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BenzingaEditorial

Pickups, SUVs and CUVs – The Bright Future of the Specialized Equipment Market

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Pickups, SUV News

Pickups form the largest share of the specialty equipment industry because they are simply a great platform for modification. The Specialized Equipment Market Association (SEMA) rated Ford Motor’s (NYSE:F) F Series as the most customizable truck and its majesty, Fiat Chrysler Automobiles’ (NYSE:FCAU) Jeep Wrangler as the winner of the SUV category. And besides providing valuable opportunities for customization, pickups have taken the throne from traditional passenger cars and they show no signs of stopping.

Pickups are on the throne – and they are bringing Workhorse Group Inc along!

There are 55.9 million registered pickups in the United States, making 20% of all vehicles on the road. Led by Ford F-150, there’s also quite a bit of Toyota Motor’s (NYSE:TM) Toyota Tundra. As for a snapshot of the accesorization subsegment, total specialty-equipment sales in 2018 amounted to $12.03 billion and made 27% of the specialty-equipment retail market. These products include, maintenance oil, wax and cleaning products, trailer and towing accessories but also exterior appearance upgrades, batteries and truck bed liners. People love to add big wheels to their pickups, enhance exterior appearance so those products also always tend to do well and logically, trailer and towing products are most commonly purchased by pickup owners. But it is truck beds that provide valuable opportunities that aren’t present with other vehicle segments for utility products, such as racks and toolboxes, plus liners and bed covers.

Speaking of truck beds, no wonder Workhorse Group Inc (NASDAQ:WKHS) has its hands full with the electric start-up company occupying its strongest position to-date, both operationally and financially. During its third quarter, the company signed several partnership deals to leverage its intellectual property while more than doubling its loss of a year ago from $5.5 million to $11.5 million due to higher interest expense.
The company recorded sales of $4,000 which is quite down from $11,000 in the same period last year, however despite the fact that the company delivered fewer trucks, it did so at higher prices due to making a transition to a new generation, causing its R&D prices to increase 13%. Workhorse received a non-dilutive 10% stake in Lordstown Motors which purchased the 6.2-million-square-foot plant from General Motors Co. (NYSE: GM) on Nov. 7. Also on a brighter note, the company’s balance sheet of September 30th shows cash and cash-equivalents amounting to $9.3 million compared to only $1.5 million on December 31, 2018.

Meanwhile, Franchise Holdings International Inc (OTC:FNHI)’ Worksport was just granted a third U.S. patent protecting its innovative covers that provide unique full-bed access for light trucks such as Ford F series. In September, the company received its second U.S. Patent Office trademark allowance, so now they have four in 2019 that add protection to its brand strategy. This innovative company is also looking to complete its Helios line with complimentary truck accessories able to transform sunlight into storable energy so that they can extend the driving range of forthcoming electric trucks. Worksport’s proprietary solar technology infused with its most advanced truck bed covers is more than a major breakthrough innovation, it represents an endless opportunity for future growth.

Pickup market outlook

The top pickups as far as accesorization goes are GM’s full-size pickups and surprise, Ford’s F series. But Toyota’s Tacoma and Tundra are on the list as well as Nissan Motor Co. (OTC:NSANY)’s Nissan Frontier. Of the roughly 56 million pickups in the United States today, nearly 60% of them are either GM Full-Size or Ford F-Series as these two models combined account for almost 12% of all vehicles on the road. GM and Ford’s market dominance is expected to continue with estimated additional 12 million trucks for 2026- speaking for a safe haven for the specialized car equipment industry! GM has 17.6 registered vehicles on the road with Ford following with 15.6 million. But, the rebirth of several mid-size models are also expected to provide an additional boost by bringing in new buyers, with Toyota and Nissan having quite a number of enthusiastic owners, creating a strong market for their specialty equipment. Great news for Toyota that is struggling to adapt to the ‘electrification’ era.

SUVs

With 36.7 million registered vehicles in the United States making 13% of all vehicles on US roads, top models are again led by Ford, and Ford Explorer to be exact. But then there’s Jeep taking second and third place, GM’s Chevrolet Tahoe, Toyota’s Toyota 4Runner, with Hyundai Motor Company (OTC:HYMTF) Kia Sorento taking 8th place and FCA’s Dodge Durango taking 9th place. But don’t worry about Fiat Chrysler Automobiles, as despite a miss on revenue targets, its stock gained 17.3% in October, mostly due to the good merger news with France’s Peugeout SA (OTC:PUGOY) which was announced on the same day of the earnings release.
The specialty equipment sales for the SUV segment amounted to $5.93 billion in sales in 2018, making 13% share of the market. While SUVs are not as versatile as pickups for accessorization, many owners upgrade their SUVs with utility parts and for off-roading as many SUVs topping the list are in fact often used to go off-the road.
But it is Jeep that dominates the after-market. The Jeep Wrangler is widely considered to be one of the most modified and versatile vehicles on the road today as nearly 40% of Jeep Wranglers are accessorized in some way, be it shape or form.

Crossovers are becoming more popular

Although a crossover (CUVs) are becoming more and more popular and their distinction is not always clear, they are a separate segment because SUVs are built on truck platforms whereas CUVs are built with unibody construction. With SUVs showing a long tenure, consumer interest is expected to continue in the coming years. They are more profitable for auto-manufacturers to make but there are economic factors like increased gas prices and uncertain economy could decrease consumer buying power. But when it comes to accessories, they will persevere for all those who wish to optimize their utility with a lot of specialty after-market upgrades.

CUVs

The fastest developing segment makes 17% of all vehicles on US roads amounting to 48.3 Million registered CUVs are being led with Honda Motor Co (NYSE:HMC)’s CR-V, the one and only model that crosses in between not being a true pickup nor an SUV, a true jewel for this ever evolving company. Then there’s of course, Ford Escape, Toyota RAV4, Chevrolet, Nissan, Subaru Forester and Jeep Cherokee. CUVs created 11% share of the specialized equipment market. Having outpaced even pickups, it is logical to assume consumers will turn to accessorizing CUVs like they do with SUVs. That being said, there are obstacles. The segment is fragmented as there are 120 models in operation and just as many models are expected to be sold in the future. As a consequence, it will be difficult to create products that will function across all platforms. The large number of platforms limits the opportunity for companies seeking to sell specialty parts as there is no clear single model that dominates the market. The Ford Escape and Toyota RAV4 lead the pack in terms of registrations having been out longer. However, there are many other CUVs close behind and all this diversity makes it challenging to focus on to a single model. The popularity of CUVs is not expected to subside soon but, many CUV models are relatively new and have little history with the accessorization market so there will be a challenge to decide which models to focus on. But one thing is certain, while the conventional car market continues showing signs of fatigue, pickups, SUVs and crossovers are booming- and show no signs of stopping. And even if this wasn’t case, there’s so still so much room in upgrading older models so all is bright for the specialized equipment industry when it comes to this segment. Worksport has its future guaranteed with its breakthrough solar technology that can surely disrupt the truck accessories market but Workhorse Group is also in for the ride once the company finishes its transition to the new generation as pickups are definitely here to stay.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

US Airlines Shaking Up Their Infrastructure

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Airlines News

Jet Blue Appoints Two Vice Presidents, United Airlines Announces CEO and American Airlines Introduce a Passport Scan Feature

Jet Blue (NASDAQ:JBLU) is once again the subject of a possible merger speculation and by no other than Delta Air Lines (NYSE:DAL) who invested quite a lot in earning a reputation for its smooth public relations strategy. This intrigue came out as both companies dropped out of an upcoming Buckingham Research conference next week. But the speculation has resulted in Jet Blue’s shares trading up 2.8% on December 4. The U.S.-based airline just also announced its new company’s vice president for labor relations as well as the vice president for enterprise information security. But a lot more is happening in that blue sky and to those airlines flying in that sky to be exact.

Performance – is Jet Blue an easy takeover mark?

The US-based company belonging to the services and airlines sector has a market cap of $5.52 billion. Its stock has risen 0.7 percent one month since its last earnings report in October. But it is underperforming the S&P 500 but let’s look a bit deeper for a clearer “blue” image. When excluding 4 cents from non-recurring items, the company’s latest earnings per share came in at 59 cents per share, managing to exceed Zach’s consensus estimates. But more importantly, quarterly earnings jumped 37.2 percent year-to-year due to low fuel costs. Average fuel cost per gallon and including fuel taxes decreased 11% year over year. And passenger revenues improved 3.3 percent year-over-year and they ultimately, accounted for 96.1% of the top line so it’s safe to say, they make the revenues. But despite the fact that even other revenues were up 21.6 percent, both revenue per available seat mile and passenger revenue per available seat mile dipped. Capacity, also measured per seat mile, and traffic measured in revenue passenger miles, also expanded. And total operating costs shrined 4.7 percent year over year despite increasing costs of an expanding workforce. The quarter ended with cash and cash equivalents amounting to $695 million which is more than $474 million from the end of 2018. Total debt decreased slightly from 2018’s $1, 670 million to $1,636 million. For the fourth quarter, the company is well on track to achieve its 2020 EPS target in the range of $2.5-$3. Meanwhile, Norwegian Air just appointed Jet Blue’s Marty St. George as its interim Chief Commercial Officer as part of a significant management ‘reshuffle’ in an effort to achieve profitability in the coming years so clearly Jet Blue has something worth tapping into. Its latest quarter did show a positive trend, but can it keep it up is the question.

Competitors

According to many analysts and industry experts, tough times are ahead for all US airlines. And all airlines in general, as even The Emirates Group predicted difficulties for its subsidiary airline whose net profit slumped 86% in the first half due to both higher fuel prices but also low-cost competitors, as revealed on November 20th. Operating costs of the largest airline in the Middle East increased 13 percent compared to last year with fuel expenses rising 42 percent mostly due to higher prices.

But United is doing more than ok

Meanwhile, United Airlines Holdings (NASDAQ:UAL) sealed its succession plan on Friday. Its next CEO will be its President Scott Kirby, an industry veteran who along with current CEO, Oscar Munoz, orchestrated the impressive turnaround for the company. Profits have grown and performance has improved, so all Kirby has to do is keep it up. The company’s shares have already 87% since Kirby became president of United, after leaving American Airlines Group Inc (NASDAQ:AAL) who just introduced passport chip scanning feature to its to the app on Wednesday. Using the technology behind cashless payment system like Apple’s (NASDAQ:AAPL) Apple Pay, it first airline to use near field communication (NFC) technology to securely transmit passport information. Although passport will still need to be shown when boarding, passengers will surely be grateful for the time-saving effect gained by eliminating the need of an American agent opening and scanning the passport at the airport.

Outlook

Everyone is clearly reshaping their management to ensure that the captain of the boat is brave and equipped to handle the complexity of such a mature and challenging market. With the two new appointments, Jet Blue has shown that it supports the vision of its crew members being its greatest differentiator and that its greatest focus is safety and security. But is this enough to differentiate the “Jet Blue experience”? Its latest earnings revealed positive trend, but the question is can Jet Blue persevere in this direction? Especially considering the competitive pressures from its peers and unfavorable winds ahead.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

Johnson and Johnson Emerging Out of a Dark Place

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It seems that Johnson and Johnson (NYSE:JNJ) has finally started shaking off those heavy legal headwinds. Accusations of tainted baby powder was just the latest chapter in its long book of controversy. Although the complicated legal process can drag on for years, its stock has posted a 6% return in the first 11 months of 2019. Dow’s return was 22% return but the result highlights the company’s resiliency in the face of heavy negative sentiment and severe legal headwinds. And after it announced extensive tests showed no trace of asbestos that FDA claimed to find in October, its stock rose 1% on Wednesday.

No asbestos after all!

On December 3, as part of Johnson and Johnson’s latest effort to prove the safety of its products, more tests showed that the baby powder was free of asbestos. Therefore, the company concluded that the most probable cause of FDA’s report that led to a nationwide recall of 33,000 products in October was due to either a contaminated sample, analyst error or both. This was the first time the company recalled its famous baby powder for possible contamination with this known carcinogen, and also the first time US regulators announced such a finding in this product. But, this was only the latest blow as the company is facing more than 15,000 lawsuits that also target its opioids, medical devices and the antipsychotic Risperdal. Just in September, they were forced to pay $572 million after being found guilty of deceptive marketing relating to its opioid drugs. They even needed to pay $8 billion in damages to a consumer due to not warning that use of Risperdal could cause male breast growth. And let’s not forget patent concerns as it already lost US patent exclusivity to Remicade which was its once top-selling drug and its last US patent for Stelara which generated 6% of total revenue last year is about to expire in 2023. And there are many lawsuits on this front as well.

Position

This is the world’s largest healthcare company. But the question is: is it eroding? While its brand has remained strong through it all, it is dropping in popularity and consequently, value, due to all this reputational damage.

Bayer (OTC:BAYRY) is also facing its legal battle but at least it managed to buy more time. The company reached an agreement to postpone lawsuits over the alleged cancer-causing effects of its glyphosate-based weed killers, giving more time for talks seeking a settlement.
The Cincinnati-based maker of consumer goods, Procter& Gamble (NYSE:PG) decided to commercialize the research on packaging for liquid products through an Innventure portfolio company called AeroFlexx. Their revolutionary package solution is at least 50% less plastic, enhances the consumer experience and reduces shipping costs as it’s easier to move along the supply chain. Overall, it has great odds of boosting P&G’s revenue.

Unilever (NYSE:UL) just hired its new CMO, 13 months after it got its new CEO. The CMO title went to Conny Braams, a not-so-well-known operational hero that use to run its middle-Europe segment. By not going for a ‘brand-building’ name, the company has put a clear emphasis on wanting to build its complex operational effectiveness. Like others, it is being squeezed by discount retailers and venture capitalists who offer both cheap products and premium innovations and these are not easy to compete with. And let’s not forget Colgate Palmolive (NYSE:CL) which is generating significantly more profit after accounting for expenses comparing to its market peers, yet it is a somewhat riskier investment.
due to not investing in short-term assets in an optimal way. So, a somewhat mixed picture showing both strengths and weaknesses. As of the whole sector.

Outlook

The bottom line is that despite the reputational damage due to an endless flow of legal proceedings, the stock is not showing any signs of technical damage. This surely raises the odds of breaking out in the coming months as the company continues to stabilize as all that legal dust settles. Investors have a reason to worry considering all those eroding factors. But considering the weight of those headwinds, it has always found a way to pull through whereas other companies facing similar challenges have seen their stock plunge. One thing is for sure: the more than 130-years old healthcare conglomerate deserves a medal for stock resiliency, or to be more precise, for its successful diversification across healthcare.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

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BenzingaEditorial

3M Stock Buzz Despite the Harmful Trade War

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Industrial conglomerate which brought the world Post-It-Notes, 3M (NYSE:MMM) is suffering due to consequences of the trade war between US and China. Besides scotch-tapes, the company also has a drug delivery business and makes pretty much everything, automotive adhesives and touchscreen displays included. And it is also known to regularly buy and sell businesses as part of its strategy. And according to Bloomberg, the newest sale that the company is exploring is of its drug delivery unit. Consequently, shares rose about 4% to $171.01 during the morning trade on Friday.

Divestiture strategy

The St. Paul, Minnesota-based company had its biggest-ever deal by buying a bandage maker this year for $4.4 billion. Last year, it sold a communications business for about $900 million. Its CEO, Mike Roman, spoke on Thursday and although he did not name a business segment in particular, he clearly emphasized that if there is a better ‘natural’ owner out there, the company’s management will divert that asset as part of its strategy to create value for shareholders. What would be strange, however, is that the company would consider selling part of its very bright segment, healthcare. In its latest quarter, total sales of this segment rose 4.7 percent.

Headwinds

On October 24th, third quarter revenue fell below analyst estimates as sales amounted to $8.0 billion, which is a year-on-year drop of 2 percent. The company has cut its full-year profit forecast as many other US corporations who are suffering from the consequences of the intensifying trade war. Its organic local currency sales declined 1.3 percent. But its acquisitions, net of divestitures, increased sales by 0.6 percent.
Due to its diversified business model, this conglomerate belongs to two sectors, the industrial goods and diversified machinery. But, the landscape of both industries is filled with fierce competitors. And its market capitalization of $94.99 billion is not enough to make it invincible. There’s General Electric (NYSE:GE) with historical ties to no other than Thomas Edison, Danaher Corporation (NYSE:DHR) but also many others. And 3M’s transportation and electronics segment sales fell 4.4 percent in the latest quarter. Meanwhile, despite not generating as much profit after accounting for expenses as its peers nor doing such a good job of managing its assets, GE’s stock rose 2.87 percent on Friday, December 6th. Although Wall Street has somewhat mixed reviews, it is overall also a stock with reasonable ROI potential.

Outlook

Back in the good old days, this was the one company that didn’t have a “Pepsi to its Coca Cola”. By all means, it defied being pigeonholed. But a lot has changed since it was founded in 1902 and after its many innovations that became parts of our everyday lives. Until 2016, it managed to outperformed the market for three consecutive years. But, it is not immune to a weakening macroeconomy that now remains a challenge. And 3M needs to continue improving its operational effectiveness, managing costs, reducing inventory levels but moreover, it needs new innovations to generate strong growth and premium returns.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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