The good:

• GM recovery, 43 bps higher than previous quarter (nods smugly at using "bps" *EDIT* Considerably less smug after realising I did a Lyft and got a decimal point wrong - real change in GM% was 430 bps). Still lower than pre-COVID so possibly further opportunity to grow this.
• Cost discipline with third consecutive half of opex reduction.
• Combination of above has resulted in earnings turn around, from small loss in pcp to $5 million profit this half.
• All regions are profitable with a big turnaround in Europe.
• Working capital unwind results in cash earnings being even better, generating $15 million of FCF in the half.
• No net debt and plenty of cash means no existential threat.
• Management expect higher profit in 2H.

The less good:

• Fourth consecutive half of revenue decline.
• Probably fairly valued, even assuming this is the bottom of the cycle.

Overall, it's a pretty good result and management tend to deliver what they say (and aren't shy about telling you so when the outlook isn't so good). I just wonder whether there's better opportunities from a valuation perspective.

[Held]

• Company had a bad time in 21-22, 3% sales growth, vs 75% the previous year.
• Hardware divisions (skateboarding and rollerblades) took the biggest hit for demand 
• They are getting squeezed by strong US dollar and it is hitting their profit margin.
• FY22 - negative pressure on profit margins due to continued global logistic issues and rising interest rates and inflation.
• They expect a further bad time over the next 8 months
• Unplanned build of excess inventory
• Australia most profitable, North America where most revenue growth is, European division struggled

It looks like they're going to have a pretty rubbish year.

It's a about time I got around to writing part 2 (of 2) of Stocks in my portfolio that deservedly went belly up in the last reporting season. I've been putting this one off as the market has been depressing enough of late but I found myself using a knife and fork to eat a pork and gravy roll earlier today, so I definitely deserve some self-flagellation.

In part 1 I stated that AFL had given plenty of hints at the half year result that a spectacular full year might not have been on the cards. Globe didn't just give hints - it took investors by the hand, walked them out to the woodshed, put a hatchet in their hands and invited them to go postal.

While many companies were on the lookout for inflationary impacts six months ago, Globe were already flagging margin compression and significant supply chain issues leading to inventory blowouts "which will be addressed in the next half-year". A specific outlook wasn't provided "other than to say we expect full-year sales to hold up...while profits and profitability will be lower". Plain speaking and lesson 1) when management talks themselves down it pays to take note.

However, by then the share price was well off its peak, which brings on lesson 2) just because a share price is down doesn't mean it can't go lower...heaps lower. Also it was down so far it was almost back to my buy price, which cues up lesson 3) the market doesn't give a crap what you paid.

Sure, I reasoned, they're incurring some short-term logistical issues but that doesn't change the fact that they're selling what the peeps want. It seemed like every time I passed a workwear store they were advertising "FXD sold here" - not a bad thing when your customers do your marketing for you. Sure, that's just one product line but the rest of their gear is pretty cool and hip too. I should know because I'm also cool and hip. Lesson 4) I am not cool and hip.

Come year end results it turns out management were right. Revenue was up (slightly) and profit was down (heaps). The inventory blowout that was to be addressed in 2H wasn't and FY23 shaped up as tough year with "downward pressure on our sales trajectory, profits and dividends".

So where does that leave me? Still holding - after all 2023 could surprise and the share price must be close to its low. I might sell when it gets back to my buy price. Kids these days love their stuff. I should know, I used to be one...

Globe released the half year results this afternoon, key highlights include:

GLB - Company Announcement HY.pdf

• Net sales for the half-year of $142.9 million were 15% higher than the prior comparative period (pcp).

• Earnings before interest and tax (EBIT) were $18.2 million, representing 12.7% of net sales (lower than the 16.8% return on sales that was achieved in pcp)

• Net profit after tax (NPAT) was $12.5 million, compared to $15.3 million reported in the pcp.

• The fully franked interim dividend of 16 cents per ordinary share is 33% higher than the interim dividend paid in the 2021 financial year.

Overall, great to see revenue growing; however, this didn't translate into increased earning due to surging logistic costs.

The CEO outlined “In the second half of this financial year we will be working hard to address our underlying

gross profit margin erosion by increasing wholesale and retail prices and negating the impact of higher freight costs.

Meanwhile, we will embark on sales programs in some parts of our business to move through categories with excess

stock".

Extrapolating out their revenue and NPAT for the full year gives a PS of 0.76 and PE of 8.8

Although this report isn't great, I don't expect the market to sell this down as its valuation is already on the low end.

Disc: held

From the GLB release today (not sure why they're always put out their results around lunchtime) - 

The key business metrics for the full financial year were as follows:

• Reported net sales for the financial year of $266.5 million were 76% higher than the prior comparative period (pcp).
• Earnings before interest and tax (EBIT) were $46.7 million, more than 5 times the $7.3 million reported in the pcp.
• Net profit after tax (NPAT) of $33.3 million for the financial year was $27.2 million higher than the $6.1 million reported in the pcp.
• Cash-flows generated from operations were $22.5 million, as cash was invested in working capital to support the growth in revenues over the year.
• Dividends, paid or determined, in relation to the 2021 financial year were 32 cents per share, almost 3 times the 11 cents paid in relation to the 2020 financial year.

End Ctl-C Ctl-V.  It's a stonking result - even better than they flagged in June.  I haven't read the whole annual report but it's clear that while all regions traded strongly, the U.S. was the standout (up 115% at the top line YoY).  They're no ProMedicus though - it's a good company but how long do you want to hold a business whose only moat is their brand among millenials?  I suspect there's another really strong half to come but I'm not sure the reward outweighs the risk here...

[Held in RL and here...but might take some off the table]

25-Feb-2021:  COMPANY ANNOUNCEMENT - HALF YEAR RESULTS 31 DEC 2020   and   APPENDIX 4D - HALF YEAR ACCOUNTS 31 DEC 2020

https://globecorporate.com/

https://globecorporate.com/investors/

• Net Sales of $124.8m, up +60%
• EBIT of $21m (16.8% of net sales) was 400% higher than the $4.2m reported in the prior period (5.4% of net sales).
• NPAT of $15.3m for the half year was $11.4m or ~300% higher than the pcp.
• Cash generated from operations during the period was $17.8 million.
• Fully franked interim dividend of 12 cps declared - which is 140% higher than the 2020 interim dividend which was 5 cps unfranked.

They've done a number on the .pdf which makes it impossible to copy and paste sections of it into here, so if anyone is interested in further details of this very nice GLB result, please click on the LINKS above (why DO people use CAPITAL LETTERS like that - are they just really ANGRY?  Or just want to be noticed??)

[I hold GLB shares.  I found the market's reaction to this set of numbers a little puzzling...  There was a lot of expectation leading in to this report (and a huge SP run-up), after a couple of significant guidance upgrades from management in recent months, however the SP of GLB closed unchanged at $6.22 (same as yesterday) after trading today in a range between $6.15 and $6.39.  Perhaps GLB management have done the near impossible and set expectations pretty much bang on where they should have been, so nothing came as a surprise today...  If so, well played!]

13-Nov-2020:  Mathan Somasundaram from Deep Data Analytics and Gaurav Sodhi from Intelligent Investor both like Globe International (GLB) so it went into Ausbiz's "The Call" portfolio on Monday (9th November 2020) - see here - from the 25 minute mark:

https://www.ausbiz.com.au/media/the-call-monday-9-november?videoId=5401

Gaurav also disclosed that he holds this stock, and he gave a pretty good bull case for them.