Callouts & quotes from 1,434+ activist slides

"Lower commodity prices are forcing the industry to cut costs. Here we adjust the revenue to the future strip price, and cut expenses by 20%. On that basis, gross cash flow is $30 per BOE and Pioneer earns a positive margin. But, it's not positive value."

"Porch points investors to focus heavily on Gross Profit (Margin) as a key metric and valuation benchmark. As a result, Spruce Point has carefully scrutinized this metric and finds irrefutable evidence to suggest Porch is inflating Gross Profit (Margin)."

"As we've already shown: 1) MPWR's Chinese tax filings do not account for ~$262m of revenue, and 2) MPWR's inventory turnover metrics are ballooning and a significant industry outlier despite stable and steady gross margin growth that management touts."

"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 find that Generac marked-up inventories by 55% from £4.8m ($6.8m) to $9.97m. Generac hasn't disclosed any fair value revisions to inventory, or amortization of an inventory step-up. Inflating inventory values is a hallmark of margin overstatement."

"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."

"We believe providing a target of at least 40% growth plus profitability for FY2025 would be in-line with peer targets and timelines and should be readily achievable through a reasonable acceleration in revenue growth and meaningful margin expansion."

"Absent any helpful answers from the Company, shareholders can only assume that the Company is significantly increasing spending in other areas and offsetting the margin improvement that should result from the workforce reduction and revenue growth."

"We believed that GoDaddy had significant opportunities to deliver on strong revenue growth, meaningful margin expansion, and a more appropriate capital allocation strategy, which, collectively, would result in meaningful shareholder value creation."

"We believed that GoDaddy had significant opportunities to deliver on strong revenue growth, meaningful margin expansion, and a more appropriate capital allocation strategy, which, collectively, would result in meaningful shareholder value creation."

"We believed that GoDaddy had significant opportunities to deliver on strong revenue growth, meaningful margin expansion, and a more appropriate capital allocation strategy, which, collectively, would result in meaningful shareholder value creation."

"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?"

"In an effort to avoid admitting a large miss, management has recently started stating that "to get to its mid-cycle EBITDA PSX needs adjusted gross margin of $14.50/bbl,"(1) a level that even VLO (best-in-class operator) is not expected to achieve"

"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."

"Given that Juniper failed to meet its prior cost reduction target by a wide margin, a significant amount of detail and conviction from management will be necessary to ensure that investors and Street analysts understand that this time is different"

"We made some modest adjustments to our EBITDA margin outlook at the midyear point raising Imagery a bit higher and putting Space Systems segment a bit lower due to continue Geo concept market weakness and program performance. — CEO Howard L. Lance"

"Basically, on the crush margin, so if you really talk about crush margin, I would really expect it to be a little bit of flat or let's say a little bit on the lower side. The reason is there is overcapacity of the crushing. — Former Bunge Director"

"We are surprised that the sell side seems to think that gross margin in the product segment could expand through the coming years despite the strong relative growth of sales of distributed product vs. manufactured product, as cited by management."

"If one simply adds back to COGS the direct manufacturing costs we believe it is misclassifying via a Worldcom-esque accounting scheme, its gross margin is negative – consistent with color from ex-employees, competitors, and manufacturing experts."

"Lasertec never explained what was different about the ACTIS tools sold in Q1 such that they had no margin – each tool is the same, and the obvious implication is that if those are worthless, then so is the $1.2B of inventory on its balance sheet."

"Our research shows that YoY growth in fully-loaded marketing expense per order generated has exceeded the comparable period's growth in AOV eight of the past nine quarters, often by a dramatic margin, suggesting deteriorating customer economics."

"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."

"The SEC's order finds that MagnaChip Semiconductor Corp. overstated revenues for nearly two years in response to immense pressure placed on employees each quarter to meet revenue and gross margin targets that had been communicated to the public."

"CLEAR talked about high incremental margin potential with TSA PreCheck. Yet, even as CLEAR increased its price from $189 to $199 per year, the discounted bundled cost of its service with the TSA partnership actually fell from $122.00 to $121.05."

"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."

"In an effort to avoid admitting a large miss, management has recently started stating that "to get to its mid-cycle EBITDA PSX needs adjusted gross margin of $14.50/bbl," a level that even VLO (best-in-class operator) is not expected to achieve"

"In an effort to avoid admitting a large miss, management has recently started stating that "to get to its mid-cycle EBITDA PSX needs adjusted gross margin of $14.50/bbl," a level that even VLO (best-in-class operator) is not expected to achieve"

"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"

"the continuing shift in sales mix within food grade alcohol from lower margin industrial alcohol products to higher margin premium beverage alcohol products, a decline in input costs, and an increase in warehouse revenue. — MGPI Press Release"

"To avoid admitting a large miss, management has recently started saying that "to get to its mid-cycle EBITDA Phillips 66 needs adjusted gross margin of $14.50/bbl," a level that even Valero (best-in-class operator) is not expected to achieve"

"Management confused the research community when it revised long-term margin targets and simultaneously added back pension/OPEB expenses. During this process, management brought down long-term targets but never made that clear to stockholders"

"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."

"To avoid admitting a large miss, management has recently started saying that “to get to its mid-cycle EBITDA Phillips 66 needs adjusted gross margin of 14.50/bbl,” a level that even Valero (best-in-class operator) is not expected to achieve"

"Spruce Point observes unusual and unexplained changes to REZI's property disclosures between 2023 and 2024. Our suspicion is that REZI used its discretion to allocate greater overhead costs to the P&S segment to flatter ADI segment margins."

"Based on the synergy plan, we are confident that the combined entity will generate about a 24% operating margin by the end of this decade versus the 18.5% P&G delivered in fiscal 2004-5. — A.G. Lafley, CEO, Gillette M&A Presentation 10/3/05"

"Avery Dennison faces significant long and short-term headwinds across its offerings' end-markets. We believe these headwinds will continue to intensify as competition increases, resulting in declining sales and further pressure on margins."

""The Retail segment margin rate was not as strong as we would have liked... We recorded a lower benefit than last year from a true-up related to the margin sharing arrangements with dealers" — Dean McCann, CFO, Q2 2019 Call, August 8, 2019"

""[W]orking capital could be reduced... without a detrimental effect on margins... best-of-breed distributors and retailers are able to drive down working capital needs while at the same time boosting profitability" — Piper Jaffray, 12/2/12"

"Rollins has been increasing its discussion of auto accidents and insurance as a headwind to margins, and recently modified its Critical Audit Matter discussion on the topic. We believe this will continue to weigh on margins going forward."

"I will say growing margin is very hard to do. I specifically have a lot of experience in that area given I was on the pricing side. I really considered myself more in margin management. — Former Avery Global Pricing and Revenue Specialist"

"This stark and recent case study brings up several questions: How can a $2bn revenue segment of ADP have margins which are >80% below optimal levels? What does this say about ADP's corporate operating efficiency, culture, and governance?"

"Spruce Point believes that frequent segment shuffling is a classic red flag and we find that Zebra has made multiple shuffles. When we evaluate the revisions, we see that it has twice moved product lines that exhibited declining margins."

"In 2019 Vireo has come short of its dispensary rollout plan and gross margins have been significantly below expectations (16% in Q3/2019 vs 35% consensus and down 19% sequentially) Buildout in a number of locations have been put on hold."

"Although Tessera’s IP segment is currently profitable, its financial performance has deteriorated substantially over the past few years and its profit margins are far below the margins of other intellectual property licensing companies."

"We compare Rollins’ valuation with a broad set of residential and commercial service companies. We expect Rollins’ margins to contract and its top-line growth to normalize. As a result, we believe its excessive multiple should contract."

"If management becomes more bearish about a recovery, it can reduce capacity further and shrink the cost base. We believe that if the business were right-sized to the current sales base of ~$3.3bn, EBIT margins could be approximately 10%"

"CEO Dominik Richter's private company borrowed massively against his HelloFresh’s shares to fund highly leveraged real estate investments by his brother Benedikt Richter, apparently triggering margin calls amid a steep share price drop."

"10/28/15: Q3'15 earnings miss on SSS, EPS headwinds due to higher D&A & margin dilution from franchisee acquisitions (labor, low sales, training). Guided to "single digit" net earnings growth in FY'15 and 20% in FY'16. Shares fell ~17%"

"How does Mettler attract and retain the most talented employees when its stock compensation expense per employee is the lowest in its industry by a significant margin, and it appears to avoid granting equity to rank and file employees?"

"Following the spin-off of beverages and creation of a pure-play confectionary business in 2007, Cadbury increased its 2010 operating profit margin to a level 400 bps above what Wall Street analysts had forecast prior to the separation."

"As we’ve demonstrated, Nuvei’s revenue is low quality (already being restated) and growth has come from inorganic acquisitions and higher risk (and margin) business which will we believe will revert towards lower margin in the future."