By Svea Herbst-Bayliss

NEW YORK (Reuters) – Hedge fund D.E. Shaw shifted course in its campaign for change at industrial gases company Air Products and Chemicals (NYSE:) and is now supporting a rival activist’s efforts instead of pressing ahead with its own board challenge, sources familiar with the matter said on Thursday.

D.E. Shaw no longer plans to nominate a slate of directors to the company’s board and will support the campaign launched by Mantle Ridge, the activist firm run by Paul Hilal, the people said.

The two hedge funds merged their efforts days after each said separately that the company needs new directors on the board, a succession plan for its octogenarian CEO, should allocate its capital differently and scale back on risky projects.

D.E. Shaw was concerned about Air Products’ sharp rise in capital expenditures and its bet on a clean hydrogen strategy, telling management that its recent decisions made it look more like a “high risk commodity trading business” instead of the “stable industrial gas infrastructure business” that it has historically operated.

It also told the company that changes could create over $25 billion in incremental equity value, translating into a 50% gain in the share price.

D.E. Shaw declined to comment.

Air Products’ stock price jumped 13% on news that there were two powerful investors pushing for changes at the company.

D.E. Shaw held discussions with Mantle Ridge over the last days and arrived at its decision to back off its public campaign recently, the sources said.

Mantle Ridge advanced its campaign last week when it signaled plans to work with Dennis Reilley and Eduardo Menezes, two former top executives at Linde (NYSE:) Plc.

Hilal is eyeing Reilley to become Air Products’ executive chairman while Menezes might become chief executive officer, sources familiar with Hilal’s thinking said.

Wells Fargo analysts called the pair a “dream team” and said their joining with Mantle Ridge could make a big difference in the campaign, given their strong track records and experience.

Activists often research the same companies given their readily visible vulnerabilities, but hedge funds then guard their plans closely, which can lead to more than one showing up at a company at the same time.

Two years ago, at least four activists piled into Salesforce (NYSE:), for example.

But bankers and academics say there are times it makes sense for one activist to take the lead and minimize distractions caused by several battling publicly for bragging rights.

Project will quadruple U.S. lithium output, create hundreds of high paying jobs in rural Nevada

SYDNEY–(BUSINESS WIRE)–Ioneer Ltd (Ioneer) (ASX: INR, NASDAQ: IONR) received its federal permit for the Rhyolite Ridge Lithium-Boron Project from the Bureau of Land Management. With the positive decision, Rhyolite Ridge becomes the first U.S. lithium project approved by the Biden Administration as part of its efforts to accelerate domestic critical mineral production and advances the Esmeralda County, Nevada investment toward construction in 2025 and first production in 2028.

Rhyolite Ridge will supply the batteries for more than 370,000 American-made electric vehicles annually and process crucial battery materials on-site in the United States. The project will create an estimated 500 jobs during construction and 350 high paying jobs during its decades in operation.

For more than six years, we have worked closely with state, federal and tribal governments, as well as the Fish Lake Valley community, to ensure the sound and sustainable development of our Rhyolite Ridge Lithium-Boron Project. We value our relationships with these stakeholders and appreciate their openness to engage, discuss concerns and develop solutions. Without that open and honest dialogue, such an outcome could never have been possible, said Ioneer Managing Director Bernard Rowe. This permit gives us a license to commence construction in 2025 and begin our work in creating hundreds of good-paying rural jobs, generating millions in tax revenue for Esmeralda County, and bolstering the domestic production of critical minerals.

I can say with absolute confidence there are few deposits in the world as impactful as Rhyolite Ridge. Today’s approval of Ioneer’s federal permit is the culmination of countless hours of work and a testament to our remarkable team’s dedication to developing and building one of the most sustainable mining projects in the country, said Ioneer Executive Chairman James Calaway. We are pleased by what we have achieved working with the Biden Administration, and by the bi-partisan support we have received at the federal, state and local levels.

The formal Record of Decision (ROD) follows the issuance last month of the final Environmental Impact Statement (EIS)1 by the BLM, which incorporated public feedback received during the April-June open comment period, and concludes the rigorous and comprehensive formal federal permitting process, which began in early 2020. Ioneer’s pre-permitting work began in early 2019 and, in December 2022, the company formally entered the final stages of the National Environmental Policy Act (NEPA) review, as required by all projects on federal lands.

Ioneer enacted major changes to the project throughout the permitting process resulting in a stronger, more sustainable project that incorporates the needs and concerns of all stakeholders. They include:

• Major modification to the location of the western wall of the quarry to avoid Tiehm’s buckwheat, an endangered species adjacent to the project designated in December 2022,
• Relocation of all possible infrastructure and related disturbance to areas outside of critical habitat identified because of its potential to support pollinators for Tiehm’s buckwheat,
• Relocation of overburden storage facilities to avoid culturally sensitive sites and other important mitigation measures based on input from tribal site visits and consultation,
• Commitments to water conservation,2 and
• Commitments to dust, noise and light monitoring as well as mitigation and minimization of impact for the community and nature.

As part of the final EIS, the U.S. Fish and Wildlife Service, which oversees the administration of the Endangered Species Act (ESA), also formally released the ESA Section 7 Biological Opinion concluding Rhyolite Ridge will not jeopardize Tiehm’s buckwheat or adversely modify its critical habitat.

Rhyolite Ridge’s commitment to sustainability extends to its processing facility, for which 70% of engineering is complete, to recycle half of all the water used. As Ioneer’s facility comes online, the company will evaluate and continue to deploy new technologies to further reduce water consumption.

Due to the deposit’s unique minerology, Ioneer will limit its operational footprint by avoiding the use of evaporation ponds and curtail its carbon footprint as its steam-powered facility will operate independently from the Nevada energy grid.

With the project formally approved by the federal government, Ioneer expects to issue updated reserve figures and estimated project costs by December 2024 and advance toward a Final Investment Decision with its financing partners.

Estimated Project Timeline

Ioneer’s estimated timing for the Rhyolite Ridge Lithium-Boron Project is as follows:

As of October 2024, and subject to change.

This ASX release has been authorised by Ioneer Managing Director, Bernard Rowe.

About Ioneer

Ioneer Ltd is an emerging lithium“boron producer and the 100% owner of the Rhyolite Ridge Lithium-Boron Project located in Nevada, USA. Rhyolite Ridge is the only known lithium-boron deposit in North America and one of only two known such deposits in the world. Once operational, the low-cost, world-class project is expected to power upward of 50 million electric vehicles and will instantly become a globally significant source of critical materials vital to the clean energy transition.

In September 2021, Ioneer entered into an agreement with Sibanye-Stillwater where, following the satisfaction of conditions precedent, Sibanye-Stillwater will acquire a 50% interest in the Project, with Ioneer maintaining a 50% interest and retaining the operational management responsibility for the joint venture. In January 2023, Ioneer received a conditional commitment from the U.S. Department of Energy Loan Programs Office for up to $700 million of debt financing.

Ioneer signed separate offtake agreements with Ford Motor Company (NYSE:) and PPES (joint venture between Toyota (NYSE:) and Panasonic (OTC:)) in 2022 and Korea’s EcoPro Innovation in 2021.

To learn more about Ioneer, visit www.Ioneer.com/investors.

Important notice and disclaimer

Forward-looking statements

This announcement contains certain forward-looking statements and comments about future events, including Ioneer’s expectations about the Project and the performance of its businesses. Forward looking statements can generally be identified by the use of forward-looking words such as ˜expect’, ˜anticipate’, ˜likely’, ˜intend’, ˜should’, ˜could’, ˜may’, ˜predict’, ˜plan’, ˜propose’, ˜will’, ˜believe’, ˜forecast’, ˜estimate’, ˜target’ and other similar expressions within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, the Conditional Commitment, financing plans, future earnings or financial position or performance are also forward-looking statements.

Forward-looking statements involve inherent risks and uncertainties, both general and specific, and there is a risk that such predictions, forecasts, projections and other forward-looking statements will not be achieved. Forward-looking statements are provided as a general guide only and should not be relied on as an indication or guarantee of future performance. Forward looking statements involve known and unknown risks, uncertainty and other factors which can cause Ioneer’s actual results to differ materially from the plans, objectives, expectations, estimates, and intentions expressed in such forward-looking statements and many of these factors are outside the control of Ioneer. Such risks include, among others, uncertainties related to the finalisation, execution, and funding of the DOE financing, including our ability to successfully negotiate definitive agreements and to satisfy any funding conditions, as well as other uncertainties and risk factors set out in filings made from time to time with the U.S. Securities and Exchange Commission and the Australian Securities Exchange. As such, undue reliance should not be placed on any forward-looking statement. Past performance is not necessarily a guide to future performance and no representation or warranty is made by any person as to the likelihood of achievement or reasonableness of any forward-looking statements, forecast financial information or other forecast. Nothing contained in this announcement, nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee as to the past, present or the future performance of Ioneer.

Except as required by law or the ASX Listing Rules, Ioneer assumes no obligation to provide any additional or updated information or to update any forward-looking statements, whether as a result of new information, future events or results, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241023742388/en/

United States Investor Relations
Chad Yeftich
E: ir@ioneer.com

Media Relations (USA)
Daniel Francis, FGS Global
E: daniel.francis@fgsglobal.com

Australia Investor Relations
Ian Bucknell
E: ir@ioneer.com

Media Relations (Australia)
Peter Taylor, NWR Communications
peter@nwrcommunications.com.au

Source: Ioneer Ltd

Savers Value Village, Inc. (NYSE:SVV), a prominent player in the thrift retail sector, has been navigating a complex market landscape characterized by shifting consumer preferences and macroeconomic challenges. The company, known for its secondhand clothing and household goods offerings, has garnered attention from analysts due to its unique position in the growing thrift shopping trend, particularly among younger demographics.

Company Overview

Savers Value Village operates a chain of thrift stores that specialize in selling used clothing and household items. The company has positioned itself at the intersection of value-conscious shopping and sustainability, capitalizing on the increasing consumer interest in secondhand goods. SVV’s business model relies on providing affordable options to budget-minded shoppers while also appealing to environmentally conscious consumers seeking to reduce waste through reuse.

Market Performance

The stock performance of Savers Value Village has been a subject of scrutiny among financial analysts. As of October 24, 2024, the company’s stock price stood at $9.63, reflecting the market’s current assessment of its value and future prospects. Analysts have recently adjusted their outlook on SVV, with some revising their price targets and ratings in response to the company’s financial performance and market conditions.

Thrift Shopping Trends

One of the key factors driving interest in Savers Value Village is the structural shift in shopping habits, particularly among younger consumers. The thrift shopping sector has seen a notable rise in popularity, especially in the post-pandemic era. This trend is evidenced by the consistent ranking of thrift and Goodwill stores in the top 10 ‘Favorite Clothing Store / Brand’ category over the past five iterations of the semi-annual Taking Stock With Teens Survey.

Analysts note that while there has been a slight pullback in interest among female teens, this has been offset by an increasing trend of thrift shopping among male teens. This demographic shift has helped maintain the overall category ranking and suggests a broadening appeal of secondhand shopping across genders.

Financial Outlook

The financial outlook for Savers Value Village has been a point of contention among analysts. The company’s 2024 guidance was significantly reduced in a recent quarter, a move attributed to the company’s relatively new Chief Financial Officer. This downward revision has impacted investor sentiment and prompted some analysts to reassess their projections for the company’s performance.

Analysts have lowered their earnings per share (EPS) estimates for the second quarter of 2024 and for the fiscal years 2024 through 2026. These revisions are based on anticipated same-store sales (SSS) growth that is expected to fall below consensus estimates. The potential for further negative revisions to the fiscal year 2024 guidance remains a concern for some market observers.

Geographical Challenges

A significant factor influencing Savers Value Village’s performance is the macroeconomic environment in Canada, which represents a substantial portion of the company’s sales mix. Analysts have expressed concerns over ongoing macro pressures on SVV’s Canadian core customer base, with some projecting a softer outlook for Canada’s same-store sales, estimating a decline of 3.0% compared to street expectations.

These challenges in the Canadian market are particularly noteworthy given the country’s importance to SVV’s overall revenue stream. The potential for continued economic headwinds in this key region could have a material impact on the company’s financial results and growth prospects.

Future Prospects

Despite the challenges, Savers Value Village has shown some positive indicators for future growth. The company has reported an increase in new members from younger demographics, aligning with the broader trend of thrift shopping popularity among teens. This ability to attract younger consumers could be a crucial factor in SVV’s long-term success, potentially offsetting some of the current market pressures.

The durability of thrifting as a shopping mode among teens is seen as a positive sign for SVV’s market position. Analysts believe that if the company can effectively capitalize on this trend and navigate the current economic challenges, it may be well-positioned to strengthen its market share in the thrift retail sector.

Bear Case

How might continued macroeconomic pressures in Canada impact SVV’s overall performance?

The ongoing economic challenges in Canada pose a significant risk to Savers Value Village’s financial health. With Canada representing a substantial portion of SVV’s sales mix, any prolonged downturn in consumer spending or economic instability in the region could have outsized effects on the company’s overall performance. Analysts project a potential 3.0% decline in same-store sales for the Canadian market, which is worse than current street expectations.

If these macroeconomic pressures persist or intensify, SVV may face difficulties in maintaining its revenue streams from Canadian operations. This could lead to further downward revisions of financial guidance, negatively impacting investor confidence and potentially leading to a reassessment of the company’s valuation in the market. The company may need to implement cost-cutting measures or explore strategies to stimulate sales in this key market, which could strain resources and potentially affect profitability in the short to medium term.

Could the recent downward revision of 2024 guidance signal deeper issues within the company?

The significant reduction in 2024 guidance by SVV’s new Chief Financial Officer has raised concerns among analysts about potential underlying issues within the company. This downward revision could be indicative of several problems, including:

1. Overestimation of market growth: The initial guidance may have been based on overly optimistic projections of the thrift shopping market’s expansion or SVV’s ability to capture market share.

2. Operational inefficiencies: The revised guidance might reflect newly identified operational challenges or inefficiencies that are impacting the company’s ability to meet its financial targets.

3. Competitive pressures: The thrift retail sector may be facing increased competition, potentially from both traditional retailers entering the secondhand market and online platforms facilitating peer-to-peer used goods sales.

4. Supply chain or inventory management issues: Difficulties in sourcing quality secondhand items or managing inventory across stores could be impacting the company’s ability to meet sales targets.

If these issues are indeed present and not effectively addressed, they could signal more profound challenges for SVV’s business model and growth strategy. Investors and analysts will likely scrutinize future financial reports and management communications closely to determine whether the guidance revision was a one-time correction or part of a more systemic problem within the company.

Bull Case

How can SVV capitalize on the growing trend of thrift shopping among younger demographics?

Savers Value Village is well-positioned to benefit from the increasing popularity of thrift shopping among younger consumers, particularly teens. This trend presents several opportunities for SVV to enhance its market position and drive growth:

1. Targeted marketing: By focusing marketing efforts on platforms and channels popular with younger demographics, SVV can increase brand awareness and attract new customers. This could include leveraging social media influencers, partnering with youth-oriented organizations, or sponsoring events that align with sustainability and value-conscious lifestyles.

2. Store experience enhancement: SVV could redesign store layouts and create shopping experiences that appeal to younger consumers. This might involve incorporating technology, creating Instagram-worthy displays, or organizing themed sections that cater to current fashion trends.

3. Digital integration: Developing a robust online presence and e-commerce platform could help SVV reach tech-savvy young shoppers who prefer to browse and purchase online. This could include features like virtual try-ons, personalized recommendations, or a mobile app for easy browsing and purchasing.

4. Sustainability initiatives: By emphasizing the environmental benefits of secondhand shopping, SVV can tap into the growing eco-consciousness among younger generations. This could involve launching sustainability campaigns, partnering with environmental organizations, or implementing visible recycling and upcycling programs in stores.

5. Exclusive collaborations: Partnering with young designers or popular brands for limited-edition upcycled collections could create buzz and drive foot traffic to stores.

By effectively implementing these strategies, SVV could strengthen its appeal to younger shoppers, potentially leading to increased sales, customer loyalty, and long-term growth in market share.

What potential does SVV have for expanding its market share in the thrift retail sector?

Savers Value Village has several avenues for potentially expanding its market share within the thrift retail sector:

1. Geographical expansion: SVV could explore opportunities to enter new markets or increase its presence in underserved areas. This could involve opening new stores in regions with favorable demographics or acquiring smaller, local thrift store chains.

2. Diversification of offerings: Expanding the range of products beyond clothing and household goods could attract a broader customer base. This might include categories such as vintage electronics, collectibles, or upcycled furniture.

3. Omnichannel strategy: Developing a strong online presence alongside physical stores could help SVV capture a larger share of the secondhand market. This could include launching an e-commerce platform, offering in-store pickup for online orders, or creating a mobile app for easy browsing and purchasing.

4. Strategic partnerships: Collaborating with complementary businesses, such as sustainable fashion brands or recycling companies, could help SVV differentiate itself and attract environmentally conscious consumers.

5. Enhanced donation programs: Improving and expanding donation programs could ensure a steady supply of quality secondhand items, potentially giving SVV an edge over competitors in terms of inventory selection and turnover.

6. Customer loyalty initiatives: Implementing a robust loyalty program or membership scheme could encourage repeat visits and increase customer lifetime value, helping SVV to retain and grow its market share.

7. Technology integration: Investing in inventory management systems, data analytics, and pricing algorithms could help SVV optimize its operations and pricing strategy, potentially leading to improved margins and competitiveness.

By pursuing these strategies, SVV could position itself to capture a larger share of the growing thrift retail market, potentially leading to increased revenues and improved financial performance in the long term.

SWOT Analysis

Strengths:

• Established presence in the thrift retail sector
• Strong appeal among teen demographic
• Alignment with growing sustainability trends

Weaknesses:

• Recent history of disappointing earnings announcements
• Vulnerability to economic pressures in key markets, particularly Canada
• Downward revision of financial guidance impacting investor confidence

Opportunities:

• Growing trend of thrift shopping, especially post-pandemic
• Increasing interest in secondhand shopping among male teens
• Potential for geographical expansion and market share growth
• Possibility of enhancing online presence and e-commerce capabilities

Threats:

• Ongoing macroeconomic pressures in Canada affecting core customer base
• Potential for further downward revisions of financial guidance
• Increasing competition in the thrift and secondhand retail space
• Changing consumer preferences and shopping habits

Analysts Targets

• Piper Sandler: Overweight rating with a price target of $11.00 (October 23rd, 2024)
• J.P. Morgan Securities LLC: Neutral rating with a price target of $12 (July 22nd, 2024)

This analysis is based on information available up to October 24, 2024, and reflects the market conditions and analyst opinions as of that date.

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