AutoZone easily beat earnings and sales estimates for its fiscal fourth quarter but the stock was falling after sales in the company’s domestic commercial division came up short.
AutoZone (ticker: AZO) posted fourth-quarter earnings of $46.46 a share, rising from a year ago and beating Wall Street’s estimate of $45.17.
Net sales for the…
easily beat earnings and sales estimates for its fiscal fourth quarter but the stock was falling after sales in the company’s domestic commercial division came up short.
(ticker: AZO) posted fourth-quarter earnings of $46.46 a share, rising from a year ago and beating Wall Street’s estimate of $45.17.
Net sales for the automotive replacement parts maker were $5.69 billion, also climbing from the year-ago quarter and beating expectations of $5.61 billion. But total domestic commercial sales were $1.499 billion, below the $1.55 billion analysts had forecast.
Same-store sales for the quarter rose 4.5%, falling from 7.1% a year ago but higher than the 2.4% jump analysts had expected.
“While we started this quarter slowly, we saw improvements in the back half of our quarter,” said CEO Bill Rhodes in the earnings release. “Despite lower-than-expected growth in domestic Commercial, we believe that the initiatives we have in place and are implementing will drive stronger growth in fiscal 2024.”
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AutoZone stock fell 2.2% to $2,467 in premarket trading. Coming into Tuesday’s session, shares have gained 2.3% this year.
Write to Emily Dattilo at emily.dattilo@dowjones.com
has been playing second fiddle to its larger ride-hailing rival, but new CEO David Risher bought a large block of stock backed by his optimism for the company.
Lyft stock (ticker: LYFT) cratered 74% in 2022, far worse than the 41% drop in
stock (UBER). Both have recovered in 2023, but that has been lopsided, as well, with Lyft stock rising 1% compared with Uber stock’s 80% surge.
Risher was named Lyft CEO effective on April 17, and one of his first acts was terminating nearly 1,100 employees, about 26% of the workforce, that month. Disappointing guidance the next month sent shares sliding. On Aug. 8, after the market closed, Lyft reported strong second-quarter numbers that were overshadowed by a mixed outlook. Shares slipped.
With Lyft stock still smarting, Risher paid $1.1 million on Aug. 11 for 100,000 shares, an average price of $11.46 each. According to a form he filed with the Securities and Exchange Commission, Risher now owns 12.4 million shares, including grants of restricted stock units.
In response to a request for comment, Risher wrote in an email, “This is all about investing in Lyft as we build a very successful, very customer-obsessed business. Seeing this team in action shows me it’s the best investment I could make.”
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It’s his first open-market purchase of Lyft stock since taking the helm, although he has been a director since July 2021. A former
(AMZN) executive, Risher also co-founded and headed Worldreader, a nonprofit firm that promotes reading for children.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.
Lucid‘s largest shareholder is showing growing support for its electric vehicle investment.
The Saudi Public Investment Fund, or PIF, bought 265,693,703 shares of Lucid (ticker: LCID) stock in a private placement of common stock for an average price of $6.83 a share. It’s a huge $1.8 billion purchase representing almost 15% of the total stock outstanding, before the issuance.
It…
‘s largest shareholder is showing growing support for its electric vehicle investment.
The Saudi Public Investment Fund, or PIF, bought 265,693,703 shares of
(ticker: LCID) stock in a private placement of common stock for an average price of $6.83 a share. It’s a huge $1.8 billion purchase representing almost 15% of the total stock outstanding, before the issuance.
It now owns about 65% of the common stock outstanding, up from about 60% before the purchase. PIF didn’t immediately return a request for comment about the purchase.
The purchase was made on June 22. Shares closed that day at $5.73 apiece. Shares rose 1.5% Monday while the
fell 1.2% after the company announced a partnership with
(AML.London). Aston will buy products from Lucid and Lucid got cash and stock in return.
Lucid shares are up another 3.1% in after-hours trading Monday following the disclosure of the purchase.
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Investors, apparently, believe more capital is a positive for the company even if existing shareholders own a little less of the company after the offering. Capital is important as Lucid ramps sales. Wall Street sees the company using about $10 billion over the coming four years before Lucid generates free cash flow after achieving about $13 billion in annual sales. Analysts project 2023 sales of about $1 billion.
It’s a lot of growth and a lot of cash. Higher interest rates and more EV competition have sapped some investor enthusiasm for start-up EV stocks. Lucid shares are down about 71% over the past 12 months.
Write to Al Root at allen.root@dowjones.com
Andrei Echeverria brings in up to $14,000 per month letting strangers drive his six cars on rental platform Turo.
Andrei Echeverria
Andrei Echeverria isn’t your average car enthusiast: In 2019, he turned his hobby of fixing up cars and trading them for flashier models into a lucrative side hustle.
Echeverria, 32, brings in up to $14,000 per month renting his six vehicles out to strangers in Boston on the rental platform Turo, according to documents reviewed by CNBC Make It.
The side hustle started with one car, a great location and some clever strategy. Echeverria lives mere miles from Boston Logan International Airport, and capitalizes by undercutting the prices of nearby car rental companies.
His 2021 Jeep Gladiator, for example, is listed on Turo at $89 per day. Renting the same car from the airport’s Enterprise Rent-A-Car costs $204 per day, according to the company’s website.
That strategy particularly paid off as people returned to travel in 2021, seeking cheaper-than-usual ways to get around amid the Covid-19 pandemic. One car’s revenue helped Echeverria buy a second car, a third, ultimately a sixth — all flashier models that allowed him to charge more per customer and quickly grow his business.
Last year was his most successful year so far, bringing in more than $94,000 — including about $60,000 in profit — on top of his $80,000 per year salary as a full-time nursing home maintenance manager, he says.
Here’s how Echeverria turned his passion for cars into a nearly six-figure side hustle:
When Echeverria was 16, his mom helped him finance a forest green 2002 Honda Civic. But it wasn’t solely for driving: Echeverria wanted to work on the car in his family’s garage, sell it and use the money to buy a Nissan 350Z.
Just over a year later, he did exactly that. Then, at age 18, he financed another car, an Infinity G37 X sedan. Over the next 16 years, he bought, fixed and sold his way up to a two-seat BMW 435, his dream car at the time.
Then, in late 2018, Echeverria saw a YouTube ad for Turo. He figured the platform could help expediate his process, and says his BMW quickly attracted paying customers. That summer, he used his Turo earnings to buy a 2014 Audi A7 outright, he says.
In November 2019, Echeverria bought a third car, a Mercedes-Benz, with a $10,000 down payment and $17,000 loan, he says. With three cars on Turo, Echeverria says he brought in about $3,500 per month.
Having uncommon models helped, he adds: “I always wanted to get something different. I didn’t see many cars on the road like [mine].”
The following year, the pandemic’s economic effects created another opportunity: low bank loan interest rates.
Echeverria took advantage, swapping the Mercedes for a newer model and bringing his monthly sales up to $4,500 per month. The following year, he acquired his fourth and fifth cars, an Audi S5 and a BMW C4.
He probably paid a premium: Used cars were a hot market in 2021, up 28% from 2020 and 47% from 2019, according to Kelley Blue Book.
But it paid off, he says. As Americans began traveling again, demand for rentals skyrocketed. Even with the additional cars, Echeverria found himself overbooked.
He bought two more cars, 2018 SUV models from BMW and Jaguar, his sixth and seventh vehicles. By October 2021, his net profits were up to about $9,500 per month.
When the market started cooling off later that year, Echeverria shifted his business model again, buying a Jeep to attract customers who wanted a cheaper economy model.
The move brought his fleet size to eight, before clients crashed two of his cars in late 2022. Instead of replenishing his stock, Echeverria used the insurance money from Turo — about $21,000 — to pay off some of his other car loans, he says.
He’s also learned to cut costs at the expense of his time, he says — spending eight to 10 hours per week managing, booking and cleaning his cars. He still pays $20 per month on a car wash all-access pass, he adds.
Echeverria parks the cars in his driveway and free Turo-designated spaces at the airport, and says he’s developed close relationships with local repair shops, who offer him discounts to keep him and his six vehicles coming back.
Those kinds of relationships are crucial to his success, he says: “You cannot do everything yourself. You’re going to need somebody who knows about certain models or how to repair the cars. It’s about meeting the right people and building trust with them.”
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- Stellantis will use a Super Bowl ad for its Ram brand to indirectly take shots at the current all-electric vehicle market, specifically pickup trucks.
- The ad, called “Premature Electrification,” spoofs ads for male sex-enhancement drugs, as well.
- The 60-second commercial also debuts the production version of the Ram 1500 REV electric pickup that is expected to go on sale next year.
Ram’s 2023 Super Bowl ad debuts the production version of the Ram 1500 REV electric pickup that is expected to go on sale late-next year.
Screenshot
DETROIT – Stellantis will air a 60-second Super Bowl ad for its Ram brand to indirectly take shots at the current all-electric vehicle market, specifically pickup trucks.
The commercial, called “Premature Electrification,” or “PE,” spoofs ads for male sex-enhancement drugs. It features electric vehicle owners discussing problems they’ve had with their trucks – from insufficient range and power to problems charging and other potential issues associated with EVs.
“Are you excited about buying an electric vehicle but worry that it could leave you … unsatisfied?” says the ad’s star and narrator Jason Jones, a comedian best known for his work on “The Daily Show with Jon Stewart” and for appearing in comedic Budweiser and Molson ads. “Then you could be one of many Americans concerned about premature electrification.”
The ad debuts the production version of the Ram 1500 REV electric pickup that is expected to go on sale next year. Online reservations for the electric pickup, which debuted as a concept in January, also open Sunday. The vehicle resembles the concept but also the current Ram pickup, which has a traditional internal combustion engine.
Stellantis Chief Marketing Officer Olivier Francois, who has become known for unique and well-received Super Bowl commercials, said the main message is Ram’s electric pickup may not be the first to the market, but it’s going to be worth waiting for compared to the current offerings.
“We have an incredible truck that’s electric that can really deliver on what truck people want a truck to do, so ‘wait, wait and see’ is the meaning of the ad,” he told CNBC. “That’s our pitch.”
When the electric Ram arrives to market, it’s expected to join an increasingly crowded yet relatively unproven segment that includes the GMC Hummer EV, Rivian R1T, Ford F-150 Lightning and Lordstown Endurance. Others such as the Chevrolet Silverado EV, GMC Sierra Denali and Tesla Cybertruck are expected to be on sale by next year or sooner.
“We are on an exciting electrification journey that will see Ram push past the competition in areas customers care about the most: range, payload, towing and charge time,” Ram Trucks CEO Mike Koval said in a release.
Jason Jones, a Canadian-American comedian best known for his work on “The Daily Show with Jon Stewart,” stars and narrates Ram’s “Premature Electrification” Super Bowl 2023 ad.
Ram
The ad is unique compared to most of the company’s Super Bowl spots under Francois, who has aired many thought-proving commercials and convinced celebrities not known for being in ads such as Bruce Springsteen, Bill Murray and Eminem to rep the automaker and its vehicles or brands.
The demeanor of the commercial is similar to a 2015 Super Bowl ad aired under Francois by Fiat Chrysler – a predecessor of Stellantis – that followed the path of a little blue pill that an amorous Italian man accidentally loses as he attempts to swallow it.
“It’s lighthearted,” Francois said. “I think it’s just a need. We’ve been through a lot – from Covid to the war in Ukraine to inflation and recession. People want comedic relief.”
Francois said the commercial is not meant to make light of anyone who takes male enhancement drugs. He said the “spoof” ad is aimed at the commercials for the prescription drugs and the current electric vehicle market.
Much like a real pharmaceutical commercial, viewers should pay attention to the fine print. In addition to confirming symptoms of premature electrification aren’t real but “certainly worth talking about,” it says “range-lengthening technology” mentioned in the ad for the vehicle will “come later.”
The Ram ad is scheduled to air in the fourth quarter of the game between the Philadelphia Eagles and Kansas City Chiefs. Before then, the automaker also will air a 60-second ad for its Jeep brand during the second quarter, focusing on its “4xe” Wrangler and Grand Cherokee plug-in hybrid electric SUVs.
The Jeep ad is a much more traditional Super Bowl ad, featuring dancing animals along with the electrified Jeeps. Where it’s unique is the music. The commercial features a remixed version of the 1983 hit “Electric Boogie” by Marcia Griffiths. The song, also known as the “Electric Slide,” was initially recorded by the late Bunny Wailer in 1976.
“The two ads are not pursuing the same objective,” Francois said. “While Jeep is all about pushing the 4xe plug-in hybrid technology … to really push sales, Ram is a totally different thing. We have nothing to sell right now. It’s an investment on the brand itself.”
Griffiths is featured on the new version of the song along with Grammy Award winning reggae artist and producer Shaggy and others. Stellantis is releasing the song Sunday on streaming services.
The “Premature Electrification” and “Electric Boogie” ads were created in partnership with Chicago-based agency Highdive. Both ads were released online Sunday ahead of the Super Bowl.
Stellantis declined to release how much it spent on the ads. The cost of a 30-second commercial is approaching $7 million, according to Kantar Media.
Jeep’s one-minute Super Bowl ad features dancing animals and the brand’s plug-in hybrid electric Jeep Wrangler 4xe and Grand Cherokee 4xe SUVs.
Screenshot
A revitalized Hertz is set to put investors in “the driver’s seat,” to borrow a phrase from its 1960s ad campaign.
This isn’t the Hertz of old, however. Before 2020—and its bankruptcy filing—the company was known as the industry’s bad actor for the periodic price wars it would launch, contributing to the boom-and-bust nature of the business. Now, car rentals are dominated by three financially disciplined companies—
(ticker: HTZ),
(CAR), and the private Enterprise Rent-a-Car—that control 90% of the U.S. market, resulting in a more stable and better managed industry than ever before.
Hertz looks like the best of the bunch. It remains highly profitable, leads peers in adding electric vehicles to its fleet, and has bought back over 30% of its stock since it emerged from bankruptcy in mid-2021. At a recent $19, Hertz trades for eight times projected 2023 earnings of $2.32 a share, and at a slight discount to Avis.
“Hertz trades at a single-digit P/E, has low leverage, and is rapidly buying back shares,” says Andy Taylor, a portfolio manager at Carronade Capital Management, which owns the stock. “The industry has learned cash generation is better than unprofitable market share.” When that happens, he notes, stock valuations rise.
Hertz has $2 billion of net corporate debt, excluding $11 billion of asset-backed debt secured by its fleet.
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Why does Hertz trade so cheaply? Part of the problem is the nature of the travel business, with its cycles of good times and bad. Other concerns have weighed on the stock as well. Profits are expected to drop nearly 40% this year because the used-car market has cooled off after a sharp rise in prices in the two years ended in mid-2022, and Hertz needs to sell older vehicles to make room for new ones.
One encouraging sign is that Hertz has a $1 billion cushion in its asset-backed bonds—meaning that the market value of the fleet is $1 billion more than the carrying value of the cars. This gives Hertz the ability to absorb any weakness in used-car pricing.
The company was upbeat on its earnings conference call this past week, and Kenny Cheung, Hertz’s chief financial officer, expanded on that in comments to Barron’s. He noted that U.S. airplane travel last Sunday was up 20% year over year, while corporate demand is now back to 80% to 85% of 2019 levels. Lucrative international travelers to the U.S., who spend more than Americans on rental cars, are at 50% to 55% of 2019 levels. All of that implies more room for growth.
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Cheung said the number of “transaction days,” a measure of volume that normally contracts 5% in the first quarter relative to the fourth quarter, is on pace to be flat. Chris Woronka, an equity analyst at Deutsche Bank, sees Hertz generating $1 billion of free cash flow this year, which he thinks will largely go to share buybacks.
“There’s a lot to like at Hertz,” he says. “The stock is inexpensive on any metric.” He has a Buy rating and a price target of $27.
Concerns about used-car pricing may also be overblown. After declining in late 2022, prices have risen in each of the past five weeks, Cheung said.
The other fear is that rental car pricing, which is up 40% from 2019 levels, could be headed lower from an average of about $62 a day during the fourth quarter. Woronka, though, doesn’t think pricing will crack. “Consumers have accepted higher prices,” he says.
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Like Avis, Hertz pays no dividend but could afford 75 cents per share annually, for a 4% yield. Asked about a dividend, Cheung tells Barron’s that “everything is on the table.”
The big differentiator between Hertz and its competitors, though, may be its early adoption of EVs. It got the jump on Avis and Enterprise with an order for 100,000 Teslas in late 2021. It now owns more than 40,000 Teslas, which make up 9% of its fleet, and the company aims to get to a 25% electric fleet by the end of 2024. In late 2022, Hertz cut a deal to buy 175,000 EVs from
(GM) over five years.
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The EVs burnish Hertz’s green credentials—many corporate customers are eager for their employees to rent EVs—and are nicely profitable, garnering $25 to $30 a day premiums above the average daily rate. What’s more, maintenance costs are lower due to the simplicity of electric motors relative to internal-combustion engines.
That EVs are more profitable and less costly fits with Hertz’s newfound sense of discipline. CEO Stephen Scherr got the top job a year ago after 30 years at Goldman Sachs, where he was most recently CFO, and he has emphasized generating adequate returns. He received a gargantuan compensation package that could pay him more than $200 million, mostly in stock, if share-price targets are reached in the coming years, and he’ll be motivated to get the shares moving higher.
Investors can also play Hertz through attractively priced warrants—essentially long-term call options that give the holder the right to buy the stock at a predetermined price. They trade at around $9.50 and allow holders to buy the stock at $13.80. The warrants, which trade under the ticker HTZWW, have a superlong—and appealing—maturity of 28 years. They should be treated as an inexpensive alternative to the common stock.
No matter how you play it, it’s worth taking a ride with Hertz.
Write to Andrew Bary at andrew.bary@barrons.com
Ford F-150 Lightning trucks manufactured at the Rouge Electric Vehicle Center in Dearborn Michigan.
Courtesy: Ford Motor Co.
DETROIT – About 65% of Ford Motor’s dealers have agreed to sell electric vehicles as the company invests billions to expand production and sales of the battery-powered cars and trucks, CEO Jim Farley said Monday.
About 1,920 of Ford’s nearly 3,000 dealers in the U.S. agreed to sell EVs, according to Farley. He said roughly 80% of those dealers opted for the higher level of investment for EVs.
Ford offered its dealers the option to become “EV-certified” under one of two programs — with expected investments of $500,000 or $1.2 million. Dealers in the higher tier, which carries upfront costs of $900,000, receive “elite” certification and be allocated more EVs.
Ford, unlike crosstown rival General Motors, is allowing dealers to opt out of selling EVs and continue to sell the company’s cars. GM has offered buyouts to Buick and Cadillac dealers that don’t want to invest to sell EVs.
Dealers who decided not to invest in EVs may do so when Ford reopens the certification process in 2027.
“We think that the EV adoption in the U.S. will take time, so we wanted to give dealers a chance to come back,” Farley said during an Automotive News conference.
Ford’s plans to sell EVs have been a point of contention since the company split off its all-electric vehicle business earlier this year into a separate division known as Model e. Farley said the automaker and its dealers needed to lower costs, increase profits and deliver better, more consistent customer sales experiences.
Farley on Monday also reiterated that a direct-sales model is estimated to be thousands of dollars cheaper for the automaker than the auto industry’s traditional franchised system.
Wall Street analysts have largely viewed direct-to-consumer sales as a benefit to optimize profit. However, there have been growing pains for Tesla, which uses the sales model, when it comes to servicing its vehicles.
Ford’s current lineup of all-electric vehicles includes the Ford F-150 Lightning pickup, Mustang Mach-E crossover and e-Transit van. The automaker is expected to release a litany of other EVs globally under a plan to invest tens of billion of dollars in the technologies by 2026.
Electric buses at a charging station.
Koiguo | Moment | Getty Images
Plus, the tax credit for bigger trucks is worth more money — up to $40,000 in contrast to the $7,500 maximum for passenger cars and smaller commercial electrics.
“I think it’s going to be a lot more straightforward and easy to take advantage of than the light-duty-vehicle tax credit,” Ingrid Malmgren, policy director at Plug In America, said of the tax credit for commercial EVs. “It’s really a great opportunity for business owners to reduce emissions in a cost-effective way.”
Business owners can get the tax credit for new vehicles purchased on or after Jan. 1, 2023. It’s available for 10 years, through the end of 2032.
How and why of the commercial-vehicle tax credit
Luis Alvarez | Digitalvision | Getty Images
Here are the basics of the credit for commercial vehicles.
The tax break is available to business owners who buy an electric vehicle or electric “mobile machinery,” including for construction, manufacturing, processing, farming, mining, drilling or timbering.
The vehicle must be subject to a depreciation allowance — meaning it’s for business use, according to the Congressional Research Service.
“If you had a flower shop, for example, and you want to get flower-delivery vehicles, you buy a bunch of vans, you’d be the one claiming the tax credit,” Malmgren said.
There are two thresholds for the commercial tax credit: Vehicles that weigh less than 14,000 pounds qualify for up to $7,500; those that weigh more than that qualify for up to $40,000.
The 14,000-pound demarcation line includes commercial vehicles that are Class 4 and above, or largely medium- and heavy-duty trucks and buses.
If you had a flower shop, for example, and you want to get flower-delivery vehicles, you buy a bunch of vans, you’d be the one claiming the tax credit.
Ingrid Malmgren
policy director at Plug In America
Medium- and heavy-duty trucks “are the fastest-growing fuel users and greenhouse gas producers in the United States,” according to a 2019 U.S. Department of Energy report.
Class 3 through Class 8 trucks make up less than 5% of the total number of U.S. vehicles on the road but they account for 27% of annual on-road fuel use, according to the report. Gasoline and diesel account for well over 90% of the fuel use for medium- and heavy-duty vehicles, it added.
While the market for electrified commercial vehicles has “lagged well behind” that for light-duty vehicles, battery performance has improved and battery costs have fallen substantially over the last decade, making electrification of medium- and heavy-duty trucks and buses “more attractive,” according to the Energy Department report.
Technically, the commercial-vehicle tax credit is worth the lesser of: (1) 30% of the vehicle purchase price; or (2) the “incremental cost” relative to a similar gasoline-powered vehicle. (The incremental cost is the net difference in price between the commercial clean vehicle and a similar vehicle with an internal combustion engine.)
Whatever the amount from this calculation, its ultimate value is capped at $7,500 or $40,000, as noted earlier.
Some aspects of the tax break will be unclear until the U.S. Department of the Treasury and IRS issue guidance on the new rules, experts said. For example, how will business owners determine the price of a comparable gas-powered vehicle to do an “incremental cost” analysis?
Because the financial benefit is structured as a tax credit, business owners must have a tax liability to benefit. One caveat: Tax-exempt entities can still get a financial benefit in the form of a direct check from government, said Steven Schmoll, a director at KPMG.
In addition, business owners can’t double dip by getting a tax break on the consumer side (tax code section 30D) and on the commercial end (code section 45W).
How commercial, consumer e-vehicle breaks differ
One key difference between the commercial and consumer tax credits for new clean vehicles is the absence of manufacturing and other requirements for the commercial credit.
To be eligible for a “new clean vehicles” credit (i.e., the one that’s not for business owners), final assembly of the car must now occur in North America. The Energy Department has a list of vehicles that meet this standard.
Some additional rules take effect in 2023.
First, there are income caps. A tax credit isn’t available to single individuals with modified adjusted gross income of $150,000 and above. The cap is higher for others — $225,000 for heads of household and $300,000 for married couples who file a joint tax return. (The test applies to income for the current or prior year, whichever is less.)
Dbenitostock | Moment | Getty Images
And certain cars may not qualify based on price. Sedans with a retail price of more than $55,000 aren’t eligible, nor are vans, SUVs or trucks over $80,000.
Two other rules apply to manufacturing: One carries requirements for sourcing of the car battery’s critical minerals; the second requires a share of battery components be manufactured and assembled in North America. Consumers lose half the tax credit’s value — up to $3,750 — if one of those requirements isn’t met; they’d lose the full $7,500 for failing to meet both.
The five requirements were added by the Inflation Reduction Act, and none of them apply to the commercial clean vehicle credit, Schmoll said.
