We’ve curated core ideas and lessons from the legendary investor Sam Zell, who recently passed away at the age of 81. Also, this dispatch includes quarterly highlights and curated quotes from HEICO and NVIDIA.
Sam Zell: 8 lessons
Sam Zell, who recently passed away at the age of 81, was a trailblazing investor renowned for his contrarian approach and ability to spot undervalued assets. With precise research and a knack for identifying emerging trends, he consistently delivered impressive returns.
His adaptability and philanthropic endeavors further define his influential presence in the investment world. Sem Zell inspired a new generation of investors to challenge norms and seize untapped opportunities. In his memory, we want to highlight his core ideas and lessons from his life and career.
HEICO Q2 2023
Revenue +28%
*Flight Support +28%
*Electronic Technologies +27%
EBIT +29%
*margin 22.8% (22.7%)
EPS +23%
HEICO, a company with over 9,000 team members, has achieved record-breaking results in the second quarter of fiscal '23. The Flight Support Group contributed significantly to the company's success, driven by increased demand for commercial aerospace products and services as well as recent acquisitions.
Consolidated operating income and net sales improved by 28% compared to the same period last year, primarily due to 10% organic net sales growth and the impact of acquisitions. Despite an increase in net debt resulting from the purchase of Exxelia, HEICO maintains a strong balance sheet with a net debt-to-EBITDA ratio of less than 1x.
The company's cash flow provided by operating activities decreased slightly in the second quarter due to increased working capital, particularly in inventory to support the growing backlog. HEICO plans to continue investing in new products, market penetration, and acquisitions while navigating inflationary pressures and supply chain disruptions caused by the COVID-19 pandemic.
The company's conservative policies, financial strength, and liquidity position it well for sustained growth and market share gains. HEICO's focus is on providing customers with better pricing, expanded capacity, more products, and increased efficiency. With consistent annual bottom-line growth of 15% to 20% over the past 30 years, HEICO aims to maintain this compounding trend in 2024 and keep leverage below 2x, potentially making smaller acquisitions if leverage remains controlled.
“We try to grow 15% to 20% bottom line on an annual basis in this compound. We have done that pretty consistently for the past 30 years, and according again to our projections, we believe that we will be able to, in '24, grow within that 15% to 20% increase” – Laurans Mendelson, Chairman & CEO (00:43:57)
NVIDIA Q1 2024
Revenue -13%
*Data Center +14%
*Gaming -38%
*Professional Visualization -53%
*Automotive and Embedded +114%
EBIT +15%
*margin 30% (20)
EPS +28%
NVIDIA has reported strong sequential growth in its Q1 results, driven by record data center revenue and improved performance in gaming and professional visualization. The company's accelerated computing platform for generative AI has contributed to significant revenue growth in the data center segment.
Gaming revenue showed strong sequential growth due to increased demand for GeForce RTX GPUs. Pro Visualization revenue also improved, indicating a recovery from channel inventory corrections. The company's gross margins have recovered and operating expenses have been controlled while working through inventory challenges. NVIDIA plans to increase investments in the business while delivering operating leverage.
The outlook for the second quarter is very positive, with expected growth driven by the data center segment. NVIDIA anticipates a shift in data center budgets toward accelerated computing over the next 10 years. The company faces competition from start-ups and other semiconductor companies, but emphasizes its value proposition as the lowest-cost and most optimized solution in the market. Overall, NVIDIA's strong performance and strategic focus on emerging technologies position it well for continued growth and market leadership.
“The integration of guardrails and alignment systems with reinforcement learning human feedback, knowledge vector databases for proprietary knowledge, connection to search, all of that came together in a really wonderful way. And it's the reason why I call it the iPhone moment.” – Jensen Huang, Co-Founder & CEO (00:26:22)
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