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Yahoo
20-05-2025
- Business
- Yahoo
Q1 2025 Target Hospitality Corp Earnings Call
Mark Schuck; Senior Vice President - Investor Relations; Target Hospitality Corp Brad Archer; President, Chief Executive Officer; Target Hospitality Corp Jason Vlacich; Chief Financial Officer, Chief Accounting Officer; Target Hospitality Corp Stephen Gengaro; Analyst; Stifel Scott Schneeberger; Analyst; Oppenheimer Greg Gibas; Analyst; Northland Securities Operator Good morning, ladies and gentlemen and welcome to the Target Hospitality first-quarter 2025 earnings call conference call. (Operator Instructions) This call is being recorded on Monday, May 19, 2025.I would now like to turn the conference over to Mark Schuck. Please go ahead, sir. Mark Schuck Thank you. Good morning, everyone, and welcome to Target Hospitality's first-quarter 2025 earnings call. The press release we issued this morning outlining our first quarter results can be found in the investor section of our website. In addition, a replay of this call will be archived on our website for a limited note the cautionary language regarding forward-looking statements contained in the press release. The same language applies to statements made on today's conference call will contain time sensitive information as well as forward-looking statements, which are only accurate as of today, May 19, 2025. Target Hospitality expressly disclaims any obligation to update or amend the information contained in this conference call to reflect events or circumstances that may arise after today's date, except as required by applicable law. For a complete list of risks and uncertainties that may affect future performance, please refer to Target Hospitality's periodic filings with the will discuss non-GAAP financial measures on today's call. Please refer to the tables in our earnings release, post in the investor section of the website to find a reconciliation of non-GAAP financial measures referenced in today's call and their corresponding GAAP the call of the day will be Brad Archer, President and Chief Executive Officer; followed by Jason Vlacich, Chief Financial Officer and Chief Accounting Officer. After their prepared remarks, we will open the call for questions.I would now like to turn the call over to our Chief Executive Officer, Brad Archer. Brad Archer Thanks, Mark. Good morning, everyone, and thank you for joining us on the call delivered strong first quarter results centered on the strength of our business fundamentals and proven capabilities. These elements illustrate the benefits of Target's efficient and durable operating model, supporting our ability to successfully navigate a variety of economic the first quarter, we announced two multi-year contracts which are expected to generate over $380 million in revenue over the coming years. These contracts illustrate our unique ability to support a range of critical domestic initiatives spanning both commercial and government and markets. We are well positioned with strong momentum as we continue evaluating and pursuing the most active and robust growth pipeline we have had in many years. We're excited about this opportunity set and focused on accelerating our strategic growth turning to our segments and growth pipeline. Our HFS segment continues to benefit from consistent demand where our world-class customers find added value in the unmatched solutions our network provides. These capabilities support targets of long-standing customer relationships, some for over a decade, and a consistent 90% renewal rate since consistency illustrates the value proposition of our network and ability to appropriately match customer demand through a variety of economic cycles. These characteristics support a well optimized network and enhanced revenue cash flow of visibility. The workforce subcontract, which we announced in February, continues to progress in line with expansion and diversification further illustrate our ability to utilize our distinct core competencies to advance our strategic growth initiatives. Our ability to provide customized solutions across industries highlights the reach of our capabilities as we continue evaluating a strong commercial growth pipeline is predominantly centered around large capital investments focused on modernizing critical domestic infrastructure and advancing 21st century technologies. As this potential historic capital investment cycle takes shape, we have seen growing demand for hospitality solutions to support the significant workforce requirements associated with these initiatives. These opportunities include large industrial projects throughout the US including technology infrastructure, increased domestic critical mineral development, and other related large capital investment a reminder, the size and scale of these growth opportunities inherently leads to longer sales cycles. However, we're encouraged by the pace of active conversations and progress on certain initiatives. We believe these commercial growth opportunities provide meaningful long-term growth potential and are on and are an important element of target strategic growth and diversification to the government segment. Our government segment experienced a transition as we moved into 2025. However, amidst evolving policy initiatives, Target has illustrated its ability to provide unmatched solutions, supporting a range of critical US government. This execution underpins our ability to actively pursue a significant growth opportunity set, supporting the current administration's immigration reactivation of our Dilley, Texas facility is progressing, and the community was able to receive an active population ahead of schedule. Our decision to maintain this community in a ready state was critical to the contract award and our ability, along with our partner to quickly facilitate the community our West Texas assets, we are encouraged by the continued interest from the US government in utilizing this readily accessible community. We have conducted numerous site visits and tours of the facility with positive feedback indicating this community's ability to serve the current administration's policy objectives. Further, the substance of our conversations has indicated the US government's desire to utilize this facility consistent with its current layout, minimizing the need for additional capital timing remains uncertain, as there are likely administrative steps required, including securing necessary funding prior to potential contract award. While we are actively remarketing our West Texas assets, we are simultaneously evaluating multiple opportunities to support immigration initiatives beyond targets existing asset portfolio and available the scope of executive orders and resources required to adequate adequately implement the government's current immigration policies, there is a significant demand for solutions aligned with target's core competence. We are taking intentional steps to demonstrate target's capabilities and believe there are multiple avenues to support these critical policy our strong operational reputation and partnerships with industry leading companies uniquely positions Target to participate in many of these mission-critical summary, the strength of our existing customer base, network capabilities, and proven operational flexibility support a resilient business model. This foundation supports our continued focus on pursuing strategic growth initiatives aimed at expanding and diversifying targets, contract portfolio across in markets.I'll now turn the call over to Jason to discuss our financial results in more detail. Jason Vlacich Thank you, Brad. First quarter total revenue was approximately $70 million with adjusted EBITDA of approximately $22 million. Our government segment produced quarterly revenue of approximately $26 million. The decrease from prior year was primarily driven by the termination of the PCC contract, effective February 21, 2025, and partially by the termination of the South Texas Family Residential Center contract on August 9, 2024. These declines were modestly offset by the reactivation of our Dilley, Texas assets and the Dilly contract award effective March 5, a reminder, this contract is based on fixed monthly revenue regardless of occupancy, and it's expected to generate approximately $30 million of revenue in 2025, with over $246 million of revenue over its anticipated five-year as the community progressively reopens, 2025 monthly revenue contributions will correlate with the reactivation of each neighborhood within the facility. Further, this paced reopening will result in lower margin contribution through the 2nd and 3rd quarter of 2025 prior to full reactivation. We anticipate the community will be fully activated by September of 2025, at which point we will realize revenue and margin contribution commensurate with the entire 2,400 bed our West Texas assets, as a reminder, we have decided to maintain these assets in a ready state as we actively remarket them. This decision, which is similar to the approach we took regarding our daily assets, will result in carrying costs prior to a potential new contract award of approximately $2 million to $3 million per to our HFS in all other segments. Our HFS and all other segments delivered quarterly revenue of approximately $44 million. These segments continue to experience consistent customer demand, illustrating the value our customers find in our premium premium service offering and network capabilities. We have benefited from a more fully optimized HFS South segment which continues to perform in line with our expectations in a competitive pleased with the workforce hospitality solution segment which includes our recently announced Workforce hub contract. Instruction activity associated with the Workforce hub contract is pacing on schedule and generated approximately $5 million of revenue in the first quarter. We anticipate that the majority of the construction revenue will be realized in the 2nd and third quarter of 2025 with completion in the fourth quarter of a reminder, this contract also provides for service revenue, which will support the premium Workforce hub with comprehensive hospitality solutions through 2027. The contract exemplifies the benefits of our full-service capabilities and establishes a long term revenue corporate expenses for the quarter were approximately $10 million. As we move through the year, we will continue to look for opportunities to optimize our cost structure and strengthen margin contribution. Total capital spending for the quarter was approximately $21 million including approximately $16 million of growth capital to expand strategic network capacity and support the Workforce hub we previously announced on March 25, 2025, we redeemed all outstanding senior notes due in June of 2025, at a redemption price of 101% of par, resulting in an expected annual interest savings of over $19 decision to redeem the senior notes was focused on maintaining a balanced capital structure and financial flexibility as we continue pursuing a pipeline of strategic growth initiatives. We believe the current structure supports our ability to react to value enhancing growth opportunities as they arise while appropriately balancing our ended the quarter with $35 million in cash and $169 million in total liquidity, with $41 million of borrowings under the company's $175 million revolving credit facility and a net leverage ratio of 0.1 times. We will continue to prudently manage the capital structure and look for opportunities to further reduce outstanding borrowings as we progress through strong business fundamentals have established a flexible and durable operating model. These elements support the company's reiterated 2025 financial outlook, which consists of total revenue of between $265 million and $285 million and adjusted EBITDA of between $47 million to $57 million. Target is well positioned with a flexible operating model and optimized balance sheet as we continue evaluating a robust growth pipeline, which we believe provides the greatest opportunity to accelerate value creation for our we continue to thoughtfully evaluate a holistic set of capital allocation initiatives, our primary focus is growing and diversifying Target's contract portfolio. As we focus on strategic growth initiatives, we believe it is prudent to maintain the financial flexibility we have established to quickly react to value enhancing opportunities as they arise. Importantly, as we evaluate these opportunities, we will remain focused on maintaining the strong financial profile we have established while optimizing margin contribution through our efficient operating that, I will turn the call back over to Brad for closing comments. Brad Archer Thanks, first-quarter results were supported by strong business fundamentals and continued momentum across our operating segments. We are focused on sustaining this momentum as we evaluate one of the strongest growth pipelines we have had in many years. The breadth of these opportunities spans both commercial and government and by strong secular tailwinds promoting significant domestic capital investments and national security initiatives. The growth opportunities are robust, extended beyond our existing asset portfolio and across multiple and markets. We are excited about these opportunities and believe Target's capabilities and proven reputation uniquely position the company as we actively pursue the strategic growth remain focused on enhancing Target's business mix and contract portfolio, which we believe will accelerate value creation for our shareholders. I appreciate everyone joining us on the call today and thank you again for your interest in Target now, I'd like to open the call questions. Operator (Operator Instructions) Stephen Gengaro, Stifel. Stephen Gengaro There's two for me. The first is just around sort of opportunities on the idle assets on the government side and is there like, can you give us any kind of incremental detail about the conversation you're having the opportunity to put those to work and kind of what we should be thinking about as far as data points around it or what's driving the demand? I'm just trying to kind of get a sense from I know you can't tell us timing or economics, but any more color around that would be helpful. Brad Archer Yes, Stephen, this is Brad. Good morning. Let me just kind of give you a high level on some of the things that happened, since our last call, and I would just kind of the government segment as a whole, but specifically starting on the West Texas continue to have strong interests, as we said before, high level, conversations with the government and our partners, since our last quarterly call, we've led several tours of the facility, which has really increased the excitement around this asset, as we said before, and this hasn't changed, the government fully intends to increase their bed capacity by approximately 100,000 the West Texas facility, it's ready for immediate occupancy, giving them kind of what I've said before is an easy button, right? For once funding is in place. And at this point that is kind of the waiting game, right? Once funding gets in place, the budget's approved. But from all conversations we've had, we believe this facility is part of the government's acquisition plan and we've been told that, through the conversation. So we feel good about this facility and what happens to it in the I would say, and as a reminder, I know there's a lot of focus always on the West Texas assets and rightfully so. But what really gets us excited is all the other potential, for more beds, more opportunities to service the government, from the DOD side to the I side to other, folks within the DHS community. We're seeing more and more, every week, that is hitting our pipeline. So, in summary, I would just say, look, the opportunity set is strong operational, reputation, it positions just well, to get some of this business in the future. We put ourselves in a really good position to grow this segment. Now we need to execute and I believe we will. Stephen Gengaro Got you. Okay, great. No, that's helpful. And then the other question I just had was the contract you have on the Lithium front and just how do we think about how that -- so what's contracted right now and kind of what that means for contribution this year and next and then kind of how do we think about the upside to that in '26-plus? Jason Vlacich Yeah, this is Jason. So in terms of the workforce subcontract, this year the majority of the revenue generated is going to be from the construction activities which we expect to wrap up this year in Q4, we think the majority of that activity is going to, occur in in Q2 and with the majority in Q3 and a wrap up in Q4. That's going to contribute about $65 million of revenue for the year on the construction piece with an estimated margin of between 25 and 30%.After that, that's when the services part kind of more fully kicks in through 2027. So that's the balance of that $140 million revenue contract will be attributable to service. And then on the Lithium project as a whole, there's a potential for multiple phases which we're well positioned to participate in beyond 2027. These phases can go all the way through 2040. Brad Archer Yeah, that's why we really like this project, right? We like it for the first phase, but we really like it for multiple phases that they've publicly been out there and talked about. Look, as we know, GM has taken all the capacity on the first phase, a big portion already on the second phase, so they're set up pretty well to continue to extend it again. We need to continue to perform where there's a service provider in the second and the third phase on this, and we believe we will. So, I looked at that as the upside of this, just the longevity of the project itself. Operator Scott Schneeberger, Oppenheimer. Scott Schneeberger Thanks very much. Good morning. Just kind of following up on the theme of new opportunities. Brad, you did a nice job of outlining kind of what's occurred since the last call with regard to West Texas. Could you -- and you touched on the government opportunity as a whole. Could you -- I thought I heard in there the unprepared remarks somewhere, maybe looking at things that you may not already owns so in the answer to this question, could you address maybe M&A or new asset consideration that you might pursue?And then maybe that's more on the government side, and then on the non-government side, just a discussion of ripeness of what's occurring out there? Thanks. Brad Archer Yeah, let me take the first on the non-government kind of all things other than government, right? For you and I'll touch base on it then I'll let Jason touch on some of the other as well. But outside of the government pipeline, we continue to see very strong bid activity in large domestic infrastructure projects such as mining, power, and data centers to name a that said, I want to spend a little time on the data center industry, more specifically, as we're seeing the need for services across the US increased dramatically. And very encouraged with the progress our business development team is making here. We've talked about it a little before in the other calls, but we definitely moved the ball down the field on several of these projects tend to have a three-year, to six-plus years kind of a build cycle. And look, I think everybody's aware of the massive amount of capital being pumped into this industry. And there's no doubt our services are needed on many of these that we're working on. So internally, there's a lot of excitement on this data center movement, especially since our last call, we continue again kind of move the ball down the field, feeling pretty good about some of these in summary, aside from data centers, our pipelines the strongest it's been. What we really like about it is some of these, especially in the data centers, they're approved, they're shovel ready. There's, they have the capital and they're spending it now. So we put ourselves again, like I said in the government in a really good spot to execute here and we just -- we have to go and do that. That's bottom line, but I think we're close on some of these. Jason Vlacich And on the government side, I would just say with respect to assets, a lot of the opportunities we're looking at that are right in front of us don't necessarily require a lot of capital investment, specifically in the West Texas assets, those the layout there based on all of our conversations and facility site tours that Brad had mentioned in conversations with the government, the layout seems to fit the government's need as is, so we don't anticipate a lot of capital investment for those immediate government if there are requirements around capital deployments, we'll certainly consider those, to the extent that they're creative, and many times those will be built into the economics in terms of reimbursement and such. On the inorganic front, that's definitely still part of our diversification strategy. I would look at that as more of the medium and long term. In the immediate term, we're focused on our organic growth. Brad Archer Yeah, just one comment on the government side there, Scott, is there is no doubt, the amount of rooms we have available compared to what the government needs, if we're lucky enough to win that much would require us to spend some capital, right?To Jason's point, it would be structured in a way where we're not stuck for, with that capital. We're going to bid it into the job, we're going to get that capital back. There'll be guarantees if there's early termination, those types of things. So we will structure that where targets protected on that, as we always have, in the past, right? Scott Schneeberger Very good. Got it. Thanks, guys. Nice color. For my follow-up, I guess, Jason probably more for you, in HFS just curious, if you could address trends in ADR, what you anticipate over the balance of the year and going forward? It's kind of a higher level of just what you anticipate from demand and obviously how that's being priced. Thanks. Jason Vlacich Yeah, so we always balance network optimization with ADR and utilization. The utilization you can see is slightly up from prior year. ADR is down. It's a competitive market, but nothing structurally has changed with respect to the segment. I would anticipate the remaining quarters to look somewhat similar to Q1. Operator Greg Gibas, Northland Securities. Greg Gibas Great, hey, good morning, Brad, Jason. Thanks for taking the questions. Congrats on the results. To follow up on kind of the Workforce hub contract, construction ramping in Q2 and Q3, completion in Q4, wondering if you could just give us a sense of kind of the financial cadence for the remainder of the year, as kind of daily ramps is another factor as well? Jason Vlacich Yeah, so I guess, the best way to put it is, the majority of that activity is going to be in Q3. Q2 will be slightly below Q3. We had a minimal contribution of $5 million of revenue in Q1, it's probably less than 10% complete at that point and then Q4 will be sort of more minimal wrap up activity. On the Dilley ramp up, the margins are going to be bottomed out in Q2 as we ramp has an accelerated revenue rent schedule as we move through the 1st 6 months of the contract as neighborhoods open in phases, and so there's a natural sort of front loading of expenses as we have to meet certain ha milestone milestones for the reopening. But we expect the full economics on that to begin in full economics associated with the full 2,400 beds. That's how the contract's structured, and Q4 will likely be the best quarter from a run rate standpoint on that contract going forward. Greg Gibas Perfect. That's really helpful. Great, and if I could follow up to just some of your previous commentary on this call, could you give us an example or maybe an idea of those opportunities to assist the government on the immigration policy beyond like existing assets like oral facilities? Are you saying that you would -- these would likely involve like an asset purchase or are you saying like there are other opportunities as well? I just wanted to get a sense of what those are. Brad Archer Yeah, look, we're first going to try and put out our existing anything that we have existing that we can, right? And then so if we exceed the beds that we have in our own as far as our own resources, we would look to the open market to purchase some of that, right? Or build in new on similar to how we run our business for years, right? Try again, try to put out what we own today and what's not being used, and then go to the open market or build new. Greg Gibas Makes sense. Thank you. Operator Stephen Gengaro, Stifel. Stephen Gengaro Thanks for taking the follow-up. Just as a kind of a curiosity, but trying to think about your network, your lodges that serve the oil patch right now. I know you're kind of haven't maybe as cleanly differentiated as you used to, but are those assets like as part of the network that you have built to service the customers? Are they basically locked into that market at this point or could there be a scenario where you like you need that level of capacity and distribution across the basins or could those assets be repurposed? Brad Archer They look we have repurposed in the past and we would definitely do that in the future, right? We're going to look to see what's available, what rates are, so we have, not a lot of excess capacity but where we do to optimize that we would definitely look at taking some of that and just throwing this out there using it on a data center or using it on a mine somewhere that is always how we look at that want to be 100% maximized with our own equipment if we can and then look outside if we need to buy or some something else, but all of our facilities can be used somewhere else, right? Whether that's in the government data center mining, other, power projects, whatever. Jason Vlacich Yeah, we've done that historically, right? I mean we built out the government segment with HFS assets basically that we're underutilized so we can quickly repurpose those assets. That's the benefit of having a flexible asset base. Brad Archer And look, to be clear, some of the bids in our pipeline, that's exactly how they're bid with taking some of our own equipment that's set up and using it somewhere else. Stephen Gengaro Okay, and then as a follow-up, I'm trying to think how to ask, but is there like a level of contractual commitment you have to your energy customers that you will have a certain amount of assets and certain basins over a certain period of time? Like I'm just trying to understand the flexibility of doing that or like are you locked in?Because of sort of contractual commitments to having this many rooms available across this large of a swath of land over time? I'm just trying to get a better sense for that. Brad Archer Yeah, let me be clear, and that's a very good question. We are absolutely committed to the Permian Basin for our oil and gas customers, right? We have a big network there, so we would not mothball, the network. We have definitely large contracts that we need to continue to serve service and it's great business, right? Doesn't take a lot of pretty consistent as far as occupancy where we've been, but there's opportunity to maximize the efficiencies there as far as, putting, taking those rooms out if we needed them and putting them somewhere else without hurting our customer base. Stephen Gengaro Great, that was what I was looking for and I didn't ask the question as smoothly as I could have. Thank you. Jason Vlacich Yeah, no problem. Operator Thank you. There are no further questions at this time. I would now like to turn the call over to Brad Archer for closing remarks. Please go ahead. Brad Archer Thank you. Thanks to all of you who have joined the call today, and we look forward to speaking again on our second-quarter call, and we appreciate your support of Target that will conclude our call for today. Thank you. Operator Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
17-05-2025
- Business
- Business Insider
Analysts' Top Technology Picks: Rekor Systems (REKR), DHI Group (DHX)
There's a lot to be optimistic about in the Technology sector as 2 analysts just weighed in on Rekor Systems (REKR – Research Report) and DHI Group (DHX – Research Report) with bullish sentiments. Confident Investing Starts Here: Rekor Systems (REKR) Northland Securities analyst Michael Latimore maintained a Buy rating on Rekor Systems on May 15 and set a price target of $4.00. The company's shares closed last Friday at $1.08, close to its 52-week low of $0.78. According to Latimore is a 4-star analyst with an average return of 5.2% and a 44.8% success rate. Latimore covers the Technology sector, focusing on stocks such as Gorilla Technology Group Inc., SoundHound AI, Inc Class A, and Synchronoss Technologies. The word on The Street in general, suggests a Moderate Buy analyst consensus rating for Rekor Systems. DHI Group (DHX) In a report issued on May 15, Gary Prestopino from Barrington maintained a Buy rating on DHI Group, with a price target of $11.50. The company's shares closed last Friday at $1.93. According to Prestopino is a 5-star analyst with an average return of 13.7% and a 54.4% success rate. Prestopino covers the Technology sector, focusing on stocks such as CCC Intelligent Solutions Holdings, Methode Electronics, and Cantaloupe. The word on The Street in general, suggests a Strong Buy analyst consensus rating for DHI Group with a $4.67 average price target, implying a 149.7% upside from current levels. In a report issued on May 5, Lake Street also maintained a Buy rating on the stock with a $3.50 price target.
Yahoo
15-05-2025
- Business
- Yahoo
Q3 2025 Evolution Petroleum Corp Earnings Call
Brandi Hudson; Manager, Investor Relations; Evolution Petroleum Corp Kelly Loyd; President, Chief Executive Officer, Director; Evolution Petroleum Corp J. Mark Bunch; Chief Operating Officer; Evolution Petroleum Corp Ryan Stash; Chief Financial Officer, Senior Vice President, and Treasurer; Evolution Petroleum Corp Jeff Grampp; Analyst; Northland Securities, Inc. Chris Degner; Analyst; Water Tower Research LLC Poe Fratt; Analyst; Alliance Global Partners Operator Good morning everyone, and welcome to the Evolution Petroleum fiscal third quarter 2025 earnings conference call. All participants are in listen-only mode. Please also note today's event is being recorded. At this time, I'd like to turn the call over to Brandi Hudson, the company's Investor Relations Manager. Ma'am, please go ahead. Brandi Hudson Thank you. Welcome to Evolution Petroleum's fiscal 3rd quarter 2025 earnings call. I'm joined today by Kelli Lloyd, President and Chief Executive Officer, Mark Bunch, Chief Operating Officer, and Ryan Stash, senior Vice President, Chief Financial Officer, and Treasurer. We released our fiscal 3rd quarter 2025 financial results after the market closed yesterday. Please refer to our earnings press release for additional information containing these results. You can access our earnings release in the investors section of our website. Please note that any statements and information provided in today's call speak only as of today's date, May 14, 2025, and any time sensitive information may not be accurate at a later date. Our discussion today will contain forward-looking statements of management's beliefs and assumptions based on currently available information. These forward-looking statements are subject to the risks, assumptions, and uncertainties as described in our SEC filings. Actual results may differ materially from those expected. We undertake no obligation to update any forward-looking statement. During today's call, we may discuss certain non-gap financial measures, including adjusted EBITDA and adjusted net income. Reconciliations of these measures to the closest comparable GAAP measures can be found in our earnings relief. Kelly will begin today's call with opening comments and review of the company's ongoing plans and strategy. Mark will provide an update on operations during the quarter, and Ryan will provide a brief overview of our fiscal 3rd quarter financial highlights. After our prepared remarks, the management team will be available to answer any questions. As a reminder, this conference call is being recorded. If you wish to listen to a webcast replay of today's call, it will be available on the investors section of our website. With that, I will turn the call over to Kelly. Kelly Loyd Thank you, Brandi, and good morning everybody. Our fiscal 3rd quarter results demonstrated evolution's commitment to disciplined, capital allocation, and strategic execution. We stayed grounded in our core strengths, allocating capital prudently to high quality, low decline assets, maintaining our long standing dividend, and generating positive cash flow. Our diversified portfolio, robust hedging strategy. And measured approach to development is enabling us to weather market volatility while continuing to deliver long term value. Subsequent to quarter end, we closed the Tex-Mex acquisition and brought online 4 new wells in our 2nd Chevvaro development block. Together these additions are currently contributing more than 850 net barrels of oil equivalent per day and are expected to meaningfully benefit our fiscal fourth quarter production and cash flow, especially when coupled with the recent strength in natural gas pricing. We also expect to see production ads from ongoing activities in our scoop stack area. The Tex-Mex acquisition, which closed in April, adds approximately 440 barrels of oil equivalent per day of stable, low decline production with a balanced commodity mix of 60% oil and 40% natural gas. The $9 million transaction was completed at a very attractive valuation, of approximately 3.4 times forward adjusted based on current strip pricing underscoring its strong near and long term accretion even amid recent oil price volatility. The portfolio consists of producing wells across New Mexico, Texas, and Louisiana and aligns with our long-term strategy to own cash generative low risk assets. Consistent with our disciplined approach, we structured this transaction to preserve the strength of our balance sheet. The $9 million purchase was funded through a combination of cash on hand and a modest $2 million draw on our credit facility. We are now working closely with the operator to evaluate low cost reactivation opportunities that could provide additional long term upside. This marks our 7th highly accretive acquisition in 6 years, and we continue to see an encouraging M&A market, even more so now amid oil price volatility. In the last 6 years we've invested $136 million to grow production by more than 3.5 times, all while returning capital to shareholders with a quarterly dividend with a well established track record, we remain confident in our ability to source, evaluate, and integrate high quality non-operated assets at incredible value. Taking a look at the broader energy market, as we all know, oil prices softened during April, falling nearly $12 a barrel in one week to sub $60. However, natural gas prices have strengthened of late, providing a partial offset to the softness in crude prices. Our diversified commodity exposure helped mitigate the impact of weaker oil revenue. Our third quarter natural gas revenue rose 33% year over year to $7.8 million. And NGL revenue was up 14% to $3 million, partially offsetting a 19% decline in oil revenue. This volatile market environment underscores the value and resiliency of our diversified portfolio. We remain well hedged on oil, with approximately 40% of oil volumes hedged at prices above $70 through the fiscal year end, providing a strong safety net that supports both our CapEx program and dividend. Operationally, our operators executed well despite some temporary disruptions during the quarter. Total production declined 7.5% year over year to 6,667 barrels of oil equivalent per day, primarily due to plan maintenance at Delhi and weather-related downtime in Barnet. Overall, we are maintaining our focus on operational execution and continue to make meaningful progress across our various development programs. As I mentioned earlier, we drilled and completed 4 new gross wells in the 2nd Chevaro development block which were brought online shortly after the quarter ended. While it's still too early to fully assess how the wells will perform, we're encouraged by the efficient execution, drilling and completing the four wells for less than budget, and the highly positive initial results. Mark will have more updates to share across our portfolio shortly. In terms of capital allocation, dividend sustainability remains a top priority for us. On May 12th, our board declared a cash dividend of $0.12 per share of common stock, marking our 47th consecutive quarter of issuing a dividend and our 12th consecutive quarter at $0.12 per share. It's important to underscore that this dividend was not declared as a one-time event. Despite the ongoing volatility in commodity prices, the board's decision reflects our confidence in evolution's ability to sustain dividends at this level over the long term. Our ability to generate strong operating cash flow driven by our diversified portfolio of assets enables us to meet our capital requirements, repay debt, and continue to return capital to shareholders. To date, evolution has returned approximately $131 million or $3.93 per share, to shareholders in com stock dividends. Looking ahead, our strategy remains focused on preserving financial flexibility, sustaining our dividend, and pursuing opportunistic growth. The fruits of our disciplined acquisition and development strategy during fiscal Q3 will be made obvious in our fiscal 4th quarter when we will see the effects of our Tex-Mex acquisition and our 4 new Javaru wells begin to contribute to our quarterly results. While we are committed to long term development, we recognize that there are optimal times to develop new wells and optimal times to acquire new assets. In light of the recent market volatility, we, in coordination with our operating partner at Chevvaru, have made the decision to delay the start of our third development block to later into our fiscal year 206. We believe it's prudent to now focus our development activities toward gas weighted opportunities, particularly in the scoop stack. This disciplined strategy enables us to preserve near-term cash flow while positioning us to resume development when oil prices are more favorable. By maintaining a measured development approach in a low price environment, we are effectively preserving long term resource value for our shareholders. In the interim, we're actively pursuing opportunities in what we view as a highly attractive market to acquire oil-weighted, low decline producing assets or natural gas properties with favorable hedging potential. All said, our decision making will remain grounded in disciplined capital allocation, financial flexibility, and a commitment to delivering long-term value for our shareholders. With that, I'll turn the call over to our COO, Mark Bunch, to review our operations in more detail. Mark. J. Mark Bunch Thanks, Kelly, and good morning, everyone. I will focus my remarks on key operational highlights from the quarter and encourage listeners to review our earnings press release and filings for details across our asset base. At Scoop Stack, 13 gross wells have come online. Fiscal year-to-date, we have another 5 gross wells in progress. Since the effective date of the acquisition, a total of 35 gross wells or 0.6 net wells have been brought online. At Chavaro, as Kelly mentioned, we successfully completed and brought online 4 new gross wells in the 2nd development block of the field. All four wells were drilled and completed on schedule and under budget. Since production commenced about two weeks ago. It is too early to assess production trends, but so far initial rates have significantly exceeded our expectations. We will continue to monitor these wells closely and will provide an update on performance in the coming quarter. At Delhi, production was temporarily affected by planned maintenance at both the Delhi Central facility, resulting in the shutdown of the entire field for a few days, and the NGL plant for approximately 2 weeks. At the end of the quarter, the decision was made to switch from purchasing of approximately 80 million cubic feet per day of CO2 to injecting additional water instead. Exxon will continue to inject approximately 300 million cubic feet per day of recycled CO2. We believe this will be the most economical way to run the field and will significantly reduce operating costs while maximizing cash flow. In the Wolson Basin, we experienced good run time for the quarter. Production was up quarter to quarter due to deferred oil sales and third-party gathering system issues experienced in the prior quarter. The Wilson field continues to generate solid returns. At Hamilton Dome, production remains steady throughout the quarter with no notable operational activity or downtime. The field continues to perform reliably, delivering consistent oil volumes in line with expectations. Jonah also remained steady during the quarter with a temporary dip in volumes during February. Strong winter natural gas pricing contributed positively to its overall cascal flow for the quarter. Barnet Shell delivered consistent cash flow generation in the 3rd quarter. Despite some brief downtime in January due to winter storms. Production remained steady overall, with improved pricing for natural gas and NGL serving as a tailwind. These favorable pricing dynamics helped offset broader commodity price weakness and underscore Barnett's continued role as a valuable contributor to our diversified portfolio. With that, I will turn the call over to our CFO, Ryan Stash, to review our financials in more detail. Ryan. Ryan Stash Thank you, Mark, and good morning. As Brandi mentioned earlier, we released our earnings yesterday which contains more information on our results. Now I'd like to go through our fiscal third quarter financial highlights. In fiscal Q3, we had total revenues of $22.6 million, down 2% year over year. The decline was driven primarily by an 8% decrease in production volumes, partially offset by a 7% increase in average life commodity prices driven by stronger natural gas and NGL prices. The decrease in production volumes was largely due to downtime at Barnet in January due to winter storms and one week of planned maintenance at high, partially offset by higher production from a full quarter of contribution from Scoop stack compared to the prior year period. Net loss for the third quarter was $2.2 million or $0.07 per share compared to net income of $0.3 million or $0.01 per share in the year ago period. After excluding the impact of unrealized hedging losses, adjusted net income for Q3 was $0.8 million or $0.02 per diluted share compared to $1 million or $0.03 per diluted share for the prior year period. Adjusted EBITDA was $7.4 million compared to $8.5 million in the year ago period. The decrease was primarily due to lower revenues as a result of lower production volumes and higher total operating costs due to CO2 purchases at high, which were suspended in February 2024 but were resumed last October. However, adjusted EBITDA for Q3 was 30% higher than Q2, primarily as a result of higher commodity prices, especially natural gas and NGOs. Our hedging program remains a key pillar of our risk management strategy. We believe our proactive approach to hedging, coupled with our diversified portfolio, positions us well to navigate continued volatility while sustaining our dividend and meeting capital commitments. We will continue to monitor the markets and opportunistically add hedges as necessary to preserve long-term cashless stability to support our dividends. We have negotiated with our lender to provide additional flexibility for our hedging program to allow us to hedge additional gas volumes instead of crude oil to meet the hedging obligations under our credit facility. At March 30th, 2025, cash and cash equivalents totaled $5.6 million and borrowings outstanding under a revolving credit facility were $35.5 million giving us total liquidity of $20.1 million. In fiscal Q3, we paid $4.1 million in common stock dividends, made $4 million in repayments on our senior secured credit facility, paid $1.8 million in deposits for the Tex-Mex acquisition, and incurred $4.4 million in capital expenditures. During the quarter, we also sold a total of approximately 0.2 million shares of common stock under our at the market sales agreement for net proceeds of approximately 1.1 million. After deducting less than $0.1 million in offering costs. In regard to our revolving credit facility, we have received approval from our lender, MidFirst Bank to extend the maturity of our facility to April 2028 and increase their total commitments from $50 million to $55 million. Also, we expect to receive $10 million in additional commitments from a new lender, PriSM Bank, which will bring our total commitments to $65 million. We currently expect to close on the additional commitments and the maturity extension during our fiscal fourth quarter. Yesterday we declared a quarterly cash dividend of $0.12 per share payable on June 30, 2025 to stockholders of record on June 13, 2025. This will be our 47th consecutive quarterly dividend, underscoring our commitment to returning capital to shareholders and maintaining a stable and reliable dividend policy. I'll now hand it back over to Kelly for closing comments. Kelly Loyd Thanks, Ryan. Evolution continues to perform well operationally, financially, and strategically. Our 3rd quarter results underscore the strength of our diversified long-life asset base and our ability to meet all capital commitments, debt repayment, and return capital to shareholders. This reflects the benefits of a balanced portfolio that can both flourish in favorable pricing environments and withstand cyclical lows. As we look ahead, our priorities remain unchanged. Maintain and look to grow our longstanding dividend. Preserve financial flexibility and grow free cash flow. We will continue to deploy capital with discipline, prioritizing acquisitions and focusing development on natural gas weighted areas while deferring oil weighted drilling to optimize value and timing. Backed by a resilient business model and consistent. Is well positioned to navigate commodity cycles and deliver long term value to our shareholders. With that, I'll turn it over to the operator to begin the Q&A session. Thank you very much. Operator We will now begin the question-and-answer session. (Operator Instructions) Jeff Gran, Northland Capital Markets. Jeff Grampp Morning guys. Thanks for the time. Thank you. Kelly, you talked about some encouragement in the M&A market. I'm hoping you could touch a bit on, bid ask spreads that you're seeing, as we tend to see oil prices get weaker. I know bid ask spreads can kind of widen and make it challenging to get deals done, but seems like you're still encouraged nonetheless, so curious to get your thoughts there and then. Just if you're seeing any divergence in terms of you know oil versus gas weighted acquisitions that are there any trends or themes you can share in that regard that'd be helpful thanks. Kelly Loyd Sure, Jeff, like the way I kind of look at it, if you go on the oil front. I mean, look, if oil's going to follow the strip, which is sort of what we use in our budgets for say the next 12 to 18 months, I think we can all have a very strong estimate that domestic crude oil production is going to decline and the returns just aren't enough for enough profitable wells to be drilled at the strip price. The country's got so many new wells with super high declines nationwide. I mean, Unless you have a major demand shock, which I don't think we're going to, these tariffs seem to be more of a negotiating tool than trade killers. You're going to have to have crude production will go down, and then you're going to have to have it go back up. And the only way to do that is via the price mechanism, so prices will go higher. So if we're out there negotiating on the strip, I, on longli low decline stuff, I really like where we are on that and again, if it only like Tex-Mex, right, it's only declined 7%. And you buy it on today's strip and if you're expecting, in a couple of years or less prices to move back up, it's a heck of a place to want to go acquire. And so we are seeing stuff out there. We're seeing some of this is led by funds coming to the end of their life and needing to monetize, so you're always going to have that sort of activity and just natural stuff. You've seen some acquisitions, guys need to get rid of their non-core stuff, which is great, right right. We want to be, so you're seeing that and on the natural gas side, I mean it's the opposite, right? You have a really nice favorable strip going forward, so guys are willing to get paid on a discount for that because they know they're getting a decent price right now. So if we can, lock in a reasonable discount to that on low decline stuff for, a couple of years of hedging or so, then yeah, I mean that fits right in our wheelhouse. So. I don't know if that exactly answers your question, but that's sort of how we're looking at the world in M&A right now, and we're seeing seeing lots of opportunities across both sides. Yeah. Ryan Stash I would just, Jeff, I would just add, one of the areas we're seeing activity is scoop stack, which is nice because we obviously have a position there. But if you're looking at areas that have a nice mix of oil and gas, I think you're still seeing folks go to market, because there's optionality throughout there. And so we're encouraged by seeing some activity at least in Scoop stack for sure. Jeff Grampp Got it. That's super helpful. Thank you guys. And, at Chevaro, I'm curious, it seems like wealth came in cheaper and I know it's still early but performing better, so, good news on both fronts, but can we quantify at all how much under budget those wells were and then on the production side, it's still super early, but is there anything. Different about either the location of these wells or the completion technique that could explain the early time positive results, or is this just kind of general, bell-shaped curve where you're going to have some walls above type curve, some walls below that sort of thing. J. Mark Bunch Okay, yeah, hey Jeff, it's Mark. Thanks for calling in, by the way, and See, your first question was about how can we quantify the how much below AF, we think we're a little bit below 5% below AF, which is really good out here and on the ant quantitating, boy, if I can say the word, quantifying the performance of the wells, we're about 7 miles away from the 500 wells, which is the 1st 3 wells we drilled. Jennifer Wells are off to the east and it's a different part of the reservoir. We didn't encounter as much fracturing, so part of the issue with being able to drill it within cost was that we didn't have a lot of drilling problems when caused by fracturing. But honestly, it's also if you want to know the truth, if you really look around, it's kind of like a bell shape, you're right, it's a it's a district distribution of performance for these wells, and it's going to vary, throughout the field as you move around and so you're really just trying to like do the average of the wells, but these wells have come on really good. They're probably about 50% high right now to what we expected them to be producing on average. Jeff Grampp Super helpful, Mark, thanks. So to be clear, there was nothing different that you guys did it on the second batch of wells in terms of completion practices or lateral lengths or anything that would explicitly explain at least the early time results we're seeing. J. Mark Bunch Not what we think. I mean, we did have some ladder lengths on the initial round of wells that were short and like the the 504. 1 of the last we drilled was shortened quite a bit. It's about half the normal la length, but it also had a really good fraction which gives a lot of productivity. I mean, really, honestly, the completion technique and the drilling technique was very similar to the last time we did do some things that would optimize cost and help us out there and especially in the case where we lost a lot of fluid, we were able to reduce our drilling drilling fluid cost by a lot. So, but honestly, it's really just, it's, it was the same practice, different reservoir rock that we hit. Kelly Loyd Thank you. Operator Chris Degner, Water Tower Research. Chris Degner Hi, yes, thank you. I'm here for Jeff Robertson today and just wanted to, just a quick question on, The Delhi project and it looks like there's been a shift from CO2 floods into more of like a water flood, type of a development. I'm just curious, do you have any views on what the impact might be on LOE, over the longer term development of the field. Thank you. Kelly Loyd Yeah, Chris, this is Kelly. Thank you very much. Look, and I'm glad you brought it up because I'm not sure everyone is sort of paying attention to this. When Exxon decided to stop adding purchase CO2 to the field, honestly, we're kind of like hallelujah. We've been asking Denbury to do this for the last couple of years now. Look, I'm sure Exxon didn't really listen to us at all and came to came to this decision on their own accord, but this is what we really wanted for the last couple of years. Maximize efficiency of the recycled CO2. Replace the voyage with increased water instead of purchase CO2. It's on the order of 400,000 to 500,000 per month of cost savings to us, and we don't expect much if any difference in performance. In the past, when you saw CO2 purchases go down, it wasn't replaced by more water injection. It was just a loss in pressure. Now they're going to use additional water injections to replace that pressure at a way cheaper cost. It's just a much more economical way to run the field, and we think this is very exciting. That's great to hear. Thank. You. Ryan Stash Just get on the LE side. When we look at earlier, one thing you could do is obviously look back earlier last year when the line was down right on the cost side, and we were probably in the $25 per barrel plus or minus, category there when the line was down. So going forward, obviously production is because when you're looking at a per barrel metric, but as Kelly said, you're looking at about a $5 million per month or on a go forward basis called in the mid-20s on a dollar per BOE for LE cost. Operator Poe Fratt, Alliance Global Partners. Poe Fratt Hey, good morning. I just wanted to if you could break out, the net increase in production. It looks like you're sort of citing 850 BOE a day between Tex-Mex and Chabaru. I thought I heard you say Tex-Mex was running about 440. So does that imply that currently, Cheburu is running about 4:40 or 4:10 a day? Kelly Loyd So yeah, I mean, the way I would look at it, right, so I think Mark said that we were significantly above our type curve, but look, I'll just tell you, all 4 wells, the oil rate is still climbing like I think Mark said we're sort of at least 50% above where we have these things projected come on. So, again, super exciting, but we sort of put a low ball safe number out there at at 8:50, so, want to cover our bases there. Poe Fratt Just to clarify though, that does include about 440 from Tex-Mex. Kelly Loyd Yes, it does. J. Mark Bunch Okay, and that that's actually the latest number I have for Tex-Mex is about 440 BOE net, so I think it may be slightly higher than that, but that's pretty close and and the Chevaro number that we that was would be included at 850 is only for the new wells, not it does not include the first well yeah. Kelly Loyd And like I said. That's we don't know where it's going to settle out the wells are still climbing, so we're again, we want to put some sort of safe out there. I can. J. Mark Bunch Tell you right now that the two added togethers actually higher than 850. Poe Fratt That's helpful. And then you spent $4.4 million in the quarter as far as cap backs. Can you give me a sense on how much you're going to spend in the fourth quarter and then, is it too early to expect, a sort of ballpark CapEx number for fiscal 26? Ryan Stash On the fiscal 26th, yeah, it is. I mean, I think you probably saw in our in our press release and prepared marks we're working right now with with our partner PEDevco to figure out when we would start the backs, and obviously that would be a big driver of CapEx for the next. Year that plus you know any AEs we receive at Scoop stack, which you know we don't really have a feel for until we get them. I will say we are doing outreach for the operators right now in Oklahoma just as we go for a year in reserve report, so maybe we'll have a better feel for their budgets. So I think it's a little early for us to put out anything next fiscal year. We'll likely do that at the at our 4th quarter call, which is generally when we've done it. On the remainder of the year, so you know we do have some cap backs in the 4th quarter we expect on to get on the completion side, but we still think the overall budget that we put out for the full year is still is still valid. So I think that was what 12 to 14.5. So we still think we're going to have a little bit remaining for the Chevro wells on the completion side, possibly a little bit in scoop stack, but outside of that, we certainly don't expect that much additional capital in the fourth quarter. Poe Fratt Okay, and then can you just help me with the rationale for adding, a new bank, PRIM potentially is going to be added to your capital availability and can you just talk about that as far as opposed to, even expanding the Midlands a little bit larger. Ryan Stash Yeah, so you know I said this in the past, so obviously I know you're a little bit new to the name, so I think our credit facility terms are, very favorable as you look at the broader market. And so what we're able to do is effectively keep those same terms, which I think again I think is favorable to us, on both draw and spread and hedging covenants and keep them the same but add another bank. Mid first at kind of going from 50 to 55, that's kind of one of their higher hold levels for for the space. So in order to get the additional capacity, which we thought was important, to give us flexibility, we had to bring in another bank and it was a bank that's familiar with id first and a smaller bank that was comfortable with, us from a credit side and the and the actual facility terms as well. So, I think. I think that that was kind of the reason and obviously Mir has been a great partner to work with us here. So I mean if we were to obviously go larger with a larger, more transformative deal, we'd have to bring in some other banks. We've also, we've talked about that as well, but we think this kind of intermediate step in order to push out the facility, keep the terms the same, and increase the size, made a lot of sense. Operator This concludes our question and answer session. I would like to turn the conference back over to Kelly Lloyd for any closing remark. Kelly Loyd Yeah, thank you. Like I said, we just want to thank everyone for joining us on our call and. Like I said, we, we're really excited about, the results we began to see from from natural gas prices moving up. I think our natural gas revenue is up 34% in the quarter and, we're excited about the opportunities in front of us and the portfolio we have. So thanks again for joining. Really appreciate it. Operator The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Yahoo
31-01-2025
- Business
- Yahoo
Research Solutions, Inc. (RSSS): Scite's AI Growth in Research Workflow Transformation
We recently published a list of . In this article, we are going to take a look at where Research Solutions, Inc. (NASDAQ:RSSS) stands against other must-see AI news and ratings you might have missed. Northland Securities recently issued a rating for a stock amidst the DeepSeek AI frenzy. The firm noted that it isn't concerned about the AI models just yet and that it doesn't expect big tech giants to cut their capital expenditures when they report their earnings either. In light of this, the CEOs of tech giants such as Meta and Microsoft have recently defended their massive spending, noting how it was crucial to stay competitive in the new field. Investors panicked after news spread over the weekend about a Chinese startup DeepSeek having released AI models that were built using less power and chips. In response, executives of tech giants are saying that building huge computer networks has been crucial to serving growing corporate needs. Even then, investors have been losing their patience with the huge amounts of spending and a dearth of hefty payouts. READ ALSO: and DeepSeek has been causing a stir in the AI world and refuted the gap that previously existed between the AI capabilities in China and the US. After the first Chinese version of ChatGPT was released, there was a lot of disappointment in China considering it was not on par with ChatGPT. However, DeepSeek's AI models have shifted the AI narrative completely. Not only has it sparked a frenzy in the US, but even its domestic competition has been pressurized. This was made evident when Alibaba released a rival to DeepSeek's model on the Lunar New Year. According to the company, the 'Qwen 2.5-Max outperforms … almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405B'. Even though DeepSeek's AI models have been impressive, there is still skepticism and confusion regarding the demand for high-end AI chips and the need for power to run AI-centric data centers. 'There's plenty of uncertainty over what the true demand for state-of-the-art chips, semiconductor fabrication plants and energy will be'. For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (). A closeup of a software engineer showing the complexity of software Solutions, Inc. (NASDAQ:RSSS) is a vertical SaaS and AI company focused on simplifying research workflow for academic institutions, life science companies, and research organizations. On January 28, Research Solutions (NASDAQ:RSSS) announced that its AI-powered research platform, Scite, has grown by 250 percent year-over-year. The accelerated usage of their platform underscores its unique offering and helps it stand out for its broad access to pay-walled and open-access content, proprietary citation ranking data, expanded AI rights for comprehensive coverage, and flexible AI model integrations. The success of this platform is further exemplified by its implementation at Clemson University, streamlining research workflows and improving access to scientific literature. 'What makes our AI solution unique is our rights agreements with publishers. We have the most comprehensive access to scholarly content which is critical for our customers who require accurate, verifiable, and up-to-date research to make decisions. Additionally, we give customers the ability to choose which underlying AI model they use to ensure they get the best results and have choices as capabilities progress. Pairing this interoperability with our unique data and content access delivers consistently better outcomes for our customers'. Overall, RSSS ranks 10th on our list of must-see AI news and ratings you might have missed. While we acknowledge the potential of RSSS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RSSS but that trades at less than 5 times its earnings, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
31-01-2025
- Business
- Yahoo
8×8, Inc. (EGHT): Transforming CX with AI Innovations and Secure Pay
We recently published a list of . In this article, we are going to take a look at where 8×8, Inc. (NASDAQ:EGHT) stands against other must-see AI news and ratings you might have missed. Northland Securities recently issued a rating for a stock amidst the DeepSeek AI frenzy. The firm noted that it isn't concerned about the AI models just yet and that it doesn't expect big tech giants to cut their capital expenditures when they report their earnings either. In light of this, the CEOs of tech giants such as Meta and Microsoft have recently defended their massive spending, noting how it was crucial to stay competitive in the new field. Investors panicked after news spread over the weekend about a Chinese startup DeepSeek having released AI models that were built using less power and chips. In response, executives of tech giants are saying that building huge computer networks has been crucial to serving growing corporate needs. Even then, investors have been losing their patience with the huge amounts of spending and a dearth of hefty payouts. READ ALSO: and DeepSeek has been causing a stir in the AI world and refuted the gap that previously existed between the AI capabilities in China and the US. After the first Chinese version of ChatGPT was released, there was a lot of disappointment in China considering it was not on par with ChatGPT. However, DeepSeek's AI models have shifted the AI narrative completely. Not only has it sparked a frenzy in the US, but even its domestic competition has been pressurized. This was made evident when Alibaba released a rival to DeepSeek's model on the Lunar New Year. According to the company, the 'Qwen 2.5-Max outperforms … almost across the board GPT-4o, DeepSeek-V3 and Llama-3.1-405B'. Even though DeepSeek's AI models have been impressive, there is still skepticism and confusion regarding the demand for high-end AI chips and the need for power to run AI-centric data centers. 'There's plenty of uncertainty over what the true demand for state-of-the-art chips, semiconductor fabrication plants and energy will be'. For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (). A close-up view of a computer screen filled with data and a single figure pointing to a graph.8×8, Inc. (NASDAQ:EGHT) is an integrated Platform that provides enterprise communications solutions. On January 30, the company announced advancements to its 8×8 Platform for customer experience, i.e. CX. The advancements include expanded 8×8 Secure Pay capabilities, AI-powered 8×8 Intelligent Customer Assistant innovations, and new customer engagement and employee collaboration enhancements. The goal of these innovations is to elevate CX, boost employee productivity and efficiency, as well as empower organizations to engage with customers across their preferred channels. '8×8 continues to empower businesses to redefine how they connect, collaborate, and deliver exceptional customer and employee experiences. These innovations, from AI-powered solutions to enhanced security and streamlined workflows, ensure our customers stay ahead in an ever-evolving digital landscape. Our customers are given the tools to transform their CX strategy and adopt AI-powered technologies efficiently, eliminating complexity and technology risk, resulting in immediate business impact.' Overall, EGHT ranks 7th on our list of must-see AI news and ratings you might have missed. While we acknowledge the potential of EGHT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than EGHT but that trades at less than 5 times its earnings, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
