timeline and ongoing conversations with potential partners, he expressed confidence that the necessary separation capacity will be available when needed.

Alex Fuhrman asked if the pilot prototype being built is designed to process the entire range of diverse critical minerals found at the Brook Mine, or if additional partnerships might be needed for less common metals.

Answer

EVP for Critical Mineral Operations Mike Woloschuk stated that Ramaco is not anticipating any partners and the pilot plant is designed with flexibility to test other minerals like yttrium, samarium, and gadolinium, and to bolt on additional testing if needed.

Alex Fuhrman asked if the pilot prototype being built is designed to process the entire range of critical minerals at the Brook Mine, or if additional partnerships would be needed for less common metals.

Answer

Mike Woloschuk, EVP for Critical Mineral Operations, stated that Ramaco is not anticipating any partners and the pilot plant is designed with flexibility to test other minerals like yttrium, samarium, and gadolinium, indicating it can handle a broad range of critical minerals.

Alex Fuhrman questioned the long-term potential for attraction ticket pricing, given the high single-digit increase in 2025 and the relatively small portion of overall trip spend. He asked how high pricing could go before encountering significant resistance, assuming continued service level improvements. He also requested more specific details on the planned enhancements and upgrades for the Banff Gondola in 2026, beyond the general commentary provided.

Answer

President and CEO David Barry declined to speculate on a specific price ceiling, emphasizing a mindset of continuous improvement, filling white space with new programming (like the Sunset Festival at Banff Gondola), and leveraging packaging to drive experience quality and yield. For the Banff Gondola, David Barry stated it's still in early planning stages with Parks Canada, envisioning a step-change transformation similar to 2015-2016, but specifics are premature and will be shared as plans evolve.

Alex Fuhrman asked about the long-term potential for attraction ticket pricing, given the recent high single-digit increase and its relatively small percentage of overall trip spend. He questioned how high the pricing could go before encountering meaningful resistance, assuming continued service level improvements. He also sought more specific details on the planned enhancements and upgrades for the Banff Gondola in 2026, as the initial commentary was vague.

Answer

David Barry, President and CEO, stated he would not speculate on a specific number for ticket pricing but emphasized continuous improvement, filling white space (e.g., Sunset Festival at Banff Gondola), and leveraging the four growth levers to drive experience quality and yield. For the Banff Gondola, David Barry noted it's 'early days' in the planning process with Parks Canada, envisioning a step-change transformation similar to 2015-2016, but specifics are premature.

Alex Fuhrman of Lucid Capital Markets LLC asked for details on the Tabacon acquisition, including its business mix and near-term investment plans, and questioned the state of the group travel business in Canada compared to pre-pandemic levels.

Answer

President & CEO David Barry and CFO Bo Heitz explained that the plan to get Tabacon's EBITDA multiple below 9x relies on operational levers, such as growing the high-margin attractions business and ramping up the new Choyan River experience, rather than major CapEx. David Barry noted that the recovery in group travel has been building progressively since 2022, supported by a favorable Canadian dollar and Canada's positive international perception. He also mentioned that while visitation from some countries like China is still recovering, other markets like Japan and South Korea are very strong, ensuring robust demand.

Alex Fuhrman of Lucid Capital Markets LLC asked for more details on the Tabacon acquisition, including its business mix and the specific near-term investments planned to lower the EBITDA multiple. He also questioned how the group travel business in Canada is performing in its first full post-pandemic season compared to 2019 levels and which countries are replacing any lagging visitor markets.

Answer

President & CEO David Barry and CFO Bo Heitz clarified that the path to lowering Tabacon's EBITDA multiple below 9x relies on operational enhancements, such as optimizing the thermal river attractions' capacity and ramping up the newly launched Choyan experience, rather than major capital investments. On group travel, Barry explained that the recovery has been a steady build over the past few years, not a sudden rebound in 2025. He noted that while Chinese travel is still recovering, strong demand from markets like Japan and South Korea, aided by favorable FX, is driving positive performance.

Alex Fuhrman asked Rimini Street to clarify whether the anticipated return to growth in 2026 would be primarily driven by accelerating new client acquisition, improved client retention, or increased spend per customer through the adoption of the new Agentic AI offerings. He also inquired if active customer growth would accelerate at a similar pace to revenue growth throughout the year.

Answer

Seth Ravin, CEO and President, explained that growth will be a combination of factors. He highlighted growing support sales due to vendor pressures, with Rimini Street offering stability and a roadmap through 2040 with Agentic AI. Ravin noted that while support currently accounts for 87% of revenue and optimized services 13%, the new accretive innovation services (Agentic AI) are expected to contribute to growth across all categories. He anticipates growth in new customer logos, with the Hunter-Farmer model in North and Latin America generating improving results after initial disruption, leading to good results throughout the year, especially in the back half.

Alex Fuhrman asked whether the expected return to growth this year would be primarily driven by accelerating new client acquisition, improved client retention, or higher spend per customer through the adoption of the new Agentic AI offerings. He also asked if active customer growth would accelerate at a similar pace as revenue growth after Q1.

Answer

CEO Seth Ravin expects a combination of factors. He noted growing support sales driven by software vendor pressures and Rimini Street's ability to stabilize environments and offer a long-term roadmap with Agentic AI. He anticipates growth across all service categories: support, optimized services, and new accretive innovation services. Seth Ravin also expects growth in new customer logos, attributing positive results to the Hunter-Farmer model in North America, which is now being expanded to Latin America, despite initial lag and disruption.

Alex Fuhrman asked about the specific drivers of growth in single-use handpiece sales during the quarter, including liposuction procedures, Renuvion attach rates, and standalone Renuvion uses.

Answer

CEO Charlie Goodwin attributed the strong growth in single-use handpiece sales, both domestically and internationally, to a combination of factors: new doctor adoption, higher Renuvion attach rates post-body contouring, and increased standalone Renuvion uses, particularly for skin laxity related to GLP-1 treatments.

Alex Fuhrman asked about the drivers of the quarter's growth in single-use handpieces, specifically if it was due to more liposuction procedures, better Renuvion attach rates, or increased standalone Renuvion uses.

Answer

CEO Charlie Goodwin attributed the growth to 'all of the above,' including new doctors adopting the technology, higher attach rates for Renuvion after body contouring procedures, and increased standalone use. He emphasized the ongoing trend of patients seeking solutions for loose and lax skin, particularly following GLP-1 treatments.

Alex Fuhrman of Loop Capital Markets LLC asked about the growth outlook for the Honey Burdette brand given tougher upcoming comparisons and whether the significant legal expenses from Q2 would continue to be a drag on EBITDA.

Answer

COO & CFO Marc Crossman stated that PLBY Group continues to expect growth from Honey Burdette in the second half of the year, supported by a strong full-price retail business which saw a 28% comp. CEO Ben Kohn added that Honey Burdette is being integrated into the broader Playboy ecosystem, like the Playmate contest, for cross-promotional benefits. Regarding legal costs, Kohn confirmed one of two major litigations is complete, but one remains ongoing, so some drag on the business will continue for an unknown duration.

Asked about the Owlet 360 subscription, focusing on key learnings, customer price sensitivity, and the attach rate for new device activations.

Answer

The company has seen strong growth in all subscription metrics, reaching 66,000 paying subscribers. While specific metrics on attach rate and retention are not yet being disclosed, they noted that a price increase was financially beneficial despite a slight dip in conversion, indicating manageable price sensitivity.

Alex Fuhrman of Lucid Capital Markets LLC inquired about the Owlet 360 subscription service, asking about key learnings since its launch, customer price sensitivity, and the attach rate for new device activations.

Answer

CFO Amanda Crawford reported strong progress, with 66,000 paying subscribers and positive trends in MRR, attach rate, and retention. While not sharing specific metrics, she noted that although a price increase led to a slightly lower conversion rate, the trade-off was favorable for revenue. She stated the company is excited about the subscription's long-term financial impact and its role in transitioning Owlet to a pediatric health platform.

Alex Fuhrman asked about the drivers of direct-to-consumer demand, questioning whether the strong March order growth was indicative of sustained consumer strength or influenced by the timing of promotions.

Answer

CEO Andrea Owen attributed the momentum to foundational business growth, including new product assortments and an expanding retail footprint. Debbie Propst, President of Global Retail, elaborated that the North America retail business, which is almost entirely direct-to-consumer, saw adjusted orders up 14% and is outperforming the wholesale business due to new collections, new stores, and improved marketing attribution.

Alex Fuhrman noted the positive retail order growth during the Thanksgiving holiday period and asked if this represents a potential turning point for the segment's return to growth or if it was primarily the result of a well-executed promotional strategy.

Answer

CEO Andrea Owen stated it was a combination of both factors. Vice President of Global Retail, Debbie Propst, elaborated that strong execution was amplified by momentum from ongoing initiatives. She highlighted the success of new products, honed marketing capabilities that improved return on ad spend, and selling programs like design services that are driving a 10% higher average order value. She expressed confidence in continued momentum for the segment.

Alex Fuhrman asked for the reasons behind the trend of customers requesting delivery dates further out from their order dates and whether this could cause a persistent lag between order growth and revenue. He also inquired about which specific industry verticals were driving the strong order growth in the North America Contract segment.

Answer

John Michael, President of the Americas Contract segment, attributed the extended order-to-delivery timeline to a 40% increase in large, complex projects (over $5 million) and clients ordering earlier to accommodate longer construction schedules. CFO Jeff Stutz added that this phenomenon is also occurring internationally and that the company's backlog has stabilized at a higher 10-12 week level post-COVID, compared to 7-8 weeks previously. Regarding industry drivers, John Michael highlighted strong activity in financial services, banking, pharma, and public sector, along with a notable uptick in the technology sector. Jeff Stutz also noted international growth from large projects and key wins in technology in India and healthcare in the Middle East.

Alex Fuhrman asked for an explanation for the discrepancy between the flat to low-single-digit GMV growth guided for Q1 and the more optimistic mid-to-high single-digit growth expected for the full year. He also inquired about plans to win back customers who did not respond well to the less promotional holiday strategy.

Answer

CFO Bernard McCracken explained the Q1 GMV guidance reflects a difficult comparison to the prior year when the company was actively liquidating its shoe and kids' inventory before the licensing transition. CEO Andrew McLean addressed the holiday customer question by stating the company will not chase unprofitable volume with deep discounts. Instead, the plan is to engage value-conscious customers during specific winter and summer sale events and then introduce them to other product franchises at various price points to broaden their purchasing habits.

Alex Fuhrman sought clarification on why Q1 GMV growth is projected to be slower than the full-year forecast. He also asked about the company's plan to re-engage customers who did not respond favorably to the less promotional holiday strategy.

Answer

CFO Bernard McCracken explained the Q1 GMV growth appears slower because the prior year's Q1 included the liquidation of shoe and kids' inventory, creating a difficult comparison. CEO Andrew McLean addressed the holiday customer question by stating that while they value all customers, the more price-sensitive segment will be targeted during specific winter and summer sale events rather than with deep discounts during peak holiday periods. The goal is to use these sales as an entry point and then introduce these customers to other product franchises at various price points to encourage broader brand engagement.

Alex Fuhrman questioned the difference between the modest Q1 GMV growth guidance and the stronger full-year outlook. He also asked about plans to re-engage customers who did not respond well to the less promotional holiday strategy.

Answer

CFO Bernard McCracken explained that the Q1 GMV comparison is difficult because the prior-year period included the liquidation of company-owned shoe and kids' inventory. CEO Andrew McLean addressed the promotional strategy, stating the company will not chase unprofitable, discount-driven volume. Instead, it will target value-focused customers during specific winter and summer sale events and work to introduce them to other product franchises at various price points to encourage full-price purchases.

Alex Fuhrman questioned whether the club channel was the primary driver of the increased GMV guidance and sought clarity on the strategy behind attracting younger customers, asking if it was for maintenance or a deliberate effort to lower the brand's average customer age.

Answer

CFO Bernard McCracken clarified that while the club channel is a significant contributor to GMV growth, the underlying U.S. e-commerce business is also growing, up mid-single digits when excluding licensed categories. CEO Andrew McLean added that the club channel provides access to a valuable 'Evolver' customer. He explained that attracting younger customers is a conscious strategy to reverse the file's aging trend, noting that the average customer age has now stabilized year-over-year for the first time in years.

Alex Fuhrman sought clarification on the company's guidance, asking for the reason behind the lowered GMV guidance while revenue guidance remained largely in the prior range. He also asked about the future trajectory of marketing spending and whether the company has found an optimal level.

Answer

CFO Bernard McCracken explained that the difference between revenue and GMV guidance is due to the transition of kids and footwear products to licensing arrangements. This transition has a more pronounced negative impact on reported revenue in Q4, while GMV remains unaffected as it includes sales of all Lands' End branded products. Regarding marketing, McCracken stated the company plans to maintain spending as a consistent percentage of revenue to continue driving the 'flywheel' of new customer acquisition, with an expectation to begin leveraging that spend as margins improve.

Alex Fuhrman asked for an update on the size of Biote's clinical network and the practitioner growth assumed in the 2025 guidance. He also inquired about the product mix within the BioteRx program, specifically the role of compounded semaglutide, and the company's strategy as GLP-1s potentially come off the FDA shortage list.

Answer

Executive Marc Beer provided network figures of over 8,600 providers and around 4,700 clinics, emphasizing that the focus is on practitioner effectiveness, not just numbers. CEO Bret Christensen confirmed that GLP-1s are the majority of the BioteRx program but are offered as a service and are not core to the company's growth strategy. He stated Biote will follow FDA guidance and that the BioteRx platform enables the addition of other products in the future.

Alex Fuhrman asked for more details on the recently launched hormone replacement therapy (HRT) offering on the RexMD platform. He inquired about the current number of patients and whether HRT is expected to be a significant contributor to the strong 2025 guidance.

Answer

Executive Justin Schreiber described the HRT offering as a comprehensive, high-quality care program involving extensive lab work and physician consultations, leading to high-quality revenue. While not disclosing specific patient numbers, he stated there is a clear path to scaling the business significantly. CFO Marc Benathen added that the 2025 guidance is conservative, including only a few million dollars in revenue from male HRT, which suggests potential upside if the company executes on its growth plans for the offering.

Alex Fuhrman asked about the potential outcomes for the Clinical business based on the ability to continue offering compounded semaglutide, noting its launch appeared to reverse subscriber declines. He also inquired about the adoption of lower-priced medication vials and any improvements in insurance coverage for members.

Answer

Chief Product Officer Donna Boyer explained that compounding was introduced primarily to ensure member access amid branded drug shortages, which drove the Q4 acceleration. She stated the company is well-positioned to pivot back to branded medications as supply improves, leveraging its broad formulary and prior authorization platform. Boyer mentioned they are actively evaluating other options, like compounded liraglutide, to provide lower-cost cash-pay alternatives. She reiterated that insurance-covered branded drugs remain the most affordable option for members, and the company's focus is on facilitating that access.

Alex Fuhrman asked about the potential outcomes for the Clinical business based on the ability to continue offering compounded semaglutide and the strategy to prevent declines if forced back to a branded-only model. He also inquired about the uptake of lower-priced medication vials and insurance coverage trends.

Answer

Chief Product Officer Donna Boyer explained that compounding was introduced to address branded medication shortages and that the company is well-positioned to pivot back as supply resolves. She stated that with a broad formulary and plans to evaluate other options like liraglutide, they do not expect a return to previous slowdowns. Boyer noted that insurance-covered branded drugs remain the lowest-cost option for members, which is why WW focuses on expediting prior authorizations. She added that the company is evaluating compounded liraglutide to provide a lower-cost cash-pay option for members.

Alex Fuhrman asked for color on the drivers of churn for clinical members and whether the long-term goal is to improve clinical retention or to transition members to the traditional behavioral program.

Answer

Interim President and CEO Tara Comonte explained that cost and access to medication are the primary reasons for clinical subscriber churn, which the new compounding offering helps address. She confirmed the latter part of the question, stating that a critical long-term strategy is to provide an 'off-ramp' for members to transition from medication to WW's sustainable behavioral program for long-term success, as most users do not intend to stay on GLP-1s for life.

Alex Fuhrman from Craig-Hallum Capital Group asked about WeightWatchers' strategy to provide more affordable medical weight loss options, questioning if the company would reconsider its stance on compounded medications or offer generics.

Answer

CEO Sima Sistani reiterated that members trust WW for safe and effective options, making FDA-approved medications the preferred path. However, she acknowledged that with persistent shortages and coverage issues, the company is 'investigating alternative paths to best serve our members' to improve access and health equity.

Alex Fuhrman of Craig-Hallum Capital Group asked what makes the current push to make WeightWatchers a covered benefit different from past attempts and when progress might be expected.

Answer

CEO Sima Sistani explained that the primary difference is the societal paradigm shift in recognizing obesity as a chronic disease, driven by new medications. She stated that payers and employers are now actively seeking these solutions, making the B2B2C model viable. Progress is already underway, with insurance-covered dietitian consultations rolling out in the coming months.

Alex Fuhrman from Craig-Hallum Group asked about the significance of the kids' offering, seeking to quantify its contribution to the member base and its future growth potential.

Answer

CEO Bahram Akradi described the kids' offering as a "humongous part" of the company's success and a key differentiator, noting that family memberships have the highest retention. However, he stated that the company does not break out specific metrics for this segment. Executive Erik Weaver added that kids' programming saw record participation and engagement this year.

Alex Fuhrman noted recent price increases for new members at numerous clubs and asked if this signals upcoming price increases for existing members at those same locations.

Answer

Founder, Chairman and CEO Bahram Akradi clarified that their process for increasing existing member dues is not club-specific but is managed system-wide by a sophisticated AI algorithm. This system identifies eligible members across the portfolio for periodic increases, a process that occurs 7-8 times a year and is now so fine-tuned that it results in minimal incremental attrition.

Alex Fuhrman requested an update on the Disney sales partnership, asking about its current momentum, how it is expected to ramp up in 2025, and if it is generating a meaningful number of bookings compared to the previous National Geographic platform.

Answer

CEO Natalya Leahy stated that the National Geographic Disney partnership is gaining significant momentum with a strong roadmap for 2025. She highlighted specific initiatives, including direct mail campaigns to new audiences with minimal overlap with the current guest base and providing access to premier 'earmarked' Disney travel agencies. Leahy expressed confidence that these efforts will generate strong returns in 2025 based on the foundation established in 2024.

Alex Fuhrman of Craig-Hallum inquired about the booking patterns of new travelers from the U.K. and Europe and asked about the timeline for expanding into other international markets, such as Asia. He also questioned if international growth was a key component of reaching normalized occupancy by 2026.

Answer

CEO Sven-Olof Lindblad explained that the international push is in its very early stages, starting with Great Britain, and they are currently testing which itineraries are most attractive to that market, suspecting polar regions, Galapagos, and Alaska will be popular. He clarified that the 2026 occupancy target is based on traditional business drivers, and any success from international expansion would be an additional accelerator on top of that baseline plan. He noted early efforts are also underway in markets like India and China.

Alex Fuhrman inquired about the financial impact and resolution timeline for recent product stockouts, questioning if they affected Q4 or were primarily a Q1 2025 issue. He also asked about the key drivers behind the significant growth in Laird's coffee category, particularly its functional coffee products.

Answer

President and CEO Jason Vieth confirmed that stockouts did impact Q4, estimating a loss of approximately $1 million in net sales, and noted there will be a lingering impact in Q1. He explained the issue was driven by unexpectedly high demand for coconut milk-based products, which have long lead times. Vieth stated that new suppliers have been secured and the issue should be resolved by the end of Q1. Regarding coffee, he attributed the 40-50% growth to strong performance in 'coffee solutions,' including functional coffees with performance mushrooms, which are gaining traction in both wholesale and online channels.

Alex Fuhrman inquired about the primary drivers for the projected 20-25% growth in 2025, questioning the mix between online sales and new retail expansion. He also asked which specific products are resonating most as the company expands into mainstream grocery retailers.

Answer

President and CEO Jason Vieth explained that while the e-commerce business remains strong with sticky subscription revenue, the wholesale channel is expected to be an even larger growth driver in 2025. This is due to new distribution in major national accounts like Kroger and Target, alongside continued velocity gains in the natural channel. Vieth noted that both powdered and liquid creamers are performing well, but highlighted that coffee and instant latte products have been 'on fire' and are key to the grocery channel expansion, particularly new functional SKUs with adaptogenic mushrooms.

Alex Fuhrman inquired about the impact of major coffee chains eliminating surcharges for plant-based milks, asking about observed changes in customer trial and demand patterns, and whether new customers gravitate towards specific milk types like oat or almond.

Answer

CEO Brian Kocher stated that any action increasing trial and penetration is favorable and that these trends are factored into their growth outlook. He noted that while different commodities have different strengths, oat milk generally performs very well in coffee products, and its growth is linked to the expansion of the foodservice channel.

Alex Fuhrman from Craig-Hallum Capital Group asked for more detail on why the company's customers are outperforming their respective categories, questioning if it's due to plant-based share gains, supply chain consistency, or other factors.

Answer

Executive Brian Kocher attributed the outperformance to traditional category management tools, including consistent supply and innovation. He emphasized that as a solutions provider, they help their customers win, and in turn, they benefit from the growth of the successful brands they support.

Alex Fuhrman of Craig-Hallum Capital Group inquired about the new organizational breakdown between hardware, software, and other functions, and asked whether to expect a significant drop in operating expenses or a focus on growing revenue faster than costs.

Answer

Interim CEO Tom Conrad noted the software team is more than double the size of the hardware team. CFO Saori Casey added that R&D is the largest group by headcount and that cost optimization efforts are ongoing beyond layoffs, targeting areas like real estate and vendor spend. Both executives emphasized a focus on scrutinizing all expenses to ensure they drive the highest returns, implying a continuous efficiency effort rather than a single step-down.

Alex Fuhrman from Craig-Hallum Capital Group asked what the new household growth was tracking toward before the app problems and inquired if the increased customer service capacity is a temporary or permanent measure.

Answer

CEO Patrick Spence reiterated that the slowdown in new household growth was primarily due to cyclical category challenges that existed before the app issues, though the app misstep was also a factor. He described the customer service enhancements as a combination of temporary and permanent changes, highlighting the addition of weekend support and the strategic, long-term use of Sierra AI to improve service quality and efficiency.

Alex Fuhrman inquired about margin headwinds from shipping and incentive costs in Q2 and why guidance implies lower EBITDA flow-through for the rest of the fiscal year. He also asked for color on the month-to-month revenue trend for the MindBody system during the quarter, given the stockouts.

Answer

CFO Carl Aure clarified that EBITDA flow-through in the second half of the year should be consistent with or slightly better than Q2, with further leverage expected in fiscal 2026. Executive Steven Fife detailed that October was a record month despite stockouts that impacted November and early December. He explained that January sales were softer because many customers on subscription received multiple months' worth of product in late December, a factor already incorporated into the company's reiterated guidance.

Alex Fuhrman of Craig-Hallum Capital Group asked about the drivers behind the strong 16% organic revenue growth, specifically questioning if improved identification and collection of owed revenue is accelerating growth across the industry.

Answer

Executive Jim Heindlmeyer attributed the strong organic growth in part to a significant, multi-year royalty recovery from an audit, which should also increase ongoing revenue from that catalog. He also credited the work of Reservoir's internal sync and marketing teams, along with broader positive industry trends, for contributing to the growth.

Alex Fuhrman questioned the drivers behind the strong Synchronization revenue, asking if it was due to the timing of licenses or underlying business health, and which sectors were showing the most demand.

Answer

CFO Jim Heindlmeyer confirmed that while the timing of licenses contributed to the strong quarter, the performance also reflects robust demand and the team's excellent execution. CEO Golnar Khosrowshahi added that advertising has been the primary driver of sync performance, as film and TV licensing continues to recover post-strike, with film trailers also remaining a consistent source of high-value placements.

Alex Fuhrman inquired about the company's marketing strategy for Valentine's Day, given its favorable placement relative to the Super Bowl, and asked for historical context on the corporate gifting business size compared to pre-pandemic levels.

Answer

CEO Jim McCann and President Tom Hartnett highlighted that a Friday Valentine's Day is the best placement for sales and that having five selling days after the Super Bowl is a significant advantage over the prior year. An executive noted that corporate gifting revenue was approximately $70 million, down from $84 million the previous year, due to clients reducing spend, AOV, and order volume. Hartnett added that despite the decline, the company remains bullish on the corporate business and plans to retool its offerings.

Alex Fuhrman inquired about the company's strategy for same-day delivery, its expected utilization during the upcoming holiday season, its potential margin impact, and the allocation of increased marketing spend.

Answer

CEO Jim McCann, President Tom Hartnett, and CFO Bill Shea detailed the expansion of same-day delivery from its historical floral base to non-floral gifts like Cheryl's Cookies and Harry & David baskets, leveraging their existing florist network in a multi-year rollout. Regarding marketing, McCann noted the spend was strategically held for the less discretionary holiday period. Hartnett added that the allocation would be flexible and similar to prior years, focusing on optimizing returns across the marketing funnel.

Alex Fuhrman asked about current trends in customer acquisition costs, given the competitive media environment from the Olympics and the upcoming election, and whether this presents an opportunity for accelerated customer acquisition post-election.

Answer

CEO Jim McCann confirmed that the contentious election cycle is driving up media costs and creating a distraction, making customer acquisition challenging. He stated that the company sees a 'significant opportunity' to increase marketing efforts more meaningfully after the election. President Tom Hartnett added that while they see costs moderating, it is not universal, and the company has a clear marketing 'playbook' ready for the post-election period.

Alex Fuhrman asked about the performance and impact of the new media buying agency, particularly during the peak holiday season, following the transition earlier in the year.

Answer

President & COO Mary Fox confirmed that the transition to the new media agency has been positive after some initial choppiness in Q1. She highlighted benefits such as better buying power, access to superior media spots, and more agile, real-time optimization of spend. She also noted an increased focus on localized marketing tactics to drive showroom traffic and an expansion of influencer marketing efforts.

Alex Fuhrman asked for a quantification of how much of the current year's sales are expected from new products and whether that contribution would be more significant next year.

Answer

CFO Keith Siegner explained that providing a precise figure is difficult because new products create a 'halo effect' that lifts the entire portfolio, including core Sactionals. CEO Shawn Nelson added that the PillowSac Accent Chair's sales have already outstripped robust plans, and the ultimate goal of innovations like AnyTable is to sell more high-ticket Sactionals. He suggested the topic would be addressed more at the upcoming Investor Day.

Alex Fuhrman from Craig-Hallum inquired how the expanding product portfolio, including the upcoming EverCouch, impacts the company's showroom strategy and whether it necessitates larger stores or new distribution partners.

Answer

CEO Shawn Nelson explained that the company is excited about the new products and that the EverCouch fits seamlessly into the current showroom footprint, which was originally designed to sell couches. He noted that while they are not concerned about space for current launches, they have 'clever and exciting solutions' for future platform introductions that will be innovative and true to the Lovesac brand, with more details to come later in the year.

An analyst on behalf of Alex Fuhrman of Craig-Hallum Capital Group asked for a reconciliation between the substantial increase in questions asked (up 79% YoY) and the significant decline in subscribers, and how Chegg could better monetize this strong user engagement.

Answer

President and CEO Nathan Schultz confirmed the 79% YoY increase in questions asked in Q3, attributing it to investments in the Q&A experience. He explained the strategy is to pivot Q&A from just providing an answer to a full learning experience, leading users to flashcards, study guides, and further questions. Schultz stated that the next step is to amplify this value proposition through the upcoming winter branding program to convert engaged users into loyal subscribers.

Asked about the growth potential of the six core brands for the upcoming year and inquired about the focus for new product development, including specific categories or leveraging existing brands.

Answer

All six core brands are considered to have great potential for growth, with hOmeLabs and Pursteam mentioned as examples. The company is not ranking them as they all have unique opportunities. The 2025 product roadmap is being finalized and will include a mix of new categories and potential relaunches of discontinued products under existing brands. More details will be provided in the Q4 results call.

Asked about the potential for further expansion at the Sky Lagoon property, including a possible hotel, and inquired about pricing trends and regional demand impact from the reduced hotel supply in Jasper.

Answer

The recent Sky Lagoon expansion improved the high-end experience to address throughput issues. While there are opportunities for further development like a hotel through their partnership, there are no current commitments. In Jasper, recovery is quick, with 7 of 8 hotels reopened. The reduced room supply is expected to drive significant market compression and rate growth. Q4 rates are already up year-over-year, with continued growth expected into 2025.

Asked about the long-term recovery prospects for Jasper into 2025 and the assumptions behind the current year's guidance range, including employee housing.

Answer

The company is optimistic about a quick recovery in Jasper for 2025, potentially accelerated by lodging compression, as their properties are intact and the overall park is largely unaffected. The current guidance range is based on a set of key assumptions about reopening, and the employee housing situation is being addressed with government support.

Asked about trends in group travel for Pursuit, particularly concerning the slow recovery from China, and whether other markets are filling the gap. Also inquired about the recovery and productivity of assets like the Columbia Icefield, which were popular with Chinese tourists.

Answer

The executive explained that while the Chinese market is recovering slowly, increased travel from other Asian countries like Japan, Korea, and India is filling the gap, supported by increased airlift. The eventual full return of Chinese tourism is expected to create positive compression and higher yields. Assets like the Columbia Icefield are seeing recovering productivity, aided by strong sales of the bundled 'Pursuit Pass.'

Questioned the drivers behind Pursuit's strong 2024 margin expansion on modest revenue growth, asked for details on growth CapEx projects beyond FlyOver Chicago, and inquired about the sustainability of GES's EBITDA margin in years without major non-annual shows.

Answer

Pursuit's margin expansion is driven by the high operating leverage of its attractions, where incremental revenue from volume flows through at a high margin, combined with rate increases and efficiency gains. The $20M in growth CapEx includes projects like an additional boat for Maligne Lake and an expansion at Sky Lagoon. GES expects to maintain an 8% or higher EBITDA margin even in odd-numbered years due to the high flow-through from returning show sizes and ongoing lean/productivity initiatives.

The analyst asked for confirmation that the company has reached an inflection point where First Day Complete revenue growth now outweighs the decline in traditional course material sales. He also inquired about the working capital implications of collecting cash after the drop/add date and whether it would necessitate a larger credit facility.

Answer

The executive confirmed that they have crossed the inflection point, and revenue from First Day programs now exceeds the decline from the traditional à la carte model, reversing a long-term trend. Regarding working capital, the shift to a more predictable B2B model improves forecasting and collection, and while it's a timing issue, it doesn't necessarily mean a larger credit facility is needed.

Inquired about the impact of the First Day Complete model on in-store traffic and general merchandise sales, and sought more detail on the drivers behind strong merchandise sales despite a smaller store base.

Answer

Executives clarified that First Day Complete actually increases store traffic as students come in to pick up their materials, creating more opportunities for general merchandise sales. The strong merchandise sales in the quarter were driven by a combination of closing smaller, less productive stores and particularly strong performance in graduation products, which exceeded expectations even against a tough prior-year comparison.

The analyst inquired about the impact of the First Day Complete program on general merchandise sales and store traffic, and asked for clarification on the drivers of strong merchandise sales despite operating fewer stores.

Answer

The company responded that the First Day Complete program actually increases store traffic because students come in to pick up their materials, which provides an opportunity to boost general merchandise sales. The strong merchandise sales despite fewer stores were attributed to a combination of closing underperforming locations and exceptionally strong sales of graduation products during the quarter.

Alex Fuhrman of Craig-Hallum Capital Group asked for the reasoning behind abandoning the asset sale strategy and questioned if other methods could accelerate Puttery openings. He also inquired about the trend in food versus alcohol sales mix at more mature Puttery locations.

Answer

President and CEO Hana Khouri explained that the asset sale was taken off the table because market conditions led to offers that significantly undervalued the asset. The company pivoted to securing debt, which, once obtained, will allow them to re-evaluate and potentially accelerate project timelines. On the food and beverage mix, Khouri stated that while alcohol sales remain dominant, the percentage of food sales at The Colony venue has been slowly increasing over time.

Alex Fuhrman asked about the recovery and growth of the events business, particularly at Puttery, its pipeline for the second half of the year, and its trajectory toward pre-COVID levels. He also inquired about gameplay statistics and the target throughput time that balances guest value with operational efficiency.

Answer

President and CEO Hana Khouri stated that the Puttery events business is building as expected for a new brand, with a strong pipeline for Q4 holiday events and a significant return in corporate demand. She noted a temporary 'reverse COVID effect' from summer travel but expects a pickup in the back half of the year. Regarding gameplay, Khouri identified a 30-35 minute sweet spot per course. She explained they are using data from existing venues to optimize course design and manage guest flow with on-course beverage service to enhance the experience during any potential waits.

Alex Fuhrman inquired about the potential mature performance profile of the traditional Drive Shack venues and asked for details on the size and course count for the upcoming Puttery locations planned for 2022.

Answer

CEO Hana Khouri stated that the Drive Shack venues are currently performing at their expected run-rate levels, with potential upside as the events business continues to recover and potentially captures some share from walk-in revenue. Regarding new Puttery venues, she explained that most will feature two or three courses. The company learned from its first location that four courses are not always optimal, and that space can sometimes be better utilized for additional seating or bars to drive higher-margin event revenue. The upcoming New York City location, while being the largest, will prioritize event space over adding more courses.

Alex Fuhrman from Craig-Hallum Capital Group asked whether the on-track opening schedule for new Puttery venues was due to easing post-COVID constraints or streamlined internal processes, given the delays experienced with the first two locations. He also inquired about the expected food and beverage mix for upcoming Puttery openings, questioning if they would more closely resemble the Charlotte or The Colony model.

Answer

President and CEO Hana Khouri clarified that the initial delays for The Colony were primarily due to the onset of the COVID-19 pandemic itself. She acknowledged that supply chain challenges persist but stated the team has become adept at anticipating issues and pre-purchasing materials to stay on schedule. Regarding the F&B mix, Khouri expects most new venues, which are in densely populated urban areas, will resemble the Charlotte model with a higher beverage mix, particularly alcohol. She added that the company is also actively working to increase food spend.