Callouts & quotes from 766+ activist slides

"Arconic originally projected that Firth Rixson would do $2 billion of revenue in 2019. At the same margins as originally projected for 2016 (i.e., conservatively assuming no incremental volume leverage), Firth Rixson will produce approximately 50% less EBITDA than originally targeted for 2019"

"An interview with a former SafeCharge (now Nuvei) employee confirmed our belief that Nuvei entered the European gaming market as its existing retail business became more competitive. This higher risk business allowed for a recent uplift in margins which we believe will be unsustainable."

"The deterioration of Skechers' cash flow margins since 2018, coupled with a history of mismatch between its CFO and net income (before non-controlling interest) and thus highly suspect earnings quality, suggests that something is fundamentally wrong with the Company's financial model."

"We struggle to explain how gross margins expanded in the face of a structural decline of inventory turnover, and a material drop in revenues in 2015 (from emerging market challenges), and the Swiss National Bank unexpectedly changing policy in early 2015 to strengthen the Swiss Franc."

"Ancora is concerned that this may have potentially been an attempt to “juice” the stock ahead of the nomination deadline by providing an incomplete picture considering the financial metrics indicated a strong top-line performance, but no detail was offered regarding margins/earnings."

"With healthy growth continuing into the 2030s, GAAP EBIT margins in the 21% range, an 11.7% WACC, and a 17.5x EV / LTM EBITDA exit multiple (relative to a current small-cap WFE average of 24x), we get a $72 per share fair value for ACMR, representing 300%+ upside from current levels."

"These record top-line results are not translating to record profitability, nor the Southwest standard of profitability levels (i.e., Southwest was once a profit leader) ... [Southwest’s margins are] roughly 1,000 basis points below the industry leader. — Deutsche Bank, October 2023"

"These record top-line results are not translating to record profitability, nor the Southwest standard of profitability levels (i.e., Southwest was once a profit leader) ... [Southwest’s margins are] roughly 1,000 basis points below the industry leader. — Deutsche Bank, October 2023"

"These record top-line results are not translating to record profitability, nor the Southwest standard of profitability levels (i.e., Southwest was once a profit leader) ... [Southwest’s margins are] roughly 1,000 basis points below the industry leader. — Deutsche Bank, October 2023"

"These record top-line results are not translating to record profitability, nor the Southwest standard of profitability levels (i.e., Southwest was once a profit leader) ... [Southwest’s margins are] roughly 1,000 basis points below the industry leader. — Deutsche Bank, October 2023"

"The ports business is a highly profitable business, recording margins significantly higher than the European freight business - we estimate BOL's ports business generates EBITDA margins of approximately 40%, vs. an estimate of approximately 5% for its freight forwarding business."

"We aren't going to give you a specific margin target, but it should result in between 100 to 150 bps of margin improvement annually on the pathway to narrow the margin gap with peers and deliver industry competitive margins. — CEO Alan Shaw, Q4 2023 Earnings Call, Jan. 26, 2024"

"It appears that Smart2Pay’s approximately 50 employees were to join Nuvei. This further calls into question how could its margins increase so dramatically in the absence of significant cost reductions. LinkedIn employment trends also show no indication of employment attrition."

"A possible motivation for these inventory transfers would be to overstate gross margins by moving high cost inventory to PP&E, or eliminate the need to write-down obsolete/slow-moving inventory in the current period, and instead depreciate the expense over a 3-5 year period."

"Xylem's financial reporting has become even more opaque specifically around gross margins. Notice carefully that, not only does Xylem not quantify the impact of the Evoqua acquisition on its gross margin, but also it provides no quantitative measures of any impacts at all."

"Kornit trades at a meaningful premium to direct digital printing peers it competes with, as well as its second largest print customer which is struggling, on the belief that its 20%+ revenue growth rate is sustainable and its margins are better than peers and will expand."

"The market expects FIGS to continue top-line growth in the mid 20% range while accelerating EBITDA margins. As a result, the market ascribes FIGS a rich revenue multiple of approximately 4x. We have shown why we believe there is substantial room for multiple compression."

"Despite a massive revenue decline of $4.8 billion from 2007 to 2012, total G&A expense has actually increased, causing G&A expense as a percentage of revenue to increase from 4.2% to 6.3% and Adjusted EBITDA margins to decline from 5.3% to 3.1% over the same time period."

"ESG & Climate segment Adj. EBITDA Margins have increased 720bps from Sept 2022 – 2023 with headcount having grown from under 1,000 to approximately 1,300 according to the Head of ESG. While Retention Rate declines and revenue growth slows, we expect margins to contract."

""[PCC] generally leverages superb execution for market share gains through pricing strategies and long-term contracts. We believe [PCC] is one of the best operators in our space, as operating margins are generally above peer companies." — Bank of America, June 4, 2014"

"As GAAP gross margins have declined, the Company's poor financial performance is shown by its negative operating and net margins. However, the Company's non-GAAP adjustments create the illusion of Sunnova being a profitable business with high Adjusted EBITDA margins."

"Improved the Company’s financial health by driving companywide efforts to improve profit margins, reduce debt, secure credit rating, and increase return on capital, positioning the Company to take advantage of future growth opportunities — DuPont 2014 proxy statement"

"Management repeatedly claimed that G&K’s gross margins will improve to Cintas’ legacy margins as it was marketing the transaction to investors. Yet, it’s now very evident that management never had a way to measure or track it, thus calling its claims into question."

"In the next quarter’s Q&A, the CEO stated that “in Q1 there were ACTIS units with very low gross margin from the first lots” – without ever explaining what “first lots” means; and that “we have finished recording the sales of ACTIS with poor gross profit margins.”"

"Carvana not only trades at nosebleed levels relative to its closest peers, even on consensus revenue growth expectations we regard as too high, Carvana now trades at a premium to leading tech players, all of whom enjoy better margins and generate free cash flow."

"Something to think about when you're studying them is, kind of, why are their margins so high, and my theory is that their [Aerospace Products] asset base is at [the] depreciated book value and that's the cost that gets baked into their margins. — MRO Competitor"

"a vote for Trian’s nominees is a vote for four highly qualified individuals who will seek to work collaboratively with the Board to: Assess the corporate structure and determine whether management is capable of achieving best-in-class revenue growth and margins"

"TCM's and Cartoon Network's 2005E EBITDA margins are estimated to be towards the high end of the profitability of other cable networks. TNT's and CNN's estimated 2005E margins of approximately 39% and 35% respectively, fall in the mid-to low end of the range."

"No, I don't remember. $500 million—between $300 to 500 million and that basically translates to the POs that they had from Intel but the POs are at a significantly reduced price. They don't have a lot of margin on those tools, very low margins on those tools."

"If you look even at the big airlines that have lower margins than the top two, there’s a core airline within them that has the same kind of margins as United and Delta, but it’s dragged down by the stuff that loses money. — United CEO Scott Kirby, June 2024"

"If you look even at the big airlines that have lower margins than the top two, there’s a core airline within them that has the same kind of margins as United and Delta, but it’s dragged down by the stuff that loses money. — United CEO Scott Kirby, June 2024"

"If you look even at the big airlines that have lower margins than the top two, there’s a core airline within them that has the same kind of margins as United and Delta, but it’s dragged down by the stuff that loses money. — United CEO Scott Kirby, June 2024"

"According to the 10-K, BID generated $26M of 2013 Agency commission revenue from Finance loan collateral. Assuming ~28% average Agency margins and 35% taxes, yields $4.7M of net income, or ~4% of ROE. Some of these sales may have occurred without financing."

"If you look even at the big airlines that have lower margins than the top two, there’s a core airline within them that has the same kind of margins as United and Delta, but it’s dragged down by the stuff that loses money. — United CEO Scott Kirby, June 2024"

"If you look even at the big airlines that have lower margins than the top two, there’s a core airline within them that has the same kind of margins as United and Delta, but it’s dragged down by the stuff that loses money. — United CEO Scott Kirby, June 2024"

"Xylem has repeatedly said that conversion of digital backlog to sales is higher margin. However, according to a former high-level executive, digital sales are actually dilutive to margins and do not scale as a result of the human capital investment needed."

"Spruce Point finds clear that Saputo is struggling in Europe, and recently made modifications to its competition discussion that suggests a loss of share. We observe that the percentage of retail sales are in decline, and that EBITDA margins are declining."

"According to an expert, due to nationalistic pride of wanting to partner with Amazon, we believe there will be fiercer competition resulting in: 1) Lower margins to Kornit or, 2) A complete loss of the business to a Japanese firm with more local resources."

"Scil generated 31% gross margins in 2018 and 2019, indicative of the Company's distribution business model. Of note, the Company was barely profitable on an operating basis despite scil management receiving Wilson's praise for their operational excellence."

"Spruce Point believes DY's margins are not likely sustainable and may have benefited from various actions that may be difficult to continue. As further evidence of our concern, management has walked back talk of what its long-term EBITDA margin should be."

"P&G’s income statement has stalled since 2011, underperforming the peer average on virtually every line item including: sales growth (volume and organic growth), gross profit growth, gross margins, operating profit growth, operating margins and EPS growth"

"It is worth noting that, similar to past acquisitions, there will be some amount of MSCI shared expenses that will be allocated to the segment. These allocations will reduce the margins for Burgiss, while slightly increasing the margins in other segments."

"Based on our research, we have identified three frequent events that should result in write-offs of capitalized connected device costs, which would reduce reported gross margins. We are not confident that Samsara has been taking the requisite write-offs."

"It seems to us that if one were to overstate revenue in a global business, one wouldn't want the margins to seem glaringly out of line with peers. Therefore, we would expect that a smart person (or people) would find a way to inflate expenses as well."

"We value BR's ICS and GTO business at 1x – 2x and 2.5x – 3.0x 2022E sales, respectively, to reflect its below industry margins, and other challenges we've identified. As a result, our price target is $37.35 – $52.30, implying 65% – 75% downside risk."

"Management not only believed that the global construction market would experience robust growth, but also that GCP would be able to organically grow at twice the market rate while retaining attractive margins due to its advantaged industry position."

"Despite claims of efficient utilization of assets benefiting gross margins, ROAD's gross margins have contracted since Pre-COVID-19 and that even includes the benefit of lower margin contracts rolling off and higher inflationary projects rolling on."

"Similarly, FirstGroup's UK Bus business grew substantially prior to 2007, with stagnant revenue growth since 2008 and significant margin deterioration since 2012, while Stagecoach grew its UK Regional Bus revenues and margins during the same period"

"Why should PetIQ shares trade at more than double pharmaceutical distributor multiples when near-term sales growth is more likely to be 9-11% than 15-20%, and when the Company's outsized margins appear to depend entirely on at-risk vendor rebates?"

"There are many data points to cast doubt on the accuracy of Axon's margins beyond it having recently reported a material weakness tied to revenue recognition and cost of sales, fail to promptly address SEC comment letters, and have its CFO resign."

"We believe that DOX has engineered superficial top and bottom-line growth alongside unusually stable margins through opaque M&A, aggressive percentage-of-completion accounting, software cost capitalization, and repeated one-off net tax benefits."

"In contrast to management's claims that plant-based foods will be a success with healthy margins for Saputo, based on our interview of a former Saputo executive familiar with its cheese business, the plant-based sales team is struggling to sell."

"Manufacturers of clean energy solutions don't necessarily carry higher valuation multiples. Excluding Enphase, which has margins that Generac will likely never achieve, peers are trading around 2.7x and 2.0x 2022E and 2023E sales, respectively."

"Spruce Point views MSCI change of practices from providing margin targets to focusing on Adj. EPS as a major red flag. We later illustrate why we believe MSCI's margins are highly susceptible to potential manipulation through cost allocations."

"BR promoted Itiviti as a 30%+ operating margin business when announcing the acquisition in late March 2021. However, when its audited and pro forma financials were later filed with the SEC, we see that its operating margins were closer to 20%."

"“And so they have great margins just in their contracting but then they add to that margin by capturing the value of aggregates and liquid asphalt by vertically integrating, which is our second margin lever.” — CEO Smith Deal Call Oct 21, 2024"

"Abbott management is aware that, given current G-Series prices and its own production cost advantages, offering the Libre at a lower price point allows it to take overwhelming incremental market share while still earning attractive margins."

"Ambry Genetics was acquired at a notable discount relative to other advanced genetic and molecular diagnostic testing companies, despite the entire peer group, including Ambry, showing double-digit sales growth and EBITDA margins above 10%."

"We believe GE can reach 18% operating margins through (i) a recovery in equipment profit margins to historical levels, (ii) stable improvement in the services portfolio over the next few years and (iii) a modest reduction in corporate costs"

"Kratos is trading at peak valuation on the inflated belief that “this time is different” and that its aspirations in the heavily promoted unmanned systems (aka: Drones) will drive nearly $800m of revenues and near record 10% EBITDA margins."