Category: Business

Best Buy warns of layoffs as it issues soft full-year guidance

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People walk past a Best Buy store in Manhattan, New York City, November 22, 2021.

Andrew Kelly | Reuters

Best Buy surpassed Wall Street’s revenue and earnings expectations for the holiday quarter on Thursday, even as the company navigated through a period of tepid consumer electronics demand.

But the retailer warned of another year of softer sales and said it would lay off workers and cut other costs across the business. CEO Corie Barry offered few specifics, but said the company has to make sure its workforce and stores match customers’ changing shopping habits. Cuts will free up capital to invest back into the business and in newer areas, such as artificial intelligence, she added.

“This is giving us some of that space to be able to reinvest into our future and make sure we feel like we are really well positioned for the industry to start to rebound,” she said on a call with reporters.

For this fiscal year, Best Buy anticipates revenue will range from $41.3 billion to $42.6 billion. That would mark a drop from the most recently ended fiscal year, when full-year revenue totaled $43.45 billion. It said comparable sales will range from flat to a 3% decline.

The retailer plans to close 10 to 15 stores this year after shuttering 24 in the past fiscal year.

One challenge that will affect sales in the year ahead: it is a week shorter. Best Buy said the extra week in the past fiscal year lifted revenue by about $735 million and boosted diluted earnings per share by about 30 cents.

Shares of Best Buy closed more than 1% higher Thursday after briefly touching a 52-week high of $86.11 earlier in the session.

Here’s what the consumer electronics retailer reported for its fiscal fourth quarter of 2024 compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $2.72, adjusted vs. $2.52 expected
  • Revenue: $14.65 billion vs. $14.56 billion expected

A dip in demand, but a better-than-feared holiday

Best Buy has dealt with slower demand in part due to the strength of its sales during the pandemic. Like home improvement companies, Best Buy saw outsized spending as shoppers were stuck at home. Plus, many items that the retailer sells like laptops, refrigerators and home theater systems tend to be pricier and less frequent purchases.

The retailer has cited other challenges, too: Shoppers have been choosier about making big purchases while dealing with inflation-driven higher prices of food and more. Plus, they’ve returned to splitting their dollars between services and goods after pandemic years of little activity.

Even so, Best Buy put up a holiday quarter that was better than feared. In the three-month period that ended Feb. 3, the company’s net income fell by 7% to $460 million, or $2.12 per share, from $495 million, or $2.23 per share in the year-ago period. Revenue dropped from $14.74 billion a year earlier.

Comparable sales, a metric that includes sales online and at stores open at least 14 months, declined 4.8% during the quarter as shoppers bought fewer appliances, mobile phones, tablets and home theater setups than the year-ago period. Gaming, on the other hand, was a strong sales category in the holiday quarter.

In the U.S., Best Buy’s comparable sales dropped 5.1% and its online sales decreased by 4.8%.

During the quarter, traditional holiday shopping days were Best Buy’s strongest, CFO Matt Bilunas said on the company’s earnings call. Comparable sales were down 5% year over year in November but fell just 2% in December around the gift-giving holidays. January was the weakest month during the quarter with comparable sales down 12%, he said.

Barry said customers “were very deal-focused through the holiday season.” Sales on days known for deep discounts like Black Friday and the week of Cyber Monday matched expectations, but the December sales lull was worse than expected.

Demand was stronger than the company anticipated in the four days before Christmas.

Signs of ‘stabilization’

On the earnings call, Barry said Best Buy expects the coming year to be one “of increasing industry sales stabilization.”

She said the company is “focused on sharpening our customer experiences and industry positioning,” along with driving up its operating income rate. That metric is expected to improve in the coming year.

Strength in services revenue, which includes fees from its annual membership program, in-home installation and repairs, has helped to offset weaker demand for new items. It’s a growth area that the company expects will persist in the coming year.

Some gains in its service business came from a switch to My Best Buy, a three-tiered membership program that ranges in price from free to $179.99 per year depending on the perks and benefits.

The company removed home installations as a perk of that program, which Barry said on a call with reporters resulted in more people choosing to pay for that service.

As of the end of the fiscal year, My Best Buy had 7 million paid members. She said customers who belong to the program spent more at Best Buy than those who don’t.

Barry said Best Buy’s services will help the retailer stand out, especially as customers seek guidance as artificial intelligence becomes part of more devices.

The retailer has been waiting for customers to upgrade and replace their consumer electronics after the pandemic-induced wave. There are some signs that cycle has begun, Barry said on the earnings call. For example, she said, year-over-year comparable sales for laptops turned positive in the fiscal fourth quarter and have remained positive in the first quarter.

She cited other positive indicators, too, including cooling inflation and “green shoots” in the housing market. Sales at Best Buy are not directly correlated to the housing market, which has seen slower turnover, but home purchases do tend to spur appliance and TV purchases, she said.

Best Buy paid dividends of $198 million and spent $70 million on share buybacks during the period. On Thursday, the company said its board of directors had approved a 2% increase in the regular quarterly dividend to 94 cents per share, which will be paid in April.

As of Thursday’s close, Best Buy’s stock is up roughly 3% so far this year. The company has underperformed the approximately 7% gains of the S&P 500 during that period. Best Buy has a market value of about $17.4 billion.

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Seeing Manila through its many battles

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By Brontë H. Lacsamana, Reporter

ASIDE from being the month of love and the arts, many Filipinos are not aware that February was also a very bloody month in our history. Seventy-nine years ago, it was a month that saw the destruction of Manila by bombs and gunfire in the midst of World War II.

For Sylvia Roces Montilla, it was a dark time in her life when, at the age of six, her family had to evacuate Manila after her father, Rafael “Liling” Roces, Jr., was taken and brutally killed by the Japanese. Her cousin, Regina Paterno, had similar trauma — her maternal grandparents burned alive by the militia.

“It’s just ashes and pain and agony left for our imaginations to contemplate,” Ms. Paterno recalled of how it all felt.

Now 86 and 85 respectively, the two women told their stories to a crowd of mainly students at a Feb. 17 event, conducted by the Memorare Manila 1945 foundation, commemorating the Battle of Manila.

The terrifying, month-long chapter in Philippine history took place from Feb. 3 to March 3, 1945. Fought by forces from the United States against Japanese troops, the battle’s casualties included over 100,000 civilians. Numerous churches, government buildings, schools, monuments, and their accompanying treasures dating back centuries were lost in the fierce battle, drastically changing Manila’s cityscape forever.

Unfortunately, despite that extensive damage, public awareness of the historic event has dwindled over the past decades.

“It was more or less something that nobody was talking about in the immediate postwar years,” said Ricardo T. Jose, a war historian and professor emeritus at the University of the Philippines, in an interview with BusinessWorld after the panel discussion with the war survivors.

While the ruins were a painful reminder of what had taken place, not a single book was written about it until the 1990s. “And that’s because they realized that it’s almost 50 years since and there’s no book on it, so a Filipino interviewed some people, wrote it, and published it before the 50th anniversary,” Mr. Jose said.

He pointed out that it was important to listen to the stories of the survivors, especially as more time passes. “There is almost no one left who can talk about it. The ones who spoke today were children, just five or six years old at the time. The older people are all gone.”

HOW TO REMEMBER
One monument that seeks to keep the memory of the harrowing battle alive for future generations to learn from is the Memorare Manila 1945 marker in Plaza de Sta. Isabel, at the corner of General Luna and Anda Streets in Intramuros.

The walled district of Intramuros itself is a reminder of what prewar Manila must have looked, with the government, through the Intramuros Administration, striving to maintain it for its historical value. (One must note that most of the structures inside the walls — aside from the San Agustin Church and parts of Fort Santiago — are all that remain from before WWII. The rest are all reconstructions as the district was almost completely leveled in the battle.)

However, contrary to popular belief, Intramuros is not the only district in Manila where the city’s heritage can be seen.

Stephen John Pamorada, a consultant with The Heritage Collective and the lead convenor of Manileños for Heritage, told BusinessWorld that there is much to see and learn in Sampaloc, Binondo, Escolta, and even his home district of San Nicolas as well.

“The goal is to empower locals with knowledge about the rich heritage of their city, and the skills to preserve it, which include writing letters and petitions to the National Historical Commission of the Philippines (NHCP) or National Commission for Culture and the Arts (NCCA) to save heritage sites in danger of being demolished,” he said in an interview.

He also emphasized the importance of cultural mapping as a way to identify existing resources that may not be given much attention.

“Basically, we go to each district to identify and document the heritage structures and traditions existing in that particular place. It’s more academic and advocacy-driven, not yet tourism in itself, but whatever resources we get or document out of mapping can be processed for tourism purposes later,” said Mr. Pamorada.

While that specific organization is a private effort, Republic Act (RA) 11961, or the Cultural Mapping Act, requires all local government units (LGUs) to survey and map out all the culturally important areas in their jurisdictions, too.

This covers both tangible and intangible, and natural and built heritage, as an extension of RA 10066, or the National Cultural Heritage Act of 2009.

At the 79th anniversary ceremony on Feb. 3, Maria Sheilah “Honey” Lacuna, the mayor of Manila, vowed to continue playing an active role in commemorative events and the preservation of heritage structures in her city.

“We will harmonize heritage and progress. We will ensure that these structures of historical value will remain, restored and protected, so that the valuable lessons that they represent will always be treasured and given importance,” she said in her speech.

BEYOND NOSTALGIA
In addition to Intramuros’ regular tour offerings, various private heritage efforts like Renacimiento Manila, Manila By Night, and the Nilad Community held multiple Battle of Manila tours over the course of February.

“It’s a series of tours that we organized per district to show a part of that battle that happened in that very place,” Mr. Pamorada explained.

For him, these tours bring Filipinos back to Manila’s history in a way that’s “experiential,” making it more effective than the standard lecture.

Diego Gabriel B. Torres, a co-founder of Renacimiento Manila and a tourism official with the Intramuros Administration, told BusinessWorld that it was in the late 2010s that Filipinos started showing an interest in learning about history, by sharing old photos of Manila on Facebook.

“Those pining for that lost city are those that haven’t experienced it. We’re longing for a past city — an imagined past city — and comparing it to the chaotic reality now. When we started during the pandemic, people were holed up inside. Our rationale is to go beyond nostalgia, which is just a longing for the past. That’s just the entry point to heritage,” he said.

Mr. Torres added that, before the current wave of heritage advocacy among the youth, it was first popular among the old and affluent. “We want the heritage struggle to be carried by ordinary people, by the middle class, by professionals, who exert their influence through social media and through their peers to shed light on issues.”

Recent campaigns include the halting of the demolition of the Capitol Theater in Escolta and the petitions against the Pasig River Expressway (PAREX) which opponents say will destroy several heritage sites and cover the Pasig River.

PUBLIC SPACES
Mr. Pamorada, who himself wrote letters to preserve heritage and teaches others to do so as well, pondered how the silent witnesses that survived the war are in danger of not surviving “so-called development.”

“That in itself is very philosophizing. Is it really development if you’re erasing a part of your history?” he said.

Paulo G. Alcazaren, urban planner and architect involved with the ongoing Pasig River Esplanade project (dubbed PARES as opposed to the PAREX), expressed hope that public access to spaces true to Manila can be prioritized.

“There’s bad development and there’s good development. Most other progressive cities around the world have realized that conservation of heritage sites and spaces are essential,” he told BusinessWorld via Zoom.

“If you develop by bulldozing sites or replacing spaces with 50-storey buildings or elevated expressways, then you lose your cultural specificity and the sense of place … Sadly, most public infrastructure in the last half century has been focused on roads and infrastructure for cars,” Mr. Alcazaren said.

Executive Order 35, signed by President Ferdinand “Bongbong” Marcos, Jr. last July, created the Inter-Agency Council for the Pasig River Urban Development, composed of 15 government agencies and five LGUs, with the goal to complete a master plan for rehabilitating the Pasig River.

By connecting the 26-kilometer length of riverbanks on both sides, the project will provide alternate mobility or transport and linear parks on the banks. The first of nine initial sections was completed in January, in front of the historic Manila Post Office in Ermita. It was rebuilt after having been destroyed in WWII.

Mr. Alcazaren said that it will be very difficult to execute the entire plan, as it involves a team of people from various disciplines to make the entire 26-km stretch beautiful and accessible, from urban planners to landscape architects to transport experts.

“We’ve seen many people come to that section we just finished. The moral of the story is, people will not congregate in spaces that are not human in scale or that have no stories to tell,” he said.

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Houthis expose vulnerability of int’l Internet connections

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“Globes” report on Monday about the damage caused to submarine communications cables in the Red Sea by the Iranian-backed Houthi terrorists has caused a stormy and mixed response worldwide. This was the first time ever that deliberate damage by a terrorist organization has been reported against international communications cables, which are responsible for major internet traffic between continents, in this case between Europe, Africa and Asia.

The damage was to four submarine communications cables – AAE-1, Seacom, EIG and TGN – out of the 17 that pass beneath the narrow waters separating Saudi Arabia and Djibouti in East Africa. The damage highlights the ability of a terrorist organization to disrupt international communications, after having already disrupted international merchant shipping.

The Houthis have not taken official responsibility for the damage to the cables and the Yemeni government has even issued a denial but the main damage has been sustained by the west and its allies – to telecom companies in the UAE and India, as well as Egypt. About 60% of the world’s Internet traffic passes through underwater cables laid in Egypt, from the Mediterranean along the bed of the Suez Canal, and onto the Red Sea near the town of Ras Zafarana.

Seacom, one of the submarine cable companies hit,, even issued a statement confirming that its cable was damaged, adding that this had also happened to “additional cables.” The revelations about the damage by “Globes” was also covered by prominent media outlets including “Bloomberg” and “The New York Post. However, the companies involved, as well as the US government, tried to ignore the story as much as possible and lower the tensions, so as not to endanger the ships due to arrive in the area to repair the submarine cables.

Insurance payments could reach $150,000 per day

Meanwhile, Saudi Arabia has already taken advantage of the exceptional event to score points. A top advisor at the Saudi Ministry of Communications, Rian Al-Sa’adi wrote on social media, “Continued deployment of the submarine cables in the existing situation leads to points of communication failure all over the world. We must act to establish a more durable network through the creation of additional digital centers of gravity.”

Al-Sa’adi is essentially saying that Saudi Arabia wants to establish a land bridge of communications cables that would bypass the Red Sea and would also link up the UAE, Bahrain and Qatar before continuing to India and East Asia.







US consultancy firm OpenCables CEO Sunil Tagare is one of the founders of the international submarine communications cable FLAG, which was laid at a cost of $1.6 billion between Europe and Japan over 17,000 kilometers via the Middle East and Asia. He tells “Globes” that he hopes the Yemeni government will allow the vessels to reach the region to assist in repairing the damage.

For insurance companies, Yemeni denials are of no interest. They have signed agreements with communication cable companies, and the daily insurance costs of a repair ship could reach $150,000. Repairs that may take an average of eight weeks could be very costly for insurance companies.

Tagare says, “As of today, all data traffic between Asia and Europe passes through Egypt, which makes the Suez Canal a real failure point. If all the cables were cut, it will lead to a serious economic and communications disaster. That is why it is important to create an alternative that will pass through Saudi Arabia to Oman and the UAE – not only to create an alternative route for transmitting data in the event of a crisis, but to cut the prices charged by Egypt for this traffic.”

Egypt does not publish figures, but estimates are that a telecom provider that lays a cable through the Suez Canal must pay $200-250 million over the life of the cable, which ranges from 15-20 years.

Only three cables link up Israel

Israel is currently connected to the world by just three submarine Internet cables, which are close to their peak capacity. There is Telecom Italia’s MedNautilus, which carries 50% of data transmission, while cables laid by Tamares Telecom and Bezeq International carry 30% and 20% of data transmission respectively.

Telecom and media consultancy company TASC managing partner Ilan Schory tells “Globes,” “Israel is not exposed to cables that continue to the Red Sea but is connected via the Mediterranean to end stations in Cyprus, Greece and Italy. But this is not sufficient. Transmissions have grown by 30% annually and are close to maximum capacity.

In terms of the security threat, cutting a communications cable leading to Israel would be no easy matter as it would involve an operation at great sea depth but on the coast communication cables can be easily damaged, since the only protection is against sharks.

Bezeq International has protected its communication cable by installing security cameras at its docking stations abroad. In Israel, the main communication cables are anchored at secure sites in Haifa, Tel Aviv and near Netanya.

Israeli telecoms Cellcom, Partner, Bezeq and Hot are connected to Jordan at the Sheikh Hussein, Allenby and Aqaba border crossings, but these cables work mainly to connect Jordanian telecommunications companies such as Orange Jordan as well as Paltel to the global Internet network, so the connection does not provide significant Israeli traffic from Jordan to Asia.

Tagare explains that Israel is at a global disadvantage due to dependence on a limited number of means of communication. “It is very important to build new routes that will carry communications overland through Saudi Arabia,” he says. “One such line could connect Israel, Jordan, and Saudi Arabia and from there to Oman and UAE, and until that happens, Israel will suffer a significant disadvantage.”

The dangerous point at the Bab al-Mandab Strait

Google and Telecom Italia’s Blue Raman submarine Internet cable, which was due to begin operations this year, could help provide capacity for Israel, but its launch has been postponed until 2025, due to protracted procedures in Saudi Arabia, not related to Israel.

This cable will pass along the seabed at the Bab al-Mandab Strait, which has been a security flashpoint in attacks by the Houthis and won’t help Israel in coping with the security threat.

At least two new submarine communications cables are due to be laid and will help Israel diversify its dependence on the existing underwater cables. These cables are supposed to link the communications corridor between Ashkelon and Eilat of the Eilat Ashkelon Pipeline Co., which received a permit from the Israeli government last June.

However, eight months after the ceremonial announcement by Prime Minister Benjamin Netanyahu and Minister of Communications Shlomo Karhi, the project has not yet been built, following a problematic plan approved by the Ministry of Finance and the Government Companies Authority, which fears that if the terms of the outline plan are not changed, the project will have difficulty being implemented.

The advantage of the Eilat Ashkelon corridor is that it passes through desert far from roads and populated areas, and organizations in the Persian Gulf and Saudi Arabia have previously expressed interest and a desire to cooperate on this route.

Another planned cable is the Andromeda cable of Tamares Telecom and Grid Telecom, which is expected to be launched at the end of this year and pass between Cyprus and Greece, and reach Israel at Tirat Hacarmel and continue overland to Eilat, and from there to Aqaba in Jordan and the city of Haql in northwestern Saudi Arabia.

“Globes” has learned that in addition to these two cables at least four more submarine cables are to be laid to Israel, and from here to Saudi Arabia and the Persian Gulf. But as long as the war rages, and the peace agreement with Saudi Arabia continues to be delayed, the projects are still only a dream.

Published by Globes, Israel business news – en.globes.co.il – on February 29, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.


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A brief history of world currencies: Commodities that define a civilisation

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A brief history of world currencies: Commodities that define a civilisation

Thursday February 29 2024

Currencies have existed for thousands of years and they will continue to exert an influence upon our culture well into the foreseeable future. PHOTO | SHUTTERSTOCK

Mankind has always relied upon trade in order to obtain vital goods and services. While barter was used for millennia, the concept of currencies has come to define our civilisation. Modern currencies are vital for global trade, economic development and life as we know it would be nearly impossible to imagine otherwise.

Let us therefore take a virtual journey in order to discover the history of currencies as well as how these unique commodities have evolved over time. It will then be easier to appreciate what the not-so-distant future may have in store.

Ancient currencies

Most experts agree that the first hard currency created can be dated back to the Mesopotamian shekel created more than 5,000 years ago. However, barter was still a common practice amongst ordinary individuals. Items commonly included grain, salt (vital to preserve meat), tea, and spices. The earliest mints emerged in the Middle East around approximately 650 BCE.

These silver and gold coins were primarily used to pay soldiers at the time and yet, they represented an important paradigm shift in regard to the mass production of currency as well as the growing importance of precious metals from an economic standpoint. Some other ancient currencies include:

  • The Roman denarius
  • The Greek drachma
  • A Chinese coin known as the yuanbao

Not only did these currencies begin to replace barter as a tool for trade, but they also allowed individuals to measure (and accrue) wealth in a different manner.

Mediaeval and renaissance currencies

An interesting economic shift began to emerge during mediaeval times.

Namely, individuals could pay for goods with a recognised currency or with a commodity (such as rice or grain). This was referred to by expressions including “quem habuero”; roughly translated to “whichever I may have”. While coins did indeed exist, there were still no large-scale monetary systems in place during this era.

However, the importance of standardisation began to truly take hold throughout the Renaissance.

Two of the major driving forces here involved expanding trade routes and how the perceived value of traditional barter goods would sometimes differ from region to region. Thus, a more standardised system was required.

Regional currencies and mints therefore began to emerge. These relied upon three types of coins when issuing new money:

  • Gold
  • Silver
  • Billon (gold or silver mixed with a base metal such as copper)

Billion tended to be used for everyday transactions while silver and gold were reserved for larger requirements (such as when purchasing a plot of land). Due to the fact that the rarity of precious metals was widely recognised, many of the complications associated with barter were no longer concerns.

Furthermore, regional powers could influence the value of currencies through minting as well as by changing the composition of the coins themselves. This gave much greater control over the economy and populations as a whole.

Colonial Currencies

Yet, another major change occurred when European nations began expanding their reach to different portions of the world. These included North and South America, Africa and India to a large extent.

One observation involved the fact that access to precious metals gave birth to a host of powerful empires; Spain is a perfect example in this case. These nations often exploited their colonies with little concern for the inhabitants and this was a common practice.

However, colonies were often allowed a semi-autonomous form of government through the use of paper script. The issue here was that the sheer variety of paper money abounded and therefore, objective values were difficult to determine. The colonial United States is a well-known example of this trend.

Not only did overprinting lead to hyperinflation in some cases, but the delicate nature of paper currency virtually guaranteed that it would not last very long. These are both origins of the phrase “not worth a Continental” that was famous at the time.

Colonial powers therefore began to introduce their own sovereign coinage as a means to control inflationary rates and to ensure economic stability. The effects of these efforts were debatable.

While they did help to balance the fiscal markets, sovereign currencies were not always accepted by colonial populations that still preferred to recognise domestically created currencies. In other regions such as South America and Africa, currencies minted by countries such as Spain and France eventually became accepted into their domestic economies.

This is why coins including the Brazilian real (royal) and the West African franc are still in use today.

The birth of modern currencies

Most experts agree that the birth of modern currencies can be traced to the global abandonment of the gold standard. Nations began to appreciate the fact that gold prices could experience volatility on occasion; leading to dramatic swings in the value of coinage. This system would therefore be abandoned entirely by 1971.

In anticipation of such a move, a major shift in monetary policy known as the Bretton Woods Agreement emerged in 1944. This policy represented something of a compromise, as it pegged many other currencies to the value of the United States dollar. In turn, the dollar was attached to the price of gold.

Nations also agreed to adhere to fixed exchange rates, helping to ensure fair taxation as well as to limit economic volatility.

Major global currencies

There are several reasons why fiat currencies were the preferred method of trade during the post-colonial period and in many cases, well into modern times. Fiat currencies (such as the US dollar, the British pound, the Japanese yen and the Swiss franc) all allow central banks to retain greater control over domestic economies, as they can choose how much money is printed.

Another interesting result of the emergence of fiat currencies can be seen in currency exchange rates. This had (and still has) an impact upon international trade. For instance, a strong British pound will make it cheaper for domestic firms to purchase goods from abroad in the event that the value of the United States dollar begins to decrease due to inflation.

Currently, the US dollar remains the most widely used currency in the world. However, it faces a strong competitor in the markets: the euro.

Nowadays, the euro is valued at approximately 1.08 US dollars per euro, thus, putting the European currency in a stronger situation than the dollar. Despite this competition, the US dollar continues to dominate global reserves; for instance, as of 2024 about 59 percent of all foreign bank reserves were held in US dollars, compared to approximately 20 percent in euros.

The US dollar’s status as the world’s reserve currency is rooted in the size and strength of the US economy, and the stability and reliability of its financial systems. Post-World War II arrangements, such as the Bretton Woods Agreement, solidified the dollar’s dominance. However, this might change in the future due to several factors.

These include the rising influence of other economies, like the European Union and China, shifts in international trade patterns, and potential changes in global economic policies. The increasing focus on diversifying reserve currencies among nations could also challenge the dollar’s predominance in the future.

Currency crises and reforms

There have nonetheless been several currency crises over the years and some of the most important include:

  • The Great Depression: just after World War I, the world faced one of the biggest economic crises in its history, which jeopardized the fragile economies of the belligerent nations. In the US, the money supply fell over ⅓ of the pre-crisis levels. The Wall Street Crash of 1929 was the catalyst for the crisis. In the United States, the stock market crash of October 1929 marked the beginning of the Great Depression. Following the crash, the American economy contracted sharply, and by 1933, the Gross Domestic Product had fallen nearly 30 percent from its 1929 level. In the UK, the British pound was devalued by over 20 percent.
  • The hyperinflation associated with Weimar Germany: After the fall of the German Empire in 1918, the Weimar Republic was established. However, the new Republic faced immense challenges on multiple fronts, including political instability and economic difficulties. Burdened with massive war debts and reparations, the country quickly fell into a hyperinflation crisis. In 1914, a dollar was worth 4.9 German marks. By late 1923, in the midst of hyperinflation, the exchange rate had soared to 4,210,500,000,000 German marks.
  • The 1998 Russian Financial Crisis: Also known as the Ruble crisis, it was triggered by a combination of factors including low commodity prices, a high fiscal deficit, and a fixed exchange rate. The government’s decision to devalue the ruble on August 17, 1998, led to a 35 percent drop in its value against the US dollar within a week. Inflation skyrocketed, reaching an annual rate of 84 percent in 1998, up from 11 percent in 1997. The stock market also suffered, with the RTS stock index falling over 80 percent by the end of the year.

There are several ways in which nations have chosen to respond. For example, the United States Federal Reserve elected to lower interest rates during the Great Depression in order to increase market liquidity. However, there were also times (such as during the Russian Financial Crisis) that solutions were not so apparent. In this case, Russia defaulted on its debt and the ruble was massively devalued.

The Introduction of the Euro

The Euro was introduced on 1 January 1999 although the notion of a unified European monetary system was first proposed as far back as the 1960s. This currency has had a major impact upon the regional economy and perhaps its most profound effect involves the level of integration now experienced throughout the Eurozone.

The Euro has simplified trade, standardised exchange rates between nations and caused Europe to become highly competitive. However, some will still argue that a single monetary policy may not always be able to adapt to local economic conditions. Nowadays, the Eurozone has 20 members and is used by 26 countries, forming the largest currency union in the world.

African currencies

Traditionally, Africa was primarily associated with a barter-based economy. This all began to change during the colonial period (beginning in the 17th century) when coinage was introduced. As mentioned earlier, the fiscal ‘footprint’ of this time is still visible in several nations.

One export-related benefit involves the fact that many African currencies are often devalued when compared to their counterparts such as the euro and the British pound. For example, as of January 2024, the Zimbabwean RTGS dollar was trading at approximately 9,800 RTGS dollars to 1 US dollar, illustrating its significant devaluation. Similarly, the Tunisian dinar was valued at around 3,11 dinars to 1 US dollar in the forex trading markets, indicating a more stable but still devalued currency compared to major global currencies.

Africa nonetheless faces some challenges in terms of competitiveness. Certain currencies are not recognised on the global stage and will therefore have to be exchanged for the equivalent in benchmark currencies such as the dollar or yen. Secondly, exchange rates favouring western nations can make it more difficult for African nations to import specific goods and services.

Digital currencies and the future

The next major paradigm shift involves the rise of the digital world. Not only has the global ecosystem become intrinsically and irrevocably interconnected, but new notions such as cryptocurrencies are already being felt. What might this mean for the future?

While fiat currencies remain predominant, the trend towards digitalisation is unmistakable. Younger generations, in particular, are more inclined to use digital forms of payment such as credit cards, e-wallets, and crypto transfers. Platforms like Exness are at the forefront of this transition, providing essential services in currency exchange and financial management for both traditional and digital currencies.

While this may be beneficial for certain sectors (particularly the massive e-commerce marketplace), some are worried that a lack of centralised regulation may result in unforeseen circumstances (such as the drastic devaluation of a cryptocurrency due to a massive number of tokens being suddenly sold). Experts are therefore debating whether or not some type of central bank may be needed in order to proactively monitor this digital ecosystem.

Currencies have existed for thousands of years, and they will continue to exert an influence upon our culture well into the foreseeable future. Whether referring to the shekel, the drachma, the dollar, or Bitcoin, there is little doubt that our culture has been at least partially defined by the monetary policies that we choose to adopt.

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The views expressed in this article are solely for the author and do not represent an endorsement by the Business Daily or the Nation Media Group. Investors are encouraged to do their independent due diligence before making any investment decision.

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Portugal: Europe’s Last Open Door For Immigrants

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In Sao Teotonio, a small country town in southwest Portugal, there are more Indian and Nepalese restaurants than Portuguese ones.

Which makes sense when you discover South Asian workers keep the fruit farms that are the mainstay of the region going.

Nepalese immigrant Mesch Khatri, 36, picks raspberries and strawberries in the greenhouses around Sao Teotonio while his wife Ritu, 28, runs their cafe, called the Nepali, in the town.

Their seven-year-old son speaks Portuguese, a little English, but no Nepali at all.

Khatri moved to Portugal in December 2012 after working in Belgium. “I came here because it was hard to get a resident’s permit in Belgium. It’s easier to get papers here.”

Five years after arriving in Portugal he had residency, and two years after that a Portuguese passport.

While migrants in most other European countries face a deliberately dissuasive obstacle course to get papers, resulting in many working illegally, in Portugal it is the other way around.

Immigrants are quickly absorbed into the legal economy, paying taxes and social charges straight away.

While the agricultural Alentejo region has been losing its people for decades, the population of the municipality that includes Sao Teotonio has gone up 13 percent in the last decade.

Migrant farm workers have brought life back to an area badly hit by the flight from the land.

With one of Europe’s most open immigration regimes, Portugal has seen its foreign-born population double in five years, partially due to South Asians who have come to work in farming, fishing and restaurants.

The influx has been encouraged by the socialist government, which has been in power since the end of 2015, but all this could change if the country shifts to the right after the March 10 general election.

Fewer than half a million in 2018, last year a million foreigners were living in Portugal — one in 10 of the population, according to provisional figures given to AFP by AIMA, the state agency for integration, migration and asylum.

Brazilians, with their long historical links to the country, remain the biggest contingent — some 400,000-strong — followed by the British and other Europeans.

But the 58,000 Indians and 40,000 Nepalis are already more numerous than people from Portugal’s former African colonies like Angola and Cape Verde.

Bangladeshis and Pakistanis now also figure in the top 10 of new arrivals.

“The main reason Portugal has seen the number of immigrants rise is because it needs them,” said Luis Goes Pinheiro, the head of AIMA, saying the country has Europe’s most ageing population after Italy.

Far from the “sea of plastic” of greenhouses around Sao Teotonio, Luis Carlos Vila also depends on foreign workers to pick his apples in an isolated corner of the northeast.

“I have no other choice,” he told AFP. “We have an elderly population and there are no more agricultural labourers.”

Six Indians were hard at work in his orchards in Carrazeda de Ansiaes. “I love Portugal,” said Happy Singh, a Punjabi Sikh in halting English. “The money is good, the work is good and the future is good. In India there is no future.”

Vila hires his foreign workers completely legally through employment agencies and sees in them a little of his own family history. “My father also had to emigrate (to France) to earn a living,” he said.

Even among the most traditional of Portuguese fishing communities like Caxinas near Porto — the living embodiment of the country’s strong maritime heritage — half of the crews are made up of Indonesians.

At the helm of his 20-metre trawler the Fugitive, Jose Luis Gomes — a skipper like his father and grandfather — is resigned to the fact that his compatriots no longer want to do this tough job when there are better salaries elsewhere.

Javanese fisher Saeful Ardani was working his fourth 18-month contract for Gomes.

Hired through a boat owners’ group, the 28-year-old told AFP that the “Indonesian fishermen who work here have no problems. And our families back home are reassured because we are not illegal.”

A country of emigrants throughout the 20th century, Portugal has become a destination for immigrants since the turn of the 21st.

“Whatever indicator you take, it is one of the most generous” countries in Europe when it comes to immigration, said Jorge Malheiros, a migration specialist at Lisbon University.

Since 2007, Portugal has been granting papers to all those who declare their earnings.

In 2018 the socialist government extended this to those who had entered the country illegally.

A new amendment in 2022 allowed foreigners looking for work a temporary six-month visa.

“Portugal’s laws are not perfect but they are better than a lot of countries with regressive policies,” said Timoteo Macedo, of the Immigrant Solidarity group.

While these laws have prevented the people smuggling tragedies that have happened elsewhere, and migrants living under constant fear of expulsion, it hasn’t stopped “people making money on the back of human misery”, Macedo added.

The authorities have dismantled trafficking networks in the Alentejo region, where farm workers were forced to live in unacceptable conditions.

Leaning on the counter of his cafe in Sao Teotonio, Mesch Khatri acknowledged that the influx of foreigners had brought new challenges.

“Before it was easier to earn your living, now there is more racism. The Portuguese don’t like it when there are 10 or 15 people living in a house and if they don’t speak Portuguese,” added his wife Ritu.

Julia Duarte volunteers in a charity shop right next to a centre where around 20 children are helped with their homework, only one of whom has a Portuguese name.

Originally from Alentejo, the 78-year-old worked in Lisbon before retiring back to Sao Teotonio. “I thought I would be able to enjoy my retirement in peace — then there was just an avalanche” of migrant workers, she said.

“Lots of people and lots of hustle, everyone looking for a job, for a place to stay…

“Then I realised that these were gentle people.”

Such is the demand that the anti-poverty NGO Taipa has changed its focus to help to integrate migrants.

“Ten or 15 years ago we were not ready for this,” admitted its head Teresa Barradas. “It is quite a big thing for a community that was more closed in on itself and not used to such big cultural differences.”

But the biggest problem for immigrants is the lack of homes, “particularly for families”, she added.

Portuguese law allows for family reunification, and “that plays a big role in tackling prejudice because you see that your neighbours are a family who have children at school with your own,” Barradas said.

Pinheiro, the head of the state integration agency, agrees. “Family reunification is extraordinarily important to guarantee the full integration and rooting of migrants, particularly in rural areas.”

Created late last year after the border police agency was wound up, AIMA inherited 350,000 outstanding regularisation applications.

In the capital Lisbon, there are noticeably more South Asian bicycle delivery riders than before.

During Friday prayers hundreds of Muslims queue to get into one of the two mosques in the narrow streets of Mouraria, the medieval Moorish quarter.

Its central street, the Rua do Benformoso, now has so many Bengali shops and restaurants that it is nicknamed “Bangladesh Street”, said Yasir Anwar, a 43-year-old Pakistani.

He arrived in 2010 without a visa after brief stays in Denmark and Norway. He lived under threat of expulsion until he managed to get his papers thanks to the change in the law in 2018.

After criss-crossing the city selling flowers in bars and restaurants, Anwar got a job with a restaurateur who taught him both the language and how to cook Portuguese food.

He is now waiting for Portuguese nationality — which he should normally get after five years of legal residency — and hopes one day to bring his wife and two children to join him.

“When I arrived there was nothing for us,” said Anwar, who now volunteers for Immigrant Solidarity. Since then “Portugal has become a good country for immigrants and welcomes them with open arms.”

Despite the recent rise of the far-right Chega party, polls show that “immigration is not regarded as a pressing issue in Portugal, and unlike the rest of Europe, the reaction to migration remains positive,” Pinheiro said.

Even if Chega, which was only formed in 2019, is polling close to 20 percent ahead of the election, immigration is for now only seventh in its list of manifesto priorities.

Nepalese cafe owner Ritu Khatri with her children in Sao Teotonio, Portugal
AFP
A young Muslim in a Portugal scarf queues to go to the mosque in 'Bangladesh Street' in Lisbon
A young Muslim in a Portugal scarf queues to go to the mosque in ‘Bangladesh Street’ in Lisbon
AFP
Muslims queue to enter a mosque in Lisbon's Mouraira neighbourhood
Muslims queue to enter a mosque in Lisbon’s Mouraira neighbourhood
AFP
Indian farm worker Happy Singh uprooting an old apple orchard in Carrazeda de Ansiaes in northern Portugal
Indian farm worker Happy Singh uprooting an old apple orchard in Carrazeda de Ansiaes in northern Portugal
AFP
Indonesia fishermen aboard the trawler 'O Fugitivo' off the village of Caxinas near Porto
Indonesia fishermen aboard the trawler ‘O Fugitivo’ off the village of Caxinas near Porto
AFP

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The Saikyo Bank Partners with nCino to Enhance Operational Efficiency and Customer-Centric Services

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GlobeNewswire

Published Feb 28, 2024  •  3 minute read

Japanese regional bank selects nCino to create a customer-driven mortgage lending experience by streamlining processes and systems onto a single platform

TOKYO, Feb. 28, 2024 (GLOBE NEWSWIRE) — nCino, Inc. (NASDAQ: NCNO), a pioneer in cloud banking for the global financial services industry, today announced that The Saikyo Bank, Ltd. (Saikyo), a $20B-asset regional bank in Japan, will implement nCino to improve operational efficiencies and customer convenience. Saikyo will start its single platform journey with nCino by introducing the technology to its mortgage operations.

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The adoption of nCino’s platform aims to streamline Saikyo’s mortgage business, from reception, screening, case management and electronic contracting to the execution of mortgage loan operations, allowing the Bank to improve efficiency and customer experience. Leveraging nCino’s platform, the Bank will be able to increase the time that employees spend with customers by reducing administrative tasks, as well as provide data-informed experiences to both the small- and medium-sized businesses and individuals Saikyo serves.

Saikyo chose to partner with nCino based on the company’s reputation of working with financial institutions worldwide. nCino’s ability to integrate the entire mortgage process, including customer experience, allows for thorough enhancement of business processes and customer convenience. Additionally, the flexibility provided by nCino’s platform can facilitate continuous system evolution to meet the changing needs and expectations of customers and employees. nCino’s ongoing investments in innovation and support were also valued in the selection process.

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Itsuki Nomura, Representative Director and Country Manager, Japan at nCino, reflected on the partnership, “We are honored to support The Saikyo Bank in realizing its vision of becoming a digitally enabled financial institution focused on helping its relationship managers to become ‘consultants’ to help solve clients’ business issues. nCino is being introduced in the mortgage area at this time, but we look forward to expanding at Saikyo to include unsecured loans for individuals, and commercial lending all on our single platform in the future.”

About nCino
nCino (NASDAQ: NCNO) is the worldwide leader in cloud banking. Through its single software-as-a-service (SaaS) platform, nCino helps financial institutions serving corporate and commercial, small business, consumer, and mortgage customers modernize and more effectively onboard clients, make loans, manage the loan lifecycle, and open accounts. Transforming how financial institutions operate through innovation, reputation and speed, nCino is partnered with more than 1,800 financial services providers globally. For more information, visit www.ncino.com.

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About Saikyo Bank

The Saikyo Bank is a regional financial institution headquartered in Shunan City, Yamaguchi Prefecture. Positioned as a bank that revitalizes the local community, values communication with its customers, and proactively anticipates and creates solutions for contemporary needs, The Saikyo Bank is committed to enhancing its product offerings and strengthening its services. For more information, please visit https://www.saikyobank.co.jp.

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Natalia Moose
[email protected]

This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally include actions, events, results, strategies and expectations and are often identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,” “projects,” “may,” “will,” “could,” “might,” or “continues” or similar expressions. Any forward-looking statements contained in this press release are based upon nCino’s historical performance and its current plans, estimates, and expectations, and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent nCino’s expectations as of the date of this press release. Subsequent events may cause these expectations to change and, except as may be required by law, nCino does not undertake any obligation to update or revise these forward-looking statements. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially including, among others, risks and uncertainties relating to the market adoption of our solution and privacy and data security matters. Additional risks and uncertainties that could affect nCino’s business and financial results are included in reports filed by nCino with the U.S. Securities and Exchange Commission (available on our web site at www.ncino.com or the SEC’s web site at www.sec.gov). Further information on potential risks that could affect actual results will be included in other filings nCino makes with the SEC from time to time.


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OrCam to spin off hearing activity ahead of IPO

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Israeli company Orcam, which develops devices to assist those with visual and hearing impairments, is implementing another organizational change and spinning off its hearing division into a separate company.

This will enable OrCam, which was founded by Mobileye Global Inc. (Nasdaq: MBLY) founders Amnon Shashua and Ziv Aviram, to become a profitable company and go for a Wall Street IPO when the window of opportunity opens. OrCam’s hearing assistance activities will attempt to raise $10 million and become an independent company that could be sold to one of the tech giants. 

As part of the reorganization, OrCam is expected to lay off 50 employees from the visual division while the R&D team from the hearing division, which also numbers about 50, will become part of the new company. OrCam has 320 employees comprised of 250 employees in its Jerusalem development center and 30 sales staff in North America, Europe and Asia. After the split OrCam will remain with 220 employees.

OrCam Hear is responsible for one the company’s newest and most interesting products, which aims to produce AI based devices to assist hearing impairments. The Hear application allows the hard of hearing to focus with a digital listening device on an individual speaker when attending social events with a lot of background noise.

The application includes a microphone connected to a telephone, an app for the phone and special headphones, which allows the user to mark the speaker on the screen and thereby focus their hearing device onto the voice of the chosen speaker. In this way, the user can navigate between the speakers and hear their voices clearly, while filtering out background noise at events such as weddings, family meals and parties.

Ahead of an IPO and acquisition

OrCam is encouraged by the positive feedback received on the Hear product at the CES electronics conference in the US last month and the response by partners and experts in the audiology industry. The company feels confident that the spinoff and raising independent capital will allow the continued development of the product which may in the future attract an acquisition by a tech giant. Potential buyers could include a smartphone manufacturer like Apple or Samsung, which strive to equip their advanced phone models with features that held monitor medical measurements and assist users with handicaps.

So behind the spinoff is the plan to turn OrCam into a profitable company ahead of a flotation, and to develop the hearing division in preparation for an acquisition by a technology giant.







The current mixing of all OrCam’s products into one company creates a loss-making concern that deals in many products that are not related to each other. The company’s products for the visually impaired and dyslexic, such as “My Eye” and “Read”, which help with reading, spatial understanding and writing, already produced $65 million in annual revenue in 2023, up 25% from 2022, and expected to rise to $100 million in 2025.

To attract additional investors

The same investors will stay behind the company that is spun off including Shashua and Aviram as well as Harel, Clal Insurance, Leumi Partners, Meitav Dash, and tech investment funds like Intel Capital, Aviv Ventures and Big Tech 50. However, OrCam’s hearing division hopes to attract additional investors to raise $10 million at a company valuation of several tens of millions of dollars.

For potential investors, Hear has been presenting a road map that includes upgrading from the app’s current ability to choose four speakers to eight speakers, and subsequently the system’s integration into the chips of telecoms and openness to all types of headphones and hearing aids. Currently, the product is in the beta stage, with the company expecting to receive marketing approval from the US Food and Drug Administration (FDA) in the coming months, which will allow it to start selling the product. The company tells investors that the market is a “blue ocean,” meaning it lacks serious rivals offering a similar experience.

In the first stage, OrCam’s Hear tech team will move to the new company and over the next three months a VP R&D and other VPs will be appointed as well as a CEO

OrCam is currently managed by CEO Elad Serfaty. Ziv Avraham and Amnon Shashua serve as co-Chairmen and cofounders.

Improved products

As one of Israel’s most veteran companies in AI, Jerusalem-based OrCam has undergone changes and upheavals following developments in the field. At the end of 2022, “Globes” reported that the company fired 16% of its 380 employees, after switching its flagship product in visual assistance to processing data in the cloud rather than through a local processor.

OrCam chose to improve its product through compressing the images it received and conveying them to a cloud to process them using natural language models, such as those of AI21, another company founded by Shashua, and transmit back to the user the reading of the text, intelligent contextual explanations while even creating new texts such as writing a summary or offering explanations for concepts and phenomena. Due to this, about 60 employees involved in the development of the processing on the device itself, left the company at the end of 2022.

After a year of integrating language processing models developed by the company and AI21 Labs, OrCam’s flagship product, MyEye3 was launched. The product allows a reading aid to be worn over spectacles that not only reads books, signs, product labels and other texts, but also gives the user explanations and provides them with context in response to questions.

A similar product, OrCam’s Read3, allows users with dyslexia or reading problems to scan texts, understand them and ask questions about them. Each of these product categories is responsible for about half of the company’s revenue.

Published by Globes, Israel business news – en.globes.co.il – on February 28, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.


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For Black workers, progress in the workplace but still a high hill to climb

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Ali and Jamila Wright, co-owners of Brooklyn Tea.

Courtesy: Brooklyn Tea

Looking at the state of Black employment in America tells a mixed story: Much progress has been made in the age of the Covid-19 pandemic and beyond, but much is left to be done.

In the nearly four years that have passed since the pandemic upended the U.S. economy, the advancement for Black people has been unmistakable: a surge in earnings that outdid the gains for both white and Hispanic people, an unemployment rate that has fallen more than a percentage point from where it stood in January 2020 and a general sense that the collective consciousness has been raised regarding inequality in the workplace.

Yet, there are still racial discrepancies in terms of earnings. Black workers are still notably underrepresented in some professions, particularly high-end tech, and efforts to address some of these issues have fallen out of favor amid criticism that they have gone too far and are inefficient.

On balance, though, there’s a feeling of optimism that real progress has been made.

“This recovery really stretched the limits of what policymakers thought was possible for Black workers,” said Jessica Fulton, interim president at the Joint Center for Political and Economic Studies, a Washington, D.C.-based think tank that focuses on issues for people and communities of color. “We were in a situation where folks accepted that Black unemployment was going to always be high and there was nothing that they could do about it. So I think this is an opportunity to continue to push the limits of what’s possible.”

When looking at the data, the numbers are encouraging.

The Black unemployment rate in January was 5.3%, up a touch from December but still near the all-time low of 4.8% hit in April 2023. Black employment in the month totaled nearly 20.9 million people, up 6.3% from February 2020, the month before the pandemic hit, according to the U.S. Bureau of Labor Statistics.

From a pay standpoint, the numbers are even more encouraging. For Black workers, weekly before-tax earnings as of the end of 2023 have risen 24.8% since the first quarter of 2020. That’s more than the 18.1% increase for white people and the 22.6% rise for Hispanics during the period. Of the groups the BLS measures, only Asians, at 25.1% had seen bigger pay gains.

Still, the unemployment rate is lower for white people, by a wide margin at 3.4% in January.

“High unemployment for Black workers is a solvable problem,” Fulton said. “There are challenges we need to address. We need to figure out how to address discrimination, we need to figure out how do we address unequal access to high-quality workforce development. We need to figure out how to address labor loopholes.”

Focus on tech

One of the areas where the greatest discrepancies exist for underrepresented groups is technology, where Black people and others hold few positions and even fewer are in management roles.

The situation is well-documented. While Black people make up about 12% of the U.S. labor force, they hold just 8% of all tech jobs and a mere 3% of executive positions, according to a McKinsey & Company study released in 2023.

There are several groups working to address the disparity, with varying levels of success.

Those involved tell similar stories. Black workers are interested in tech and believe there are opportunities. Companies don’t understand the real-world benefits of a diverse workplace. Opportunities are limited amid a backlash against the diversity, equity and inclusion push.

“Diversity is not just a warm and fuzzy feeling. You are proven by numbers to get a better return on investment,” said Autumn Nash, a software engineer at a major tech company in the Northwest that she asked not to be named because the company hadn’t given permission for this article.

Nash, who is Black, holds a prominent position in tech, where she has worked for well over a decade while both climbing the corporate ladder and trying to assist those in her cohort achieve success as well.

Autumn Nash

Courtesy: Autumn Nash

Along with her work responsibilities, she’s involved with several organizations looking to help others achieve in tech. They include Rewriting the Code, a global network founded in 2017 that focuses on women, and MilSpouse Coders, which assists military spouses and where Nash serves as education board chair.

Companies that build diversity the right way prosper, she said. Those that don’t have suffered on a tangible level in the form of products that are inadequate and data bases that don’t reflect real-world dynamics.

“The lack of diversity has left very big, wonderful tech companies with egg on their face, because they’ve had premature products,” Nash said. “One of the best ways to fight data bias is with diversity, and it’s diversity in all different backgrounds. If you look at the boards of most big AI companies, do you see diversity there?”

Indeed, instances of bias along racial lines is still seen as a significant problem, particularly in tech.

Some 24% of tech workers said they experienced racial discrimination at work in 2022, up from 18% the prior year, according to a survey by tech career marketplace Dice. While some companies have changed their corporate culture, many others remain behind.

“There are some good stories out there,” said Sue Harnett, founder of Rewriting the Code. “Goldman Sachs and Bank of America do an outstanding job, not only trying to recruit, but actually bringing them on board and converting them from being interns to full-time employees.”

Rewriting the Code collaborates with workers and companies to address diversity issues. Specifically, the organization focuses on college women and follows them through the first six years or so on their career path.

On the downside, Harnett still sees too many token measures that don’t go far enough.

For instance, she said some companies focus on Historically Black Colleges and Universities, which only goes so far in being able to find a capable and diverse workforce.

“I cringe when I talk with a company and ask them about their diversity recruiting strategy and their answer is they work with HBCUs,” she said. “That can be part of the strategy, but it shouldn’t be the only strategy.”

Harnett is sympathetic, though, with how tough the job can be.

“The amount of money that you have to put in to try and find this talent can be overwhelming, but I think there are solutions out there, so I’m personally optimistic,” she said. “I wish we made more progress by now. But the companies are ones that will drive this.”

The small business view

Sometimes the answers are found closer to home.

Ali and Jamila Wright are co-owners of Brooklyn Tea, a small business based in the New York City borough that has expanded to Atlanta and is looking for more growth opportunities.

From a hiring strategy, they focus almost solely on underrepresented groups who have a variety of employment needs. For instance, they hire actors in between shows or other workers in other professions who have been laid off and need a bridge until they find other employment.

Ali and Jamila Wright, co-owners of Brooklyn Tea.

Courtesy: Brooklyn Tea

“All of our employees are people of color,” Ali Wright said. “We have people of color, we have people that are binary or nonbinary. So being that we are diverse ourselves, it just makes it easier to hire people that we know are systematically disadvantaged.”

Brooklyn Tea has been a beneficiary of a relatively booming small business environment, particularly for Black and Latino entrepreneurs.

Black-owned businesses as a share of Black households surged from 5% to 11% from 2019 to 2022, the fastest pace in 30 years, according to the Small Business Administration. The surge has come as the number and dollar value of loans to Black-owned businesses has more than doubled and as the share of the SBA’s loan portfolio to minority-owned businesses has jumped to more than 32% from 23% since 2020.

However, race remains a tenuous dynamic in the U.S., and there’s always the possibility that progress can be rolled back, particularly considering a growingly hostile attitude toward DEI initiatives. Critics say the approach has resulted in a misallocation of resources, particularly following controversies at Ivy League schools.

“From 2020 until 2022, that’s when we all felt the most potential and the most hope, even in the midst of a pandemic,” Jamila Wright said. “We were receiving so much funding and just collaboration from corporate entities, and that attack on DEI has impacted some of the businesses, including ours.”

But the controversies have mainly triggered a reexamination of how to achieve diversity, not a backdown on initiatives in general.

For instance, a Conference Board survey in December found no human resources executives were planning to scale back diversity efforts. Still, Jamila Wright said she is cautious about the future.

“I think history has taught us that nothing, when it comes to race in America, blows over quickly,” she said. “So it’s just us trying to figure out how to be savvy in situations where we shouldn’t have to be savvy. That has been something that we have to become equipped to do.”

CORRECTION: Autumn Nash is a software engineer at a major tech company in the Northwest. A representative for her firm misstated her name.

Bonawyn Eison: Removing barriers will lead to reform

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Getting to Know You, Frazer Fearnhead, founder, Blue Silver

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In this exclusive Q&A with Frazer Fearnhead, the visionary founder of Blue Silver, delve into how he empowers SME owners to transition their businesses into assets, liberating them from being mere operators and enabling financial and lifestyle freedom through strategic transformation.

Many SME owners work long, stressful hours. They may be business owners but unfortunately, the reality, in many cases is that they have simply created a job for themselves, and the business would not exist if they weren’t working.  In a nutshell, I help them transform their company into an asset so the business works for them, rather than them working for the business. I do that by helping them unlock the hidden profits in their business using a 7 step system then, scale it, systemise and automate it so they can attain both financial and lifestyle freedom.

 What was the inspiration behind Blue Silver ?

I have previously built, sold or franchised several companies which taught me how to build systems and create a valuable asset that can be sold or can continue to run without the owners involvement.

I started my last company in 2011 and I made the mistake of not creating systems from the start. It was a complex business model and I struggled for years to build a team and automate it so I could step away.  It took a long time to accomplish, and we invested several million to do so.  As a result of the investment in staff and tech, cashflow was tight, but we were on the brink of signing a couple of deals that would have quadrupled the company’s revenue overnight.

Then the pandemic happened, the deals went off the table, and we basically were unable to generate any new income for over 12 months. It crippled the business and in the end we decided to put it into administration.

I’d put my heart and soul into that company for 10 years with little reward with the intention of selling it one day. I ended up losing it. It was a painful experience and I struggled to bounce back.

But for a long time I’d had a dream of living in Mallorca. I’d put on hold for years whilst I tried to transition my way out of the company and employ others to run it. The only upside of the company going into administration was there was no longer any reason to put off moving to Mallorca.

I had no desire to build another company employing lots of staff. So I decided the best thing I could do when we moved here was to create a simple online business where I could mentor like-minded business owners. I could help them achieve financial and lifestyle freedom by sharing what I’ve learned on my 23 year journey as an entrepreneur, together with all the insights I’ve gathered from decades of studying business strategy, personal development, philosophy and psychology.

Who do you admire?

I admire people with a strong vision and purpose to improve the world and the confidence to do what they believe is right regardless of others’ opinions. There are many people I could list but the first two that spring to mind are Elon Musk (as he’s always in the news and I watched a documentary about him recently) and Ayn Rand who has been hugely influential for many years in shaping my philosophical perspective on life.

Why?

Musk because from what I understand is totally motivated by a desire to help humanity and the world and despite his wealth does not appear to be driven by financial gain. He’s put his own money where his mouth is time and time again on hugely ambitious projects that others thought impossible – and proven them wrong. He is undoubtedly the greatest entrepreneur of the century.

And Ayn Rand for her philosophy that in order for humans and society to flourish, individual rights, logic, reason, free markets must be given pre-eminence and government interference and taxation should be kept to a minimum.   I’m not sure I would have liked her as a person though. She was not apparently the most kind-hearted and empathetic of people.

Looking back, is there anything you would have done differently?

Like any entrepreneur I am comfortable with taking risks. And sometimes they don’t pay off.  I have made plenty of mistakes. And sometimes things have gone wrong. Badly wrong.

I am eternally optimistic. I always see the best in people and I always think things will turn out fine. My main weakness is I’m not good at foreseeing potential risks.

So, a recurring problem I’ve experienced throughout my entrepreneurial journey has been trusting or relying on people I should not have trusted and not taking proper steps to protect myself.   That was, combined with Covid, the fundamental underlying reason why my last company was put into administration.

What defines your way of doing business?

Transparency integrity and going the extra mile: doing what you say you will do and delivering more than what you promised.  I have always done my best to live up to that in both personal and business life and I believe I have, to a large extent, done so.

I deeply regret that I was no longer able to do so for our investors and clients when the board voted to put the company into administration.

What advice would you give to someone starting out?

Well, I could be here all week on this one, but I’ll just keep it to four key pieces of advice.

Firstly, make sure you choose the right sort of business – what I call a ‘Freedom Business’. You will inevitably have to work hard initially but if you don’t choose a business that can be scaled, systemised and automated, you’ll be tied working to it forever.

The more your business has the following elements present, the greater your chances of successfully scaling it.

  • Controlled by you
  • High barrier to entry
  • Proven need
  • Time/Income separation
  • Leverage
  • Scalable customer base

Secondly, life coaches and others tell you to ‘follow your passion; do what you love’. But I think in 99% of cases that’s terrible advice.

However much you like singing or playing football (or whatever your passion is), unless you are genuinely the one in a million who combines  exceptional talent, with  extreme dedication and also good fortune to boot, you are not going to reach your desired superstar status.

Whilst it’s good (perhaps essential) to be passionate about what you do and have a purpose for doing it that you believe in, it rarely makes sense to start a business around one of your ‘passions’ or hobbies unless you are happy for it to remain a lifestyle business.  If you are happy to be a tennis coach or sing in bars and restaurants then great by all means follow your passion. But bear in mind that if you turn your passion into a full-time occupation that you have to work on 50 hours a week to survive, it’s likely to become a chore and won’t be your passion for much longer.

The Law Of Compensation states that you will be compensated according to the need for what you do. You will most definitely not be compensated well just because you decide you want to do something you love. The harsh reality is nobody cares what you love doing or that you want to earn money from it.

If they don’t need what you provide, then they will not exchange their hard-earned cash for your goods or services. Research has shown that 90% of new businesses fail because they are based on fulfilling the owners’ desires rather than providing for external market needs.

I would suggest it’s preferable to start a business and make it successful and you will soon find you become passionate about it. So instead do your research and make sure there is a genuine need for something you would be happy to spend your time working on. Then as you learn to become very good at it success (and the passion for it) will follow.

Thirdly, don’t try to reinvent the wheel. It’s too hard (believe me I’ve done it).

There’s no need to try and invent something completely new.   There are plenty of opportunities to improve on what is already working well and do it better – gaps in service, unsolved problems or emotional disconnects.

Keep your mind open for opportunity and start to notice products and services that could be improved.

As Isaac Newton said when he asked how he accomplished his achievements and said, “I stood on the shoulders of giants.”  Success can be modelled.  You can look to other industries or other countries for inspiration.  Find out what makes similar businesses successful and model (not copy) what they do.

Fourthly: always aim to exceed your customer’s expectations. This is a lesson I learned from Tony Shieh the CEO of Zappos. Don’t just leave your customers satisfied. Surprise them with better-than-expected service, quality and bonuses. Not only does it make for happy customers, it leads to happy staff who deal with happy customers and, as a result, love working for your company and stay loyal… and it will grow your business exponentially by word of mouth referrals.



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Earnings call: MasterBrand reports Q4 decline but strong operational performance By Investing.com

Post By Business


© Reuters.

MasterBrand Cabinets, Inc. has reported its fourth quarter and full year financial results for 2023, revealing a 14% decline in net sales for the quarter, with figures reaching $677 million. Despite this downturn, the company has demonstrated robust operational performance, delivering an adjusted EBITDA of $86 million and a margin of 12.7%. MasterBrand’s strategic focus on continuous improvement and cost-saving initiatives has helped to mitigate the effects of reduced volumes and average selling prices.

Additionally, the company has exceeded its free cash flow expectations, achieving $33 million in the fourth quarter and $348 million for the full year. Looking forward, MasterBrand anticipates growth in the US single-family new construction market but expects the repair and remodel market to remain soft. The company’s ticker symbol was not provided in the context.

Key Takeaways

  • Q4 net sales fell by 14% year-over-year to $677 million.
  • Adjusted EBITDA stood at $86 million with a margin of 12.7%.
  • Free cash flow exceeded expectations at $33 million for Q4 and $348 million for the full year.
  • The company anticipates mid-single-digit growth in the US single-family new construction market for 2024.
  • US repair and remodel market and Canadian markets are expected to see declines.
  • MasterBrand plans to continue investing in growth and operational efficiencies in 2024, with a focus on technology and customer experience enhancements.

Company Outlook

  • Mid-single-digit year-over-year growth expected in the US single-family new construction market for 2024.
  • US repair and remodel market to experience mid-single-digit declines; Canadian markets expected to remain weak.
  • Overall market demand projected to be down low-single digits year-over-year in 2024.
  • Net sales for 2024 are projected to be down low-single digits to flat year-on-year.
  • Adjusted EBITDA for 2024 forecasted to be between $370 million to $400 million, with a margin of approximately 14% to 14.5%.
  • Capital expenditures for 2024 estimated to be between $55 million and $65 million.
  • Adjusted diluted earnings per share for 2024 expected to be in the range of $1.40 to $1.60.

Bearish Highlights

  • The decline in net sales for the fourth quarter of 2023.
  • Expected softness in the US repair and remodel market and weak performance in Canadian markets.
  • Overall market demand expected to be down in 2024.

Bullish Highlights

  • Strong operational performance with significant cost savings.
  • Free cash flow surpassing goals, with expectations to continue exceeding net income.
  • Introduction of new products and channel-specific packages to offset market challenges.
  • Investment in technology and digital infrastructure to improve efficiency and customer experience.

Misses

  • Capital expenditures for 2023 slightly exceeded guidance due to accelerated spending at $57.3 million.

Q&A Highlights

  • Dave Banyard discussed the company’s response to trade-down behavior and promotional strategies.
  • MasterBrand is monitoring transportation costs and tariffs and is prepared to navigate these challenges.
  • Confidence in the company’s ability to maintain adjusted EBITDA margins and invest for future growth in 2024.
  • The success of the Mantra product line was highlighted, indicating strong performance despite competitive pressures.

MasterBrand Cabinets’ earnings call has outlined both the challenges and strategic responses for the upcoming year. The company’s focus on operational efficiency, cost savings, and technological investments positions it to navigate a potentially softer market in 2024. With a strong balance sheet and financial flexibility, MasterBrand is poised to continue its pursuit of growth and market share.

InvestingPro Insights

MasterBrand Cabinets, Inc.’s recent financial results have prompted a closer look at the company through various analytical lenses. According to InvestingPro data, MasterBrand has a market capitalization of $1.96 billion, reflecting its scale within the industry. The company’s P/E ratio, as of the last twelve months ending in Q3 2023, stands at a relatively modest 9.63, suggesting that the stock could be attractively valued compared to earnings.

InvestingPro Tips highlight that management has been aggressively buying back shares, a sign of confidence in the company’s value and future prospects. Additionally, MasterBrand’s high shareholder yield is indicative of its commitment to returning value to its investors. These actions are particularly noteworthy given the company’s strong free cash flow, which aligns with the reported robust operational performance and exceeded free cash flow expectations in the last quarter.

For investors looking for additional insights, there are 13 more InvestingPro Tips available that could provide deeper analysis and aid in making informed decisions. These tips are accessible through InvestingPro’s dedicated section for MasterBrand at https://www.investing.com/pro/MBC. Moreover, users can take advantage of a special offer by using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, opening the door to a wealth of financial data and expert analysis.

Full transcript – MasterBrand (MBC) Q4 2023:

Operator: Welcome to MasterBrand’s Fourth Quarter and Full Year 2023 Earnings Conference Call. During the company’s prepared remarks, all participants will be in a listen-only mode. Following management’s closing remarks, callers are invited to participate in the question-and-answer session. Please note that this conference call is being recorded. I would now like to turn the call over to Farand Pawlak, Vice President of Investor Relations and Corporate Communications.

Farand Pawlak: Thank you, and good afternoon. We appreciate you joining us on today’s call. With me on the call today are Dave Banyard, President and Chief Executive Officer; and Andi Simon, Executive Vice President and Chief Financial Officer. We issued a press release earlier this afternoon disclosing our fourth quarter and full year 2023 financial results. If you do not have this document, it is available on the Investors section of our website at masterbrand.com. I’d like to remind you that this call will include forward-looking statements in either our prepared remarks or the associated question-and-answer session. Each forward-looking statement contained in this call is based on current expectations and market outlook and is subject to certain risks and uncertainties that may cause actual results to differ materially from those currently anticipated. Additional information regarding these factors appears in the section entitled forward-looking statements in the press release we issued today. More information about risks can be found in our filings with the Securities and Exchange Commission under the heading Risk Factors in our full year 2022 Form 10-K and updated, as necessary, in our subsequent 2023 Form 10-Qs, which are available at sec.gov and masterbrand.com. The forward-looking statements in this call speak only as of today and the company does not undertake any obligation to update or revise any of these statements except as required by law. Today’s discussion includes certain non-GAAP financial measures. Please refer to the reconciliation tables, which are in the press release issued earlier this afternoon and are also available at sec.gov and at masterbrand.com. Our prepared remarks today will include a business update from Dave, followed by a discussion of our fourth quarter and full year 2023 financial results from Andi, along with our initial 2024 financial outlook. Finally, Dave will make some closing remarks before we host a question-and-answer session. Now with that, let me turn the call over to Dave.

Dave Banyard: Thanks, Farand. Good afternoon, everyone. We appreciate you joining us here today for our fourth quarter and full year 2023 earnings conference call. This call marks not only the end of our 2023 fiscal year, but the end of our first year as a standalone public company. And I’m pleased to say, we finished the fourth quarter and full year stronger than anticipated. Net sales in the fourth quarter were $677 million, a 14% decline over the same period last year. This decline was at the favorable end of our expected range due to the relative strength of our customers servicing the new construction markets. Despite this favorable performance against internal expectations the year-over-year net sales decline was driven by lower volume due to continued overall softer end-market demand. From an operational standpoint, the company continued to perform well. We delivered adjusted EBITDA of $86 million in the fourth quarter and a related margin of 12.7%, 20 basis points higher than the same period last year. Our ability to deliver another quarter of margin expansion despite lower net sales on a year-over-year basis was due to continued disciplined use of our business system, The MasterBrand Way. Cost savings from continuous improvement efforts and strategic initiatives more than offset the negative impact of lower volumes and lower average selling price from trade downs and the return of normal seasonal promotional activity. Our strategic initiatives of Align (NASDAQ:) to Grow and Lead Through Lean continued to deliver strong year-over-year savings, specifically in the areas of supply chain, productivity and quality management processes. I’ll provide you with more details on this shortly. Our focus on working capital improvements helped us deliver another quarter of better-than-expected free cash flow of $33 million. Further inventory reductions, driven by our supply chain team and common box efforts, as well as improved collection systems and processes, drove this improvement. Our strong free cash flow performance in the fourth quarter was despite our decision to accelerate certain capital expenditures and benefit from discount opportunities. We were able to pull forward the spending due to the continued strength of operations and our constant readiness to execute on future capital projects. In total, full year 2023 free cash flow was $348 million, 191% of net income, surpassing our goal of delivering annual free cash flow in excess of net income. In addition to these impressive operating results, we continue to improve on our already-strong safety record. I’m proud to say that in 2023 we achieved an OSHA recordable rate of 0.84, a 19% improvement year-over-year. While we’re proud of this industry-leading rate, our goal remains zero. Keeping our associates safe is core to our culture. As you can see a strong finish to an exceptional first year, none of which would have been possible without our dedicated associates. So I’d like to take a moment to recognize them. Their efforts, coupled with the tools of The MasterBrand Way, have helped drive engagement and a culture of problem solving at all levels of the organization. This culture allows associates closest to the work to best understand the challenges to bring this forward and address them. This can be in the form of a formal kaizen event or simply using the proven tools in our toolkit. In 2023, we once again saw the impact of this approach on our financial performance, with roughly $50 million of continuous improvement savings in the year. In addition to these savings, our associates continue to unlock hidden capacity at our facilities. This capacity and further advances in our common box initiative allow us to flex operations and align our manufacturing network with end-market demand in 2023, which help support our strong decremental adjusted EBITDA margin performance. Beyond financial and operational benefits, we look at lean as the ultimate engagement tool. When associates are leading change within their own plants and they see their decisions in action, they feel empowered, which drives higher engagement, and our engagement score reflects this. On a semi-annual basis, we completed an employee satisfaction survey and our satisfaction score continues to improve and outperform the manufacturing benchmark. While we are proud of these results in 2023, we believe we can deliver greater CI savings and become an even better place to work in the coming year. On that note, I’d like to speak about our plans for 2024, specifically how end markets served by our customers finished last year, and then demand environment we expect for 2024, along with the opportunities we have to invest in growth and drive operational efficiencies to achieve the long-term financial targets we introduced at our 2022 Investor Day. US single-family new construction was a bright spot in the fourth quarter of 2023, with relative strength compared to normal seasonality. We saw improving demand within some segments and regions throughout the fourth quarter, specifically large production builders. So much so that we kept a few facilities online for our anticipated two-week holiday shutdown. Declining mortgage rates and less interest rate volatility, along with a solid inventory of spec homes, has helped drive demand in the single-family new construction market. Large production builders in particular were able to capitalize on this pent-up demand for housing and we’ve seen this strength continue into the first quarter of 2024. We expect to see this strength to continue through the year resulting in mid-single-digit year-over-year growth in 2024 in the new construction market, with large and medium builders performing the best. The demand these customers are seeing points to the fact that there is an underlying need for housing, even in the current interest rate environment. While there could be upside to this demand forecast, we are also cognizant that builders may see constraints in land and labor, along with potential for some supply chain disruptions in certain categories. We think our view of the market and single-family new construction is balanced between the potential demand and the potential constraints. Overall, we’re optimistic about new construction as we saw momentum develop at the end of 2023 and carry forward into 2024. We think recent indicators validate the underlying demand in the housing market from years of underbuilding, which bodes well for our current and long-term outlook. As for our dealer and retail customers who primarily service the repair and remodel market, performance followed a similar trajectory to prior quarters with demand down in the mid-teens year-over-year. This demand environment showed up in both our retail and dealer channels. While the fourth quarter is usually the softest quarter for repair and remodel due to normal seasonality, we believe this market remains down as consumers are prioritizing other spending and being more thoughtful of large ticket items in general. We continue to see consumers look to lower their total project costs, extend decision lead time and choose fewer features in their orders. Accordingly, we expect to see this portion of the market remain softer in the near term as we annualize these impacts, particularly in the first quarter of 2024. In total, we expect the US repair and remodel market for cabinets to be down mid-single digits for 2024, with more significant year-over-year declines early in the year as consumers remain cautious about spending, particularly on larger ticket items. In Canada, both the new construction and repair and remodel markets remained weak through the fourth quarter and experienced double-digit declines. We currently expect to see soft end-market demand continue in Canada with the market being down high-single digits year-over-year in 2024. This outlook is based on new housing starts being meaningfully lower and repair and remodel activity being down mid-single digits year-over-year. Taking into account the dynamics we’re seeing in new construction and repair and remodel markets across North America, we would expect our overall market demand to be down low-single digits year-over-year in 2024. Andi will provide more color on our expected performance relative to this demand environment later in the call. Our assumptions factor in a moderate reduction in interest rates later in the year, which based on recent Federal Reserve commentary, appears probable. The key factors for us in our modeling are rate stability, which we are seeing today, and future rate reductions, which we have modeled in a similar fashion to the Fed commentary. With that environment, we expect a gradual improvement in existing housing turnover, along with a solidifying of demand levels for new construction as the year progresses. We also expect to experience a lag effect as smaller ticket R&R products will pick up sooner than our larger ticket products. While 2024 looks to be a transitionary year from a demand standpoint overall, we think the current rate trajectory coupled with the long-term gap in housing supply will bode well for our end markets as we move through 2024 and beyond. Given this market outlook, we are looking to build on the momentum we created in 2023 with our strategic initiatives and position ourselves for long-term future demand. Those of you that attended our 2022 Investor Day or watched the replay, you’ve heard me speak about the positive flywheel effect of our tools and culture and the competitive advantage it provides us. The financial and operational performance we exhibited in 2023 is evidence that this algorithm is working and we’re ahead of schedule on our long-term targets. Our operations continue to mature with a strong pipeline of continuous improvement initiatives for 2024. As we improve operations and drive cost out of the organization, we have more bandwidth to focus our toolkit on growth and reinvesting in the business. Now I’d like to provide a little more detail on both these areas and the opportunity they present in 2024 and beyond. As I discussed on our last earnings call, MasterBrand’s common box initiative and more standard work across the plants is allowing us to improve efficiency in many areas. The newest area of opportunity being our quality processes. As part of our Tech Enabled initiative, we’re implementing technology to inspect product quicker and with a higher degree of accuracy. Since our last call, we’ve already launched some pilot programs. The technology being deployed provides both preventative and detective quality control, helping reduce quality issues and identifying them should they occur. Today, maintaining our quality standards require significant human decision-making. Once fully implemented, we believe these enhanced processes, automate many of these decisions, allowing for even greater productivity within our operations. Similar to our RFID deployment, this is another example of how our Tech Enabled initiatives can use proven technology and continue to drive efficiency and better outcomes in the organization. Utilizing these savings, we’re increasing our investment in the business for growth. As part of our Tech Enabled initiative, our digital and technology team rolled-out a new customer portal in the fourth quarter, designed to improve the connection between us and our channel. The new MasterBrand Connect was built on industry-leading software and it will provide our sales team with a comprehensive customer view, including orders, cases and more. For our customers, it will ensure accurate order tracking, invoice access and a marketing material repository fostering a seamless buying experience. The rollout of this portal is well underway and we’re making good progress on getting our dealers and distributors on this application. At the same time, our digital infrastructure team continues to make progress on cloud migration efforts. Implementing modern tools in this arena further expands the capabilities of any overlaying platform, providing near real-time data across multiple metrics both to our team and to our customers. In 2023, we made significant progress in delivering net near real-time data internally, which has allowed our teams to shorten the timeline for continuous improvement projects, both in the planning phase and the execution phase. In the past, we had to dig through various systems to find the data we needed to solve a problem, which often took weeks. Today, we can find the same answers in hours, and in many cases, minutes. As we continue to improve the functionality of our portal, we believe the improved experience will ultimately make MasterBrand easier to do business with and enable our customers and ourselves to gain share and outgrow the market. The additional investments we made in 2023 in our Tech Enabled initiative had increase the pace of change across our organization. As we absorb that change culturally, we want to keep driving forward. Given our outlook for the market and our internal outlook on performance which Andi will go into detail on in a moment, we’ve decided to continue the higher pace of reinvestment in our business in 2024. We have great momentum and want to stay ahead of the eventual improvements in demand by making these additional investments now. Now, I’ll turn the call over to Andi for a more in-depth discussion of our financial results and additional details on our 2024 outlook.

Andi Simon: Thanks, Dave. I’ll begin with an overview of our fourth quarter financial results and I’ll touch briefly on our full-year 2023 financial highlights. Lastly, I will provide our thoughts around 2024 and our full-year outlook. Fourth quarter net sales were $677.1 million a 13.7% decline compared to $784.4 million in the same-period last year. Our top line performance was primarily the result of expected volume declines in the market along with a slight softening in our net ASP, largely due to continued trade-down activity and the return of anticipated targeted promotions. Gross profit was $223.1 million in the fourth quarter, up 3.8% compared to $215 million in the same period last year. Gross profit margin expanded 550 basis points year-over-year from 27.4% to 32.9%. This year-over-year margin expansion was driven by consistent execution on MasterBrand’s strategic initiatives specifically, supply chain efforts, continuous improvement and cost actions, which more than offset the effects of reduced volume, trade downs and personnel inflation, including variable compensation. Similar to last quarter, gross profit again benefited from some discrete items in the period. Most notably, we received the final insurance proceeds of $3.2 million related to the tornado damage sustained at our Jackson, Georgia facility earlier in the year. Selling, general and administrative expenses were $152.4 million, 5.5% lower compared to the same period last year. The absence of corporate allocations from Fortune Brands (NYSE:) and lower outbound freight and commissions due to volume declines more than offset personnel inflation, cost of being a standalone company and increased investment in our strategic initiatives, particularly Tech Enabled. Net income was $36.1 million in the fourth quarter, a 134.4% year-over-year increase compared to $15.4 million in the same-period last year. This increase was primarily driven by higher operating income due to a $20.4 million asset impairment charge in the prior year quarter that did not reoccur. This coupled with lower year-over-year restructuring charges, more than offset higher interest expense in the quarter compared to the prior year. 2023’s restructuring charges relate to our decision to exit an idle facility and the rightsizing of our Canadian manufacturing network, resulting in a $6 million restructuring charge in the fourth quarter as compared to $14.2 million in the prior year quarter, related to various market and footprint capacity adjustments towards the end of 2022 as demand softened. Interest expense was $15.3 million in the fourth quarter compared to $2.2 million in the same period last year. This interest expense relates to debt necessary to fund the dividend to Fortune Brands at the time of the spin-off. Income tax was $7.1 million or a 16.4% effective tax rate in the quarter compared to $4 million or a 20.6% rate in the fourth quarter of 2022. Please keep in mind the fourth quarter tax rate is the relevant rate equating to the difference between the prior quarters year-to-date rate and the actual annual effective tax-rate. Diluted earnings per share were $0.28 in the fourth quarter of 2023 based on 129.9 million diluted shares outstanding, an increase from diluted earnings per share of $0.12 in the fourth quarter of last year based on 129.1 million diluted shares outstanding. Adjusted EBITDA was $85.8 million compared to $97.8 million in the same period last year. Adjusted EBITDA margin expanded 20 basis points to 12.7% compared to 12.5% in the comparable period of the prior year, despite lower sales. Similar to what we’ve achieved in prior quarters, our strong margin performance was driven by continued execution on MasterBrand strategic initiatives, particularly around supply chain improvements, productivity and restructuring savings. The quarter also benefited from discrete items which were included in our revised outlook, primarily the $3.2 million of insurance proceeds we mentioned earlier. These items together more than offset year-over-year volume declines, the impact of trade downs and personnel inflation. Moving on to our full year results, we delivered net sales of $2.7 billion in 2023, down 16.8% over the prior year. Our year-over-year topline result was primarily driven by market-related volume declines. However, our early pricing actions in 2022 contributed to a favorable year-over-year ASP in 2023 despite increased trade down activity. Gross profit was $901.4 million, down 4.2% compared to $940.5 million last year. Gross profit margin expanded 440 basis points year-over-year from 28.7% to 33.1%. Full year margin expansion was driven by higher net ASP, supply chain efforts, continuous improvement initiatives and cost actions, which more than offset lower volume, trade downs, personnel inflation and investments in our Tech Enabled initiative. Selling, general and administrative expenses were $569.7 million, down 12.2% compared to the same period last year. As a reminder, in 2022, we were allocated a portion of Fortune Brands’ costs. In 2023, we have standalone costs. If you compare the impact of the two, it was a net savings year-over-year in 2023 as anticipated. These savings coupled with lower outbound freight and commissions due to volume declines more than offset personnel inflation and roughly $15 million of strategic investments in the business. Net income was $182 million compared to $155.4 million in the prior year. The increase was primarily due to an asset impairment charge of $46.4 million in 2022 that did not reoccur in 2023, higher amortization and restructuring charges in 2022 and a lower 2023 income tax expense. This was partially offset by interest expense of $65.2 million for the full year 2023. Diluted earnings per share were $1.40 in 2023, up from pro forma diluted earnings per share of $1.20 in 2022. In the first three quarters of 2022, pro forma diluted earnings per share were calculated assuming that there were no dilutive equity instruments prior to the separation, as there were no MBC equity awards outstanding. Adjusted EBITDA was $383.4 million in 2023, down 6.8% compared to $411.4 million last year due to volume declines in the market and personnel inflation, partially offset by higher ASP, supply chain and continuous improvement initiatives and cost action savings. Adjusted EBITDA margin expanded 150 basis points to 14.1% for the full year compared to 12.6% in the prior year. We are extremely pleased with our operational momentum and proven ability to deliver full year margin expansion on lower net sales. We surpassed the goals we outlined at the beginning of last year and we entered 2024 in a strong position to continue investing for future growth while preserving margins. Turning to the balance sheet. We ended the year with $148.7 million of cash on hand and $480.2 million of liquidity available on our revolver. Net debt at the quarter-end was $559.1 million, resulting in a net debt to adjusted EBITDA leverage ratio of 1.5 times, consistent with the third quarter of 2023. Our balance sheet remains strong with the financial flexibility to invest in the business for growth. Operating cash flow was $405.6 million for the 12 months ended December 31st, 2023 compared to $235.6 million in the comparable period last year. Our strong operational performance as well as our working capital improvement plans specifically around inventory management and collections drove this year-over-year improvement. Capital expenditures for the 12 months ended December 31st, 2023 were $57.3 million compared to $55.9 million in the prior year. As Dave mentioned, we made the decision to accelerate certain capital expenditures to benefit from discount opportunities, resulting in us slightly exceeding our CapEx guidance. Free cash flow was $348.3 million for the 12 months ended December 31st, 2023 compared to $179.7 million in the comparable period last year. This is a $168.6 million improvement year-over-year. As expected and disclosed in previous calls, cash outflows increased in the fourth quarter due to our last significant spin-related payment of Fortune Brands of roughly $30 million, increased capital expenditures and the slowing of improvement on our working capital. Finally, during the fourth quarter, we repurchased approximately $6.1 million of our common stock under our existing stock repurchase program. Now let’s turn to our outlook. As Dave mentioned, we expect our overall market demand to be down low-single digits year-over-year in 2024 with performance varying by end market. For domestic markets, we expect to see mid-single-digit growth in US new construction and with US repair and remodel being down mid-single digits. Overall, we expect both end markets in Canada to be down year-over-year, as both new construction and repair and remodel markets continue to be soft. With that market backdrop, we anticipate our 2024 net sales will be in the range of down low-single digits to flat year-on year. Let me provide some additional color on the drivers of our net sales in relation to the market. Our 2024 outlook contemplates the continued effect of trade downs and a more normalized pricing environment, including customary promotions. We saw this pattern develop in the second half of 2023, so there is some annualization impact from the normal pricing and promotion environment in the first half of 2024, but we would expect to see less impact in the second half of the year as we get to normalized comparisons. We anticipate a more normal inflationary environment and we’ll continue to evaluate price quarterly in response to that. As Dave mentioned, our 2024 outlook assumes big ticket repair and remodel will lag smaller ticket items, resulting in a timing difference between our net sales and a broad R&R market recovery. To offset this net sales headwind, we have a variety of new products and channel-specific packages that launched late last year and in the early part of this year across both the new construction and repair and remodel markets. As part of our Align to Grow initiative, we have tailored these products to satisfy the specific end markets and regions best-positioned for growth. As these products gain traction, these incremental sales will more than help offset the previously discussed impacts of trade downs and customary promotions. As we enter the year, we are pleased with our existing manufacturing capabilities. Our common box initiative provides the flexibility needed to adjust capacity up or down with demand. In 2023, this flexibility along with several cost actions allowed us to deliver margins beyond our expectations. This flexibility also provides us with ample capacity to service our customers as demand strengthens. We will continue to be nimble and adjust our manufacturing network as needed to address any future market conditions. This ability to flex manufacturing, coupled with our strategic initiatives and continuous improvement efforts, will allow us to offset the impact of softer sales and further invest in the business. As Dave mentioned, given the success of our early Tech Enabled initiatives, we plan to invest an incremental $20 million into this initiative in 2024. With 2024 shaping up to be a relatively stable year particularly from a demand perspective, we are taking this opportunity to further invest and position ourselves for future growth when a more robust demand environment returns. With this in mind, we expect adjusted EBITDA in the range of $370 million to $400 million, with adjusted EBITDA margin of roughly 14% to 14.5% for 2024. Interest expense is expected to be approximately $55 million to $60 million, and we anticipate a tax rate between 25% and 26%. We are planning 2024 capital expenditures to be in the range of $55 million to $65 million. This investment is approximately 1.3 times depreciation, which is within our stated long-term goals. Given the steps we have already taken to reduce working capital and these other factors, we expect free cash flow to continue to be in excess of net income for 2024, but the magnitude of working capital improvement in 2023 will not repeat. Now that we are a year into being a standalone company, we will also initiate earnings per share guidance. For 2024, we expect our adjusted diluted earnings per share to be in the range of $1.40 to $1.60. With that I would like to turn the call back to Dave.

Dave Banyard: Thanks, Andi. We’re excited about the opportunity 2024 holds for us. Our ability to maintain adjusted EBITDA margins despite market headwinds while investing for future growth shows the strength of our culture, strategic initiatives and business model. We demonstrated the power of our culture and business in 2023, and we’re excited to continue that momentum in 2024 and beyond. And with that I’ll open the call up to Q&A.

Operator: Thank you. [Operator Instructions] And our first question comes from Garik Shmois with Loop Capital Markets. Please state your question.

Garik Shmois: Hi, thanks. First off, I was wondering if you could speak a little bit to how to better think about the cadence of the year with respect to sales and EBITDA margin. Sounds like first half is going to be a bit softer than the second half, part of that is comp driven, but anymore color as to how to think about how sales and margins should progress as the year unfolds?

Dave Banyard: Yes. Thanks, Garik. I think I’d say it’s going to be a more normal year from a pace of demand. So — and our normal years, you have a step down typically from Q4 into Q1 from a total demand standpoint. And you can look back on our filings, but I’ll give you the answer. It’s in the ballpark of mid-single-digits to high-single-digits, so the step-down from the revenue you generated in Q4 into Q1. And then, that picks up, particularly in the new construction side as you go into the spring building season, and that’s — then you have robust demand I’d say through Q2 and Q3 and then it starts tapering off towards the end of the fall and into the holiday season. So that’s our normal pattern. And I think this year is shaping up in many ways to be normal. And I think we sort of started seeing some of that normalization in Q3 and Q4, both from a demand standpoint as well as from a pricing standpoint. So, really, I’d say the only kind of things that we’re — we have to overcome is that annualization of some of that trade-down effect and the normal promotional, because back last year at this time, we weren’t seeing any promotion at all in the market and still — people were actually still raising price, I think in some cases. So, I think that’s the trajectory of the year. As we see our performance against that, I think in Q1 we were kind of aligned with that. And then as we go into Q2, a lot of the programs that we’ve launched that Andi highlighted start really coming through, because again they tackled both new construction as well as repair and remodel. And obviously, there is demand today in new construction and that helps. And so, we’ve seen some good uptake on those programs already. That demand really doesn’t come through until you start getting into the second quarter.

Garik Shmois: Got it. I do want to ask about some of the new products and programs that you recently launched. Hoping you could go into a little bit more detail, it sounds like it’s a bit of a split between repair and remodel and new construction, but any more color as to how you’re specifically targeting those different end-markets and maybe speak to the different price points that these products are targeting?

Dave Banyard: Yeah. So, I think the best example is one we’ve launched last year which was — which basically allowed us to work the trade-down program with new construction. But I’ll give you, starting — you sort of take a step back for a minute, the whole point of our Align to Grow initiative is to really segment your customers in a way that you understand exactly what they need and then build an operating capacity that can deliver that to the customer. And we’ve made a lot of progress on that over the past several years, but last year, more importantly, was really getting that specific segmentation down properly and having the machine behind it, if you will, with our plants and supply chain footprint to be able to deliver the full breadth of MasterBrand in a lot of different ways to a lot of different customers. And so, I wouldn’t say — there’s no big bang in any of this, there is no one magic product that wins the day. It’s a lot of smaller changes that you’re conforming what certain customers need. And if you have a very seamless operating model behind it, you can slide those customers as well as the consumer eventually. But I mean, when you’re talking new construction, it’s often a very large customer that’s doing it in mass. You can slide the scale around a bit and really provide them with a full package of what they need to be successful and you have to solve that problem operationally, which we have done a lot of work to be able to do in a very cost effective way. So, that’s a big part of it. When we talk about packages that we’re offering to specific customers, it’s around being able to bring the full breadth and benefit of MasterBrand to our customers with whatever they need. Then, obviously, there’s a lot of style changes that occur. There are different products, configurations that are more style focus that we’re launching. And that’s really what I call a normal process that we do every year, but if you remember back to the way I described the COVID years, it’s very difficult to do that from a supply chain standpoint, and so we spent a lot of last year, making sure we got the right, new styles, new colors and those sorts of things lined-up so that — and some of them launched again in the latter part of last year and then bringing that full platter of new styles and designs. And that’s I’d say that’s more normal course. We wouldn’t expect to necessarily change the dynamic of our pace of business with those things, but you have to do them. Really the change that we think really helps us outperform the market this coming year is the way we’re tailoring various programs to various customers.

Garik Shmois: That’s helpful. Last question is just on the trade-down comments. It’s been a headwind for several quarters now. It sounds like you’re anticipating that you’re going to anniversary the worst of it in the first half of the year. But just curious as to, maybe has the pace of the trade-down behavior stabilized at all? Any — is there anything that we should be looking out for to give us confidence that indeed in the second-half of the year that it should be stabilizing?

Dave Banyard: Yeah, I think it’s follow the trajectory that we expected through Q3 and into Q4 and the commentary we gave on it at the previous earnings call came to fruition. I’d say the reason we outperformed a bit to the higher end of our internal expectation was, there was a bit more activity in volume that we were able to drive, particularly in the new construction market. But now it’s been very well-received. The way we’re going about delivering different products that ultimately results in a trade-down has been well-received. And frankly, that’s the case in both end-markets, the new construction and R&R. But, no, I think the pace is such that it feels like this is being well-received and I don’t anticipate the need for any additional changes there.

Garik Shmois: Sounds good. Okay, thanks for that. I’ll pass it on.

Operator: Thank you. [Operator Instructions] Our next question comes from Tom Mahoney with Cleveland Research. Please state your question.

Tom Mahoney: Hi. Good afternoon. Just a follow-up on the question about promotions normalizing. Are you finding — are there any types of promotions that are having success moving consumers into projects? Do you find that maybe leads are running stable, it just takes some incremental promotion to convert them? Or are promotions more aimed at driving that lead activity, get customers interested in the first places? Any way to characterize those?

Dave Banyard: Yeah, it’s a fair question, Tom. I think it depends on the channel a little bit. I would say that your larger format retailers are going to use that promotional arm to drive traffic a bit more than your dealers because you can get other things in those retailers. So, you don’t go to your small dealer to buy hammers and so on and so forth. So that the major retailers will use promotion more broadly to drive foot traffic in the store. But then, once you’ve reached that point, it’s really more, you know you follow your sort of logic pattern out. First, try to get the consumer to buy the product that they can afford by sliding them down and that’s where the trade-down comes into play. If you can get them into something that they’re happy with and excited about at a lower price point, you don’t have to talk about promotions. And that’s why I called them more normalized, because then you use the promotion as a targeted activity for certain deals that you’re trying to get done. For example, if you have a consumer that’s at a high-end product, you’re probably not able to slide them down and — if they’re doing a very expensive kitchen, but you might need that to nudge them over the edge in the current environment. So, I think, it really does depend, it’s very tactical in a lot of ways. We look at it as an executive team as kind of overview of how are we functioning of moving the consumer where they want to be and then we — our sales team is very adept at executing on the tactical side of that.

Tom Mahoney: Understood. And then, kind of also getting at the competitive environment, there have been some recent upticks in transportation costs. And I think a topic for 2024 as well is the potential for tariffs to enter back into the conversation. Can you describe the competitive environment? I guess, first of all, MasterBrand’s exposure to those two things and then the relative exposure of MasterBrand relative to competitors as potentially transportation costs pick back up here and then as tariffs enter the conversation?

Dave Banyard: Yeah, sure. I guess, I’ll break it apart. I’ll talk about the cost side of it. I think obviously, we’re paying attention to it and we bake that into our basket of how we think about inflation in general. Our supply chain team weathered what’s probably the worst storm if you could ever have in our business over the ’22 and ’21 time periods and so I think we’re pretty adapted. This is nothing compared to that. So, I think their process is pretty well-established on how to navigate when you have transportation scenarios, both on the ocean or even in the trucking world. So, we pay attention to it. I think we’ll monitor it over time. I think you’re seeing some uptick right now, but generally what happens is as the market normalizes so does the cost. And so I think if the new normal is you can’t go through the Suez, then yes, it’s a little more expensive to go around the horn, but I think the pricing always reacts first and then normalizes over time. So we’re paying attention to it. Tariffs, I don’t have any crystal ball on what the government’s going to do on that. So again, we react if necessary. And we’re obviously very active when it comes to discussing these matters with the Department of Commerce as well as our various representatives because we cover a lot of the United States in that regard. So we have a lot of conversations with Congress around these topics. In terms of the competitive dynamic in that, I don’t know how well they performed during the tumultuous period of the COVID years, but I think we outperformed them. I would not ever bet against my competitors figuring things out because there’s some good competitors out there. So I’m sure that some of them have figured that out, but I think we’ve highlighted in the past that our competitive product in that space has been strong. It’s served us very well. I’ll highlight our Mantra product line grew high-teens last year. In the face of the market we’re in, that’s I think pretty great performance. There may have been some cannibalization of our own with the trade down effect, but I still think I would challenge — if you look at import numbers, I would challenge any of those competitors that whether they grew at that rate. So I think we have a great product and that’s part of — part of our product introductions are to continue to build out that product and — because consumers love it, as do our channel. So it’s another piece of the competitive puzzle, but that’s what we do every day is figure out how to win.

Tom Mahoney: Understood. Thanks for the time.

Dave Banyard: Thanks, Tom.

Operator: Thank you. There are no further questions at this time. I will turn the floor back to Farand Pawlak for closing remarks.

Farand Pawlak: Thank you, operator, and thank you, everyone, for joining us here today. We appreciate your interest and support, and look forward to speaking with you in the future. This concludes our call.

Operator: Thank you for joining MasterBrand’s Fourth Quarter and Full Year 2023 Earnings Conference Call.

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