Wednesday November 29, 2023
Rivian Drives Up Earnings
Rivian reported revenue of $1.12 billion for the quarter, significantly up from the $364 million reported during the same quarter last year. Quarterly revenue exceeded analysts' expectations of $1 billion.
"Results for the second quarter of 2023 reflect strong financial and operational progress as we continued to ramp production, improved cost efficiency, successfully introduced new technologies, and enhanced the customer experience," said Rivian in a letter to shareholders. "For the remainder of 2023, we intend to maintain the momentum of the first half of the year by continuing to deliver against our value drivers: production ramp, cost efficiency, future platforms and technologies, and customer experience."
The company posted net losses of $1.20 billion or $1.27 per adjusted share for the quarter. This was an improvement compared to net losses of $1.71 billion or $1.89 per adjusted share during the same quarter last year.
Rivian announced that it produced 13,992 EVs and delivered 12,640 vehicles during the second quarter. Vehicle production saw a nearly 50% increase compared to the first quarter of 2023. During the quarter, the company introduced a Dual-Motor, all-wheel drive system to its R1 vehicle line. The company updated its full-year production guidance and plans to produce 52,000 vehicles by the end of 2023, up from previous production estimates of 50,000 and over twice as many vehicles produced compared to 2022.
Rivian Automotive Inc. (RIVN) shares ended the week at $21.57, down 16% for the week.
Under Armour Releases Earnings Report
Under Armour, Inc. (UAA) released its first quarter earnings on Tuesday, August 8. The athletic-wear company's stock remained relatively unchanged despite reporting better-than-expected quarterly earnings and sales.
The company reported revenue of $1.32 billion for the first quarter. Revenue was down 2% from $1.35 billion during the same quarter last year but exceeded analysts' expectations of $1.29 billion for the quarter.
"We are pleased with how we have navigated our start to fiscal 2024," said Under Armour CEO, Stephanie Linnartz. "Our international and direct-to-consumer businesses, both of which realized solid growth in the quarter, continue to deliver aside a challenging consumer retail environment in North America. Based on this performance, we are maintaining our outlook for fiscal 2024."
Under Armour posted a net income of $8.55 million, or $0.02 per adjusted share for the quarter. This was up from net income of $7.68 million, or $0.02 per adjusted share at this time last year.
The Baltimore-based sports apparel manufacturer continues to rebound from previous supply chain constraints and experienced an inventory increase of 38% to $1.3 billion. Despite increased inventory, the company's North America segment posted a 9% decrease to $827 million in revenue for the quarter. Under Armour's International segment experienced a 12% increase in revenue to $485 million compared to the prior year. Wholesale revenue decreased 6% to $742 million and direct-to-consumer revenue increased 5% to $544 million due, in part, to a 6% increase in e-commerce revenue. Looking forward, Under Armor expects fiscal 2024 revenue to be flat to up slightly with adjusted earnings per share to be between $0.47 and $0.51.
Under Armour, Inc. (UAA) shares ended the week at $7.84, relatively unchanged for the week.
Callaway Golf Posts Quarterly Earnings
Callaway Golf Co. (ELY) reported its earnings for the second quarter on Tuesday, August 8. The golf company missed expectations for quarterly revenue, causing its shares to fall more than 6% following the release of its earnings report.
Callaway posted revenue of $1.18 billion for the second quarter. This was up almost 6% from $1.12 billion during the same quarter last year. This was in line with analysts' expectations of $1.19 billion.
"Our solid second quarter results were driven by strong performance across all business segments, and I am particularly pleased with market share gains in Golf Equipment and the continued strength of Topgolf's venue business," said Callaway CEO, Chip Brewer. "Looking ahead, we believe that our unique and attractive portfolio of leading brands continues to be very well positioned to benefit from the sustained momentum in both off-course and on-course golf."
Net income for the quarter came in at $117.4 million or $0.59 per adjusted share. This was up from net income of $105.4 million, or $0.53 per adjusted share during the same quarter last year.
Callaway's multiple subsidiary companies, including TopGolf, contributed $470.8 million in revenue, up 16.6% from one year ago. TopGolf, a popular driving range entertainment complex, opened two new locations in the U.S. and plans to open 11 additional locations in 2023. Golf Equipment, which accounted for $451 million in revenue, remained relatively unchanged. Callaway's Active Lifestyle segment reported revenue of $257.9 million, down almost a full percentage point. Callaway reaffirmed its full-year revenue guidance for fiscal 2023 to be between $4.42 billion and $4.47 billion.
Callaway Golf Co. (ELY) shares ended the week at $16.80, down 13% for the week.
The Dow started the week of 8/7 at 35,126 and closed at 35,281 on 8/11. The S&P 500 started the week at 4,492 and ended at 4,464. The NASDAQ started the week at 13,972 and finished at 13,645.
Treasury Yields Increase
On Thursday, the U.S. Department of Labor announced that the consumer price index (CPI), which measures the cost of dozens of everyday consumer goods, rose 0.2% in July and was in line with economists' forecast. The CPI year-over-year rose 3.2%, below the 3.3% projected by economists.
"It is not quite 'mission accomplished' yet, but significant progress on the inflation front has been made," said Professor of Economics and Finance at Loyola Marymount University, Sung Won Sohn. "On balance, the inflation picture has improved significantly. The Federal Reserve will stop raising the interest rate soon."
The benchmark 10-year Treasury note yield opened the week of August 7 at 4.05% and traded as high as 4.11% on Thursday. The 30-year Treasury bond opened the week at 4.20% and traded as high as 4.27% on Thursday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment rose by 21,000 to 248,000 for the week ending August 5. Continuing unemployment claims fell by 8,000 to 1.64 million.
"We think the Fed's July rate hike will be the last of the cycle, but the risks are tilted in favor of one more rate hike if more evidence of a softer labor market does not accumulate," said Lead U.S. Economist at Oxford Economics, Nancy Vanden Houten. "The claims data can be noisy week to week, but if the latest increase is sustained it would be a sign of a further easing in labor market conditions."
The 10-year Treasury note yield finished the week of 8/7 at 4.15%, while the 30-year Treasury note yield finished the week at 4.26%.
Mortgage Rates Keep Climbing
This week, the 30-year fixed rate mortgage averaged 6.96%, up from last week's average of 6.90%. Last year at this time, the 30-year fixed rate mortgage averaged 5.22%.
The 15-year fixed rate mortgage averaged 6.34% this week, up from 6.25% last week. During the same week last year, the 15-year fixed rate mortgage averaged 4.59%.
"For the third straight week, mortgage rates continued creeping up and are now just shy of 7%," said Freddie Mac's Chief Economist, Sam Khater. "There is no doubt continued high rates will prolong affordability challenges longer than expected, particularly with home prices on the rise again. However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid."
Based on published national averages, the savings rate was 0.42% as of 7/17. The one-year CD averaged 1.72%.
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