Investment Q&A

EPS of ($0.24) missed estimates of ($0.10) and revenues of $77.71M missed estimates of $78.8M. Sales grew by 2.2% for the quarter due to growth across its trade channels and price increases. Gross margin was flat against the prior year, and management noted its supply constraints have normalized, but inflation is continuing to negatively impact profitability. Management expects profits to return to normal levels over the next few years. It now pays a ~6% yield and a few silver linings from the results are that sales grew against last year and it maintained gross profit margins. We think it has potential for a turnaround, but based on management commentary, this could take several quarters, or even a couple of years. We would be OK with swapping ADW.A for a stronger name such as ATZ, DOL, or ATD.