Yet Another Value Podcast - Half Moon Capital on Oxford Industries $OXM

Episode Date: December 5, 2022

The team from Half Moon Capital, Eric DeLamarter and Brandon Carnovale, come on the pod to discuss their thesis on Oxford Industries (OXM). OXM owns the Tommy Bahama and Lily Pulitzer brands, and Half Moon thinks the market is underestimating the strength of those brands for a variety of reasons.   Half Moon's OXM thesis: https://acrobat.adobe.com/id/urn:aaid:sc:VA6C2:aec0338f-33d0-4e35-b956-ac6aa024167a?viewer%21megaVerb=group-discover  Chapters  0:00 Intro  2:20 OXM overview  5:00 Tommy Bahama brand strength  8:55 Could Tommy Bahama follow the LULU brand path?  16:05 OXM's valuation  22:10 Did Tommy Bahama over-earn during COVID?  28:00 OXM management 36:10 Capital Allocation and OXM's recent Johnny Was acquisition  38:30 CROX HEYDUDE acquisition and learnings for OXM  43:10 A little more on Tommy Bahama and the California branded hotel  47:30 OXM's margins and current competitive environment  53:30 Tommy Bahama's inventory risk

This podcast is sponsored by Delupa. Delupa was founded by a former hedge fund analyst. He didn't have a tool that he trusted to be 99.9% accurate that allowed him to pull updates directly into his existing models and that had the granularity in KPI's guidance and non-gap adjustments that he needed. So he built Delupa. Delupa is the fastest growing source for public company data with data available for over 3,000 companies. Hundreds of AI algorithms collect and organize customized company historicals

with an accuracy level and depth of data that is higher than anything achievable by other modeling tools. Each data point is audible to the source. DeLUpa's Excel plugin is the first allow you to update your models in your existing format. It's simple and non-invasive. Delupa's clients are able to cover more opportunities and generate more ideas. No more data errors, no more Excel monkeying, just the fundamentals. See why equity investors are switching to Dulupa, visit dilupa.com slash Y-A-V-P. That's Delupa, D-A-L-O-O-O-P-A dot com slash Y-A-V-P to learn more. All right, hello, and welcome to get another value podcast. I'm your host, Andrew Walker. If you like this podcast, it would mean a lot if you could follow, rate, subscribe, review it wherever you're

watching or listening. With me today, I'm happy to have the team from Half Moon Capital, Eric Dillamarder and Brandon Carnival. Guys, how's it going? Good, good morning. Thanks for having us. Yeah, appreciate it. First time, long time, Andrew. I appreciate that.

And I'm really excited to have you guys today. Let me start this podcast the way I do every podcast. First, a disclaimer to remind everyone, nothing on this podcast is investing in advice. Please do your own work, consult a financial advisor. This isn't financial advice. And then second, the way I start every podcast with a pitch for YouTube, my guess. I mean, you two do great fundamental research. I've been doing it for a while. Eric, I actually, when I was researching this podcast,

I remember I looked at tile shop a couple years ago and there was a bunch of stuff from you specifically on tile shop. But y'all do great work. I'm really excited to have you on. And we're going to talk about, I believe, your kind of highest conviction name today. So I think that's really going to shine through. The company we're talking about is Oxford Industries. The ticker is OXM. And I think Eric was going to start off. So I'll just kind of pause there and toss it over to Eric. Brandon can jump whenever whenever he wants. What is Oxford industries and why is it so interesting? Yeah, Oxford Industries OXM, as you know, is a company we've been involved with since earlier in the summer. It's a business that I think there's a handful

of misconceptions, confusion. The core business itself is Tommy Bahama, which is about two-thirds of revenue and the biggest driver of the fundamentals, to a lesser degree, Lily Pulitzer and some smaller brands. We have done an extensive amount of diligence on this one, you know, to glean these insights that we have that I think over the next couple of quarters will

illuminate the value, kind of disprove some of the confusion and alleviate some of that misperception. And that's kind of the setup from a high level. I'm happy to get into those details. Brandon, you want to add anything? Yeah, I'd say, I know I think how people may even know

it best is if like you go to the beach. Eric and I went to the beach over the summer, you're going to see a sea of Tommy Bahama. It's not going to be their polos as much, at least in the Northeast, but you're going to see the umbrellas. They're going to see the lawn chairs. And I think that's, I think, probably how people know it best. Or if you're just here in Manhattan, you're walking down Fifth Avenue, you know, they have a great location.

I got a Marlon Bar. I think we're talking earlier. We're going to have to go check it out pretty soon, grab a coffee. But yeah, I think that's, like Eric said, two-thirds of the business. And then there's Lily Pulitzer, which is also like a fun, a female fashion brand, also on the beach wear. Then they have a couple of smaller, higher growth brands like Southern Tide and a duckhead. And then I think Johnny Waz is a little bit of a newer acquisition. That's not really their strategy here, but it is very, I think, on brand and exciting, you know, double-digit

grower high-margin business. You know, we can talk about lots of stuff, but just one thing that pops into mind with Johnny Waz, and we can probably address that later. But, you know, Crocs, which is kind of a loose comp here, obviously people are going to be looking at evaluation. But they did the Hey Dude acquisition over the summer, which at the time I looked at it and was like, oh, this is weird brand. And it's early, right? It's only been a couple months. But so far, I think as people have kind of started seeing those numbers and seeing the growth of the hey dude, I think that's proved to be a various suit acquisition. Now, Johnny Was is a little bit smaller for OXM versus the whole company compares to Croxadeo. Anyway, I guess I'm jumping on myself.

Let's talk, you know, so OXM, they are a little handful of a couple of different brands. two big ones here are Lily Pulitzer and really Tommy Bahama. So I just want to spend a second and talk about Brandon started doing it a little bit, but talk about Tom Bahama because I think people might see the brand and think, oh, it's this lifestyle beach brand. You know, there are other lifestyle beach brands. I kind of want to dive into why you guys think this is more than just a fad brand or a knockoff brand, like why there's real brand strength here. Yeah, I mean, that was kind of our perception when we first looked at it. I think a lot of folks in big cities on the coasts think loud Hawaiian tropical shirts. In fact, that's only about, as we discovered,

about three, four percent of the business. These are actually high performance clothes, tees, polo shirts, pants, the less agree with some women's fashion in the Tommy Bahama category. And this is stuff that is very popular in the south. Demographics is skews towards retired folks, 60 plus. These are clothes that these folks, that's the only brand that they buy. In the Marlin is something that they pay a premium for. It's essentially a luxury brand. If you look at the margins and the price point and, you know, frankly, lack of discounting and channel in which they operate. So just one thing you said, 60 plus, do you think this is skews a lot older in terms of the main demographic consumer? Yeah, we've found that that is the case. The kind of

typical guy that buys these clothes are a bit older, retired, and it's almost 98% domestic American, so. Okay. Brandon, do you want to add anything there? Sure. Yeah, so I think, you know, I'm a question on Tommy Bahamas. By the way, I'm doing a little product placement here. I don't know. Tommy Bahamas watching. Feel free to send me a little paid promotion. But yeah, no, I think Tommy Bahama is a fun brand. I think Eric really touched on is, you know, if you walked down Manhattan, there's a lot of guys in polos, but they're not Tommy Bahama. They may, you know, have the beach chair when they go to the beach in Westchester, but when you go to Florida, like I was there for Father's Day, which is their key selling day. I mean, this is

dads, like Eric said, it's dad's over 60. The Tommy Baham in Fort Myers was just, you know, packed. There's not a seat in the house. The retail store, magnificent. And I think a lot of people, you know, it's interesting that Tommy Bahadah really does view themselves as a luxury brand that I think investors maybe not yet are viewing this so much as a luxury brand. I think one of the perks of that is, you know, this year they rate prices by, you know, ex-valent, but they raise prices by X percent and they just keep reaffirming. You know, we've, you know, never had any pushback on that. You know, this is people, like he said, 65-year-old retiree.

A lot of them are actually going on vacation. So I was, you know, running on the West Side Highway, and you see people here taking pictures. And I've seen a couple guys who are in Tommy Bahama. This is like their vacation where on Cyber Monday, I think vacation. cruise bookings are up 50%. They have a store in Fort Lauderdale, everyone in that line. A lot of people in that line are wearing Tommy Bahama to go on their cruise. So there's some really interesting drivers here that have obviously allowed them to grow at 20% when I think initially consensus was looking for low single digits. So there's been just some really interesting drivers that we think are longer term emerge here.

Yeah, no, look, my first experience of the brand, I didn't even know it at the time, but during the height of COVID, my wife and I evacuated to Fort Myers. And I remember we went to Naples and we were walking around and we were like, Tommy Bahama, like they basically controlled an entire block there and we were shocked and there were, you know, it was packed. This was, it was December, COVID in Florida. So COVID kind of wasn't exist anymore. But the thing was packed. And I had no idea that they had that brand strength. And I think I told that to you guys when we started doing this. I'll give full disclosure. I feel like a bad podcast host. This is not a Tommy Bahama Floral shirt for the people on the thing, though. Tomahama is very much in my brand.

My wife and I, we've got plans to go. We've got reservations for next week to go to check out the restaurant. So I will be checking out the Marlon Bar. But I guess from a bull case thesis, you know, the thing that strikes me as a bull case. I was looking at their Q2 call and they started saying, hey, one thing we're pushing into his pants. And Eric addressed one of my things. I was like, oh, this is all floral shorts. And they were talking about, hey, we're pushing into pants.

We're pushing into other things. We're adding features. Is the bull case here? Like Tommy Bahama is kind of following the Lulu Lemon pack, right? where Lulu Lemon, for years, people say, oh, it's just yoga pants. It's just yoga. And now that's a lifestyle brand. It's a solid brand. I mean, it trades for like 20, 25. It trades with a Nike-like earnings level. Is that kind of the bullcase path that you guys see for Tommy Bahama? 100%. And I think, yeah, I think just along the line that Lulu Lemon is, you know,

you don't think we're going to get 20 times earnings per share or anything is even higher than that. So we don't want to have our investment thesis contingent on us earning a premium to Lulu Lemon. But, you know, if you look at Tommy Bahamas financials, Oxford's financials, you know, they are growing, you know, almost as fast, at least you know, at least you're probably even faster. All organic, all same store sales, they're on opening up new locations. It's e-commerce driven. Retail revenue from 2019 today is actually flat. It's just been purely e-commerce.

And that's what's improved the margins by so much. and they have what Lou Lemon doesn't have is, well, maybe they do, but not to this degree, is the royalty income. It's 100% margin for them. So, like, one of the things they just did, they launched a suitcase with Samson night, which is like a luxury, you know, $400 suitcase. They're going to earn 5% of sales on that. I mean, it's below 5%, but it's in that ballpark. And that just hits their, it doesn't hit revenue, but it just hits their bottom line. And that's why, you know, their ebit margin, which kind of screens pretty high, is,

because I think that's one of the big drivers here. And that's been growing, you know, 20% year over year. And that, it's the umbrellas and the launchers you see at the beach as well. You want to add anything there? Yeah, we were discussing. It's actually the other day, in fact, looking back to Lulu Lemon, it reached this point about four or five years ago, whereby skepticism started to arise that, you know,

the product is going to get knocked off. They weren't going to be able to move into parallel apparel type, categories and there's you know it was a short there's a kind of a decent short interest and then since have clearly proven that that is not the case and maintain premium pricing alternatives have existed but people want the Lou Lemon brand here we sit with Tommy Bahama very similarly people are like thinking why don't you just go buy your shirts on Amazon well people want the Marlon logo and that's kind of playing out now you're seeing the pricing the margins of sustainability that. And I think the next couple of quarters, it will really come to bear and illustrate that

just proving that short thesis or the skepticism that kind of overlays the valuation. And we're going to talk valuation and skepticism a second, but I just want to come back to one thing Brandon said there. Like, Brandon, the five percent, you know, Samsonite's a real brand. They're clearly licensed in this because they think they can sell suitcases in this case at a premium by putting the Tommy Bahama and the Barland brand on there. I just, my guess would be, hey, when you've got something that licenses it, like, it speaks, A, it helps build up the ecosystem, the kind of like brand ecosystem a little bit because people get another connection point there. But B, it just speaks to, hey, slap a logo on and you can sell the same suitcase for,

it's probably a 20% premium once you, that's the only reason they do it, right? You can sell it for a huge premium. There's going to be demand there. It speaks to a brand with real strength. I'm kind of lobbying you a softball, but I just wanted to dive into that for a second. I think you touched a lot of really interesting points there. Tommy Baham because it is vacation. Now you have suitcases.

So there's like a natural shift there. It is, I'd say probably more, there's older people so they could really have that disposable income so they can pay for a Sampsonite bag. And yeah, I think, you know, Tommy Baham, they just really have figured out this licensing. Like back in the day they used to have an RV, like a windstream. Like you want a vacation near windstream? If maybe that's retirees, there's like a natural connection there. I'm sure everyone just, I'm sure you saw too recently.

They did a resort out in, I think, Nevada, if I remember correctly. So they're going to be a Tommy Bahama hotel now that you can go and stay. And they rebranded that, an existing hotel to Tommy Bahama because, you know, they think it's just people like this, you know, it's a fun brand. It's a little whimsical, but people, when you say Tommy Baham, I think everyone has something in their head that they can kind of relate to. And it's got those kind of beachy vacation vibes that everyone likes to associate with. It reminds me of Jimmy Buffett has Margaritaville and people probably last. laugh when they hear it. I laugh because it was in the FTX bankruptcy that I think FtX owns a Margaritaville restaurant like $55,000, which I don't know how you get to a $55,000 part.

That's pretty gross. But Margaritaville is a literal multi, multi-billion dollar business, which slaps brands. People go, people want to live the Margaritaville lifestyle. I know in Florida, they're building like a Margaritaville themed retirement home, a retirement community, basically. they've got the restaurants the hotels like that is a massive brand lots of licensing and you know I could see Tommy Bahama kind of it's it's leaning in that direction and that probably I'll let either you guys speak to it but that'll probably lead us nicely into valuation when you say hey margaritaville this three billion dollar brand we can probably start talking to OXM's overall valuation and everything yeah no I think that's right there's parallels not necessarily like party

lifestyle but just kind of like leisure and comfort and beach element to it that a lot of people have adhered to. There have been shifting populations in southern states and acceleration retirement. So those are all kind of tailwinds that are benefiting them. And over the last 30 years, you know, year after year, taken on these new customers, people that are retired and are on vacation. And it's kind of proven sustainable. And I think they've done a bunch of things over the last two years,

really they've changed kind of the structure of the business, the margin profile. and what I think is going to be translating to these higher, kind of continuous earnings. Cool. So let's touch on one thing. Well, one quick thing there in the license. I just so people understand the mandate of it. So Ta-I Baham will do $850 million of revenue this year.

I mean, sorry. That was like their initial guidance over the summer, $850 million. But overall, the brand will do maybe $1.3 billion in terms of revenue. So there's like $400 million of licensing revenue. And $25 million of that $400 million will. hit their balance sheet is just pure income. And that's not something that, that's actually a little quick data point we found in this WWD 30 year anniversary for Tommy Bahama. They got a little profile of the CEO had mentioned that statistic. But just like a little, just to maybe quantify

what we're talking about for the license revenue. I guess rough numbers. If people look at the LTM, I mean, the LTM for Tommy Bahama is 830 million in revenue. And what you're saying is, hey, that's a lot, actually bigger than that. This brand is kind of punching 50% above this weight if you were just looking at the financials. Exactly. Let's turn to valuation because I think valuation will bleed nicely into talking about, I think there's a pretty active short thesis or maybe some sell size don't get the valuation. So I think talking valuation will bleed nicely into that. So either one of you can start, you know, as you and I are talking, this is about $110 per share stock price what's that translated into market cap enterprise value valuation all that so i got the

financials in front me so i feel free to uh jump in if i miss it but i think what really i think pops off the page the earnings per share is up 142 percent since 2019 and i think you know what really caught our interest initially is that this management team is focused on gap EPS like they guide the gap EPS they buy back stock they do a creative acquisitions so you're getting gap EPS in this business And there's 100% pre-catchual conversion. So I think that's kind of maybe the metric that we're focusing on for valuation here is, but, you know, the, like I said, you know, the EPS is up 142% since 2019, but the stock is not. And we think the delta there is people saying, okay, this is peak. So I'm sure we'll touch on that a little bit later about why we don't think it's peak, but just, you know, just right there, you kind of keep the valuation multiple flat.

The business is just improved by so much since 2019, you know, margins of double the business historically. was in the wholesale channel they totally flipped the wholesale channel now into direct to consumer it's 80% direct to consumer so if you kind of look at where the like a ral florenna is you know they're a majority wholesale so it's not as attractive you're selling an apartment store secondary decliner's closing locations these guys control that distribution channel and where they've gonna we call it soft guidance in the 10k they said you know we expect our growth to come from the e-commerce channel and the e-commerce channel just so much higher margin for them.

But yeah, so on valuation, you look at Columbia, sportswear. You know, we look at, you know, Decker's Outdoors. These are some of like the higher growth tier guys that are, you know, doing double-digit growth with the expanding margins like Tommy Bahama and they get, you know, mid-teens, PE multiples. You know, when we look at consensus next year, we think, you know, it's very conservative. You know, we think if this business just continues to grow at zero percent, the terminal value implied in the business is negative. So it's like that right there is your huge upside

scenario. But yeah, so how we get to that $188 price target is just looking at, like I said, I think Columbia or a Decker's or not Lulu Lemon, but these guys are a higher margin, better returns on invested capital. And, you know, going to be around for the next 30 years like they have the prior 30 years. Eric, did you want to add anything to that? yeah it's what on that to work training like 10 times at the current valuations to clarify where we stand in the discrepancy between that and what we think it should trade for and happy to get into like some of the reasons why probably that discount exists yeah no so I guess the the first high level is you know I

looked at they've got all their peers listed in their proxy you know there's buckle um carters chikos is in their children's place. And then the three that Eric mentioned, Decker's, Columbia sportswear, and Lulu are all in there, too. And what you guys are seeing is, look, the median, I've got my little Bloomberg pull on my right. The median of those peers trades for about 10, which is about where Oxford's trade for, but the best, which would be Decker's, Columbia, and Lulu, all of those trade for, the smallest is Columbia at 17. And then the others are, you know, Decker's is 20 and Lulu is way over 20. You're saying the simple thesis here is Oxford has Tommy Bahama. Tommy Bahama is one of the best

brands in here. It should trade for a multiple that's kind of in the top quartile brands here. So from 10 to 17, that's your very simple thesis right there. It's a part of it. You know, and I think yeah, so multiple transactions huge. So I think one interesting thing about these guys is they're 96% North America. That's the highest of that comp group. So you're not taking Europe or Asia or China risk right now. like I said, direct to consumer. So I think when you look at the valuation discrepancies, a lot of it is, are you selling into department stores where you don't control the pricing or are you controlling the customer?

I think the other big variable there is, you know, going into this year and maybe even the last couple months, the expectation was that, you know, earnings per share was going to decline, revenue was decline. So we think that buy set expectations, investor expectations were just so far below consensus. They were really overly discounting those consensus estimates to kind of hedge that this business was just going to turn over next year. So they really weren't pricing in consensus yet. And I think what we've seen is as these guys have continued to deliver, you know, I think our big catalyst was, oh, city is going to flip from a cell to a buy. They flip from the neutral and the stock went down 3%.

So that was like, okay, we got the fundamental improvements, but we didn't really get the valuation we were looking for. But we've started to see the narrative, I think, really shift towards, okay, maybe this is going to be a long. long-term grower, you know, spectacular business that should earn the valuation of a lot of the businesses you just mentioned. So you mentioned the city report. And I think, you know, generally, I'm sure all of us don't like to get hung up too much on quarters. But I, we're talking December 1st, 2022, you know, we were talking before. It is, we're right in the midst of all of the kind of soft lines and retailers reporting. And one of the reasons we want to record this today is so we could get it out before Oxford reports their Q3 earnings next week.

So I just do want to talk. And this bleeds nicely into another the bare thesis. Brandon started mentioning it. Earnings are way up since 2019. You know, 2019, they do about $4.30 per share in earnings. This year, they're guiding for over $10. And I think people look at that and say, this is a business that way over and during COVID. You think about talking about Hama, being outdoor, living the beach lifestyle, 2020,

2020, that's what people were doing, right? They were getting out of my one bedroom apartment. in New York City and they were going to the beach. So I think people look at that and say everything retail over-earned during COVID. And these guys especially might have over-earned because people were just really going to where their stores are focused, where their lifestyles focus. And they're looking at that and saying, hey, 2003 might not be great because you've got this over-earning pullback.

You've got all the promotional environment and everything we're talking about. And then I even think for, you know, the quarters coming up, people are looking at and say the environment, their environment's getting really rocky out there. we're seeing a lot of businesses that are having to promote like crazy people are stuffed with inventory so i think there's like a this quarter risk out there and there's kind of the two thousand twenty three lapping the 2019 covid boom all that type of stuff so i'll i threw a lot out there i'll let either of you talk if you you want to i think you really touched on it no that's that's great and you know when we talk to people that's what they tell us um Q3 is a little bit

de-rest, not de-risk, but, you know, they did the Johnny Waz acquisitions and then they pre-announced, okay, we're actually raising organic growth guidance because demand for Tommy Obama and Lily Pulitzer is just coming in stronger than expected. And Q3s are seasonal low quarter. So when Q2 was really strong, we're like, okay, everyone just went on vacation. Are they keep going? And then Q3 is coming a little stronger. And now we look where Q4 estimates are. And, you know, maybe we'll dive in this a little bit later where we kind of differentiate from consensus. estimates, but if we just assume Q4 is like a seasonally in line quarter like it has in 2019 and years prior, you know, there's a decent amount of upside to those Q4 estimates. We don't really think they're reflecting how strong is they push Tommy Bahamba makes. Usually Q2 and Q4, they're, they're two big quarters. And they are usually about equivalent in revenue. So we're kind of making that assumption that that's going to stay fair and correct this year. And then it's like, yeah, there's, you know, there's a at least.

you know, 10% upside the Q4, Q4 revenue there, and then just keep going from there. Brandon, you mentioned on the Johnny Wise acquisition, which happened a few weeks after they announced Q2. They came out and they said, hey, we're raising our full year guidance. And part of that is because we're doing an acquisition. But another part is organic strength in our two key brands. They, I think they raised EPS targets a little bit and everything as well. Do you think because that was like line, paragraph three or four of an acquisition press release, it kind of buried the lead. And I mean, obviously, sell sides are going to pick up on it.

But do you think it didn't kind of get the notice that it would have if they had, you know, gone to a conference and put out a press release that said headline, Oxford industry raises guidance on strong organic trends or something? Well, I think the funny thing is people here to look at Oxford Apparel and say, I don't want to own a contract manufacturer for. So it's like that company raising guidance doesn't remove the stock either. And another thing, Eric, and I've been laughing about us, too, is we know we see some retailers report earnings, and maybe they only declined 2% versus 5% as expected than the stocks

go up 20%. Burlington, great example. You know, stock goes up 20% because they only declined, I think, 17% this quarter. And that was better than the 20% expected and the stock is ripped. And if I remember correctly, they came on the call and they said, look, our systems are way worse than all our competitors, but we promise we're going to figure it out over time. I mean, it just takes time, and I'm laughing because I kind of flipped through that call, and I remember reading it and being like, the stock was up on this?

Yeah, so to your point, Tommy Bahamas said, yeah, we're actually going to go 20% instead of 15% or, you know, whatever exactly it kind of bakes into, and the stock barely moved. So I think there's definitely something there. Eric, did you want to add anything there? Yeah, I mean, it's the name we, whenever we discussed with others, they've never heard of it, or they're familiar with in Tommy, Bahama, and again, you know, how does that get, rectified, you know, change the name of the company, Tommy Bahamman company or something like that. They're going to be doing an investor day next year.

They improve some of that outreach. You know, it's a great story. They're your articulate management team, very solid operators. So I think we'll start to see some more of that. Now a number of these shifts in the business have manifested themselves and we're kind of coming out of and probably entering a more normalized environment. I think that setting and set up and timing for that would be attractive for them. Yeah. No, I'm just laughing because I think you're exactly right. I mean, I knew we were doing a podcast on this. I read the Q2 call last night. I was getting ready. I tweeted out, hey, we're doing a podcast on Oxford. Does anyone have any questions? And then I tweeted out and I was like, oh, that's Oxford Industries. That can't be the right company. I just tweeted out the wrong thing. I was like, Andrew, you've been looking at this. Like I do think there's something. Let me just dive a little bit more into the bear case here. Right. So I do want to switch this into a little bit talking management. You guys mentioned they're going to.

to get more articulate through the investor day. But I went back to the CEO, he's a lifer at Oxford Industries. He becomes CEO in 2013. I think he was CFO before that. He's been VP. He's been here since the 90s. He takes over in 2013. That year, Tommy Bahama does 627 million in revenue and 71 million in EBIT. By 2019, Tommy Bahamas is doing 67 million in revenue and 56 million in EBIT. So, you know, revenue up 10%, EBIT down 20%, right? So I look at that. And then in the last 12 months, Tommy Ahama's 831 million in revenue and 160 million in EBIT. And I just, it is hard to look at those numbers and say, hey, for five years, the Tommy Bahama brand was kind of flatish. And then you get COVID and this brand spikes. And it's hard for me to look at that and say, you know,

what accelerated this in the past three-ish years aside from COVID? And, you know, COVID could be. People came to the Tom Baham brand, they liked it, and you built up a real brand there. Like, people have created real bands. But I just look at those five years in 2014-19, I say, oh, that wasn't really a great time for Oxford. And I wonder if that kind of disproved some of this thesis. Yeah, I mean, those are very, I think very valid points. And I think we totally agree.

And there's if you want to be, make sure this business is an over-earnings. And I think the metric we kind of look at. Because, you know, it's been around 30 years. In 1999, I think when the first earliest financials, they did 300 million of revenue. It's kind of grown at like low single digit since then, including this year. So I think that's how we put it back into it. Because there is some noise in like two, three years prior where they're really dogging sales growth by doing this rotation from the wholesale channel to the direct-to-consumer channel.

So when you're taking revenue from one channel trying to push it into another one, lower price here it's higher price here you got to get the customer to follow you so that did definitely created a little bit of an overhang and back then the funny thing is you know the stock still trade for 15 times earnings per share um but in terms of you know what's really changed i think there's somewhat of a you know we don't want to overstate it but there's somewhat of a pop culture phenomenon to tell me bahama right now and i think where we see it is that i'm you know we're usually watching a show on netflix or something on hulu everyone knows craig robinson from the office just got a new show called Killing It, where he kills snakes in the Florida Everglades.

There's a scene where the guys were in a Tommy Bahama polo, and they zoom in on it. So it's like pretty authentic there. There's another movie called Barb and Star and go to Vertha del Mar, which is like a Florida resort with Kristen Wigg and some other big names. And there's a character called Tommy Bahama, like in the movie. And there's another scene where, you know, Kristen Wig meets a lady. And she goes, you got to go to this resort in Florida. of the men, head the toe, Tommy Bahama. And it's like the movie based in Florida,

and they're really rep in Tommy Baham and, you know, there's a, you know, everyone knows Melissa McCarthy, but she has a new show called God's Favorite Idiot. I think she kind of like pairs into someone for wearing a Tommy Bahama polo. But there's just all these movies we've seen the last few years come out and they're like talking about Tommy, and this is a small brand and everyone's kind of like talking about it

in reference to Florida going to the beach. So we think it has kind of captured the imaginations of a lot of people. That makes sense. Eric, did you want to add anything there? Yeah, I think one of the kind of structural changes that COVID beneficiary for them was these are older folks historically were shopping maybe in stores. Now a lot of them start shopping online. It's easier to kind of access those people that have increased the, you know,

wallet share of those individuals. And our diligence is with that essentially a small percentage, of the shoppers or customers account for the bulk of the sales. So they'll be able to everything they buy is Tommy Bahama, and that's kind of spread. It's, you know, they've done a number of marketing initiatives to improve that. It's kind of a nascent kind of marketing initiative program that is kind of relaunched effectively through the website and through some other programs just over the last two

years. So that's really, I think, a permanent change that I think will continue to benefit them. Do you think, Tommy Bahama, just something that jumps out at me, just because they've got maybe a little bit of a older demographic shopping them. Do you think one thing people might be missing is, like, I look at their Instagram and there's about 85,000 followers, which is not small by any mean, but, you know, it's probably a little bit behind some of the, the comps that we've been talking about. Do you think just because, I mean, like, 65 year olds probably aren't on Instagram,

people might look at that and like underestimate the brand strength. And I use Instagram, but we can probably talk other. social media is. I just use that as a very high level example. It's so funny you said that because, you know, we, we had the opportunity to speak with one other former marketing guys, just super knowledgeable on it. And he goes, yeah, they historically have just done mail, mail inserts. They've just, you know, pushing that channel. They haven't really navigated towards e-commerce in the last year. And I think one thing we learned is that last year they did a massive overhaul of the website. They used to just be people dancing around on the beach

and floral shirts and they've kind of started to regroup it. So I think that's all, you know, super interesting there. And then like how we were kind of looking at it too and how, you know, beginning of your consensus was positioned was 2021 was the catch-up year. So they did 720 million of Tommy Bahama revenue last year. That was above the 676 million they did in 2019. So everyone said, okay, that's a full catch-up by, you know, a huge amount. Revenue was up 72% last year.

And then the first half this year, you know, they were lapping super easy comps where revenue grew over 100% and it's like, oh, are they really going to be able to put growth on top of 150% comp? It's like, sure enough, they grew 17% last quarter and their toughest comparison of the year. No, that's great. Let's go back to management real quick. So again, I mentioned the CEO's a lifer. He owns about $15 million worth of stock, which I'd love to own $15 million worth of stock. It's not nothing, but, you know, he did, he makes about four to five million per year. He's a lifer.

I just want to talk both management strength. And I guess the thing I was going to was, I was surprised it wasn't a little higher kind of insider ownership there. I think the person who was at the wholesale business that they kind of disposed of is on the board still and has a little bit of ownership. But I was just surprised there wasn't a little bit higher insider ownership. So I want to talk that and management strength there. sure i think we really really really really really like management and you love him or do you like him there are a lot of realies in there i feel like you're about to drop the album on him here i could i can even throw in a couple more realies but yeah so we think they're doing the right thing we think

they think about the business the right way you know they're allocating capital the shareholders they're focusing on gap EPS um they have i think the right incentives incentives where they are aligned with shareholders and you know i think they'll continue to deliver they're very i'd say they manage the business very conservatively um so they're not like out there promoting the business which at times we're like just tell them you have such a great story you know just get it out there um and they don't really do that too much um so i think yeah management you know a plus we want them just keep doing what they're doing uh and then what was the other question uh inside ownership management which i think you were just but eric did you want to

had anything there? Yeah, I mean, I think they've been very disciplined capital allocators. I think that's something we, it's critical to us, right? So generating a lot of cash flow had previously been buying back stock. We just did Johnny Waugh's acquisition. That will go to debt pay down and then share repurchases. And so we know where the capital is going. And they haven't made, you know, blundrous acquisitions in the past. These have all been logical fits. They can deploy their strategy to these new brands that are acquiring, you know, grow them with that playbook. And I think we'll start to see that with Johnny Waz as they have with the prior brands that acquired. Yeah. So I guess let's just quickly talk

Johnny Woss. So this was an acquisition that was announced mid-September, $270 million acquisition. You know, Oxford is a just under $2 billion market cap company, just over $1.5 billion dollar enterprise value company so it this isn't it's not a mate bet the whole firm type acquisition but 270 million is a meaningful acquisition for them so you know john it sounds like you guys like this deal uh do you want to talk about why you like this deal uh and kind of we can also talk share repurchase because you know i love a good share repurchase and they've done some of that too but just talk about their acquisition strategy johnny waz and what you think going forward i guess eric i'll toss it over to you to start yeah sure so we don't know a whole lot about this

was announced essentially last month, but they have, Johnny Wallace has 60 stores. They think they can grow that to about 160. There's a scoot towards California. It's going to have a casual beachwear female line. They're smaller store unit level in terms of size. So I think they're generating about 2 to 2.4 million per store. And I think their belief is they can expand this nationally into the markets where it's relevant in kind of warmer weather climates and use kind of their core skill set that they've used

and utilized with probably most likely Lily Pulitzer. And, you know, that's, I think there'll be more to come. They just kind of provided those initial numbers and some of which we kind of were able to find out from back end kind of looking at the business from kind of scoping it out online. Brian, did you want to add anything there? No, I think you nailed it. It's a interesting double-digit growing, double-digit revenue growing business. And, you know, how much they had 200 million of cash on the balance sheet.

They don't really think investors were giving them credit for that because they kind of knew it was going to be deployed to afford an acquisition. They haven't made an acquisition in quite a while. They've actually closed down a couple brands that were underperforming. Yep. Which is, you know, if your management team's paid on EPS and they close on a couple brands, it kind of takes away from their earnings per share. so we were really impressed that they would do that.

But now this made this a creative acquisition. We're really, and they haven't really told us too much about it. That's like the funny part. They make this big acquisition. Don't even hold a conference call. So I was laughing. I was trying to find the conference call. They do a big acquisition.

They put out a, I mean, I guess it's about a nine-page slide deck, but six of the pages are almost just like it's one model for Johnny Waz with, you know, acquisition overview or something on it. Like, there's really just not a lot of information there. let me talk quickly speaking of acquisitions you know one that i keep jumping into my mind is last i mentioned at the start last year crox buys hey dude and hey dude is not really a comp for tommy bahama in anyway you know we're talking completely different things hey dude is almost exclusively shoes they don't have a lot of direct to consumer i guess they do have a decent bit of digital but it's

they're mainly doing wholesale through things but the one thing that jumps out to me is it Crocs pays $2.5 billion for Hey, dude, about 15 times EV to EBDA, you know, approaching four times revenue. And I just, you know, I look at that and I have to wonder, are you guys looking at, and we've talked almost exclusively Tom Baham here. I mean, Lily Pulitzer is a real brand, but Tom Bahamas, the majority of sales, the pretty big majority of earning. So that's really why we focused here. Do you guys look at that Hey, dude transaction, or there have been other transactions in the brand space and say, oh, like the market for all the reasons we've discussed. This is named Oxford. This is buried. People are worried the market is

really missing. The multiple for these brands is, it's pretty big. Yeah, I don't think we'll use those as like comps. I mean, it would be like a triple to the stock. If they were to sell it at multiple, which is, you know, we're never render anything on an acquisition takeout premium. But yeah, no, absolutely. There's a huge disconnecting the valuation. I mean, that is, I think, going to be become more stark as we start to, as they start to put up, you know, sustainably higher margins and continue to grow an accelerating rate or an attractive rate. But that's where we stand, exactly. Do you think we've joked about this company being named Oxford a few times? Again, this is a little bit of softball, but it does strike me, Monster Energy Drink was, it was, it still might be the best

performing stock of this century. For a long time, it was like the best performing stock of the past 10, 20 years. And obviously that's a huge gross story and you need the fundamentals to work and all that. But one of the things people would always say is Monster Energy Drink, I can't even remember what was called anymore. But for a long time, it was called something different because it was the small brand that grew into this enormous thing under another thing. And for a long time, people would say, look, one of the issues with the company is the stock is like undervalued because people don't realize, you know, it's named Oxford, Oxford soft drinks or something, right? not monster energy drinks so people don't give it the thing it doesn't like get the immediate recognition

if they would change that they they would almost the stock would almost get a you know six months pop as people just got comfortable oh i'm buying monster energy drinks not some random industrial do you think you mentioned investor day next year do you think longer term there's almost a little bit of hey when they change their name to to tommy bahama anco or something there's going to be some type of pop or that'll be like a catalyst for investor recognition I'll tell you one funny thing. Oh, go ahead, Eric. No, I think that, not to interrupt, but, you know, I think that would.

We haven't formally announced any of that intention, but certainly. And, you know, getting back to the Johnny Woods real quick, I mean, the granularity, the detail of the financials for this company is exceptional. So we'll start to really see that. Like, they delineate Tommy Obama, you know, earnings revenue, lots of metrics of others down. And we'll start probably start seeing that. as soon as it's, you know, next quarter for Johnny was. But, Brandon, feel free to add. No, yeah, that's exactly right. I think the funny thing of it, you know, we always say everyone always thinks Oxford industry is just like contract parallel manufacturer. And that's because it was,

you know, IPO and I think in 1965. And that's what they did for the history of the company. IPO in 1965. I think they even say in their deck, we've paid a dividend for like 40 or 50 years consecutively and obviously with their cash flow they can keep doing that but it's 65 like they were paying a dividend as a contract manufacturer they've been doing this for a long time and yeah so i think that's everyone's perception of it and it's somewhat of a double whammy too is because once you realize that you know they actually shut that business down and they actually shut down the last of it this year their own like oxford brand and the contract apparel manufacturers but a little bit of a double whammy because people realize, okay, so this is actually a Tommy Bahama in group,

but Tommy Bahamas is a joke brand. And I think we like to reference the family guy spoof of it. I think everyone's like has that in the back of their head, that family guy spoof. And I think they see Tommy Baham and they go, that's a joke brand. I'm not why would I want to invest in that? So it's not even, you have to like educate the investor, like even another further step beyond just having a somewhat confusing name. No, it's funny you mentioned the joke because the next thing I was going to ask you is they're opening, you know, just to reiterate kind of the brand strength in what's developing here, they're opening a Tommy Bahama Hotel and like kind of luxury resort in California.

And I think it's slated to open in late 23. And it's funny you mentioned the joke because the first thing that pops up, there's a travel and leisure article and it's almost making a joke out of it. It says, that's right. There's going to be a Tommy Bahamas. Hama Hotel, right? So, like, clearly people are thinking, oh, this isn't a, this is more of a joke brand. They're not understanding the brand power here, underestimating it or maybe they're waiting for it to be proven out. But I wanted to mention that California was a, to do another indication of kind of brand power.

But B to ask, like, how will you know if you're wrong or if the Tommy Bahama brand like kind of doesn't have these legs, if there's shifts? Would it be, I mean, one early indication would be this hotel project failing or not filling up. But what are some other ways you guys kind of track that the Tommy Bahama brand is not a fad story, that it's staying on strength, that it's continuing to grow? Well, I think with the California hotel, they're not like building the hotel that most likely there's only recently announced will be like a royalty agreement. Yeah, yeah. So it's not like there's a huge capital appointed there. Royalty. But if it if it's 20% occupancy for a year, it's like, oh, the Tommyahama hotel can't really attract people. Yeah, right, right. So they're not

Yeah, exactly. I don't think they're necessarily bearing that as much risk there. But I'd say what do we look to? I mean, 30 years have continuously kind of cultivated the brand affiliations high, these retirees or older folks. And it's, you know, kind of people retiring younger that continue to do this. The pricing, they continue to raise pricing. We closely track that. You know, their $120 polos, almost none of which have been discounted. You're seeing a lot of discounting starting from kind of the lower end and some, of the peers where there's plenty of other options out there even polo and like and you know you know the kind of ongoing kind of sustainability that is i think demonstrated in the historicals and

kind of what we're seeing and you know the current environment did you want to add anything there so we um i think we talked to a formal marketing guide i think the questions you're kind of picking up on is exactly what we picked them and you know we are asking about and i think he just had this one really interesting quote was obviously no one has a crystal ball but he goes you know i was there and he's like we never saw a cliff in sales he's like they never really got too high never got too low kind of been like steady eddy um you know they spent five percent of revenue on advertising and that just hasn't changed in the years he's like they're actually probably not pushing as hard as they should but you know people will keep going on on vacations people will keep retiring

probably has a boat in Florida, probably spends at least half a year there. You know, I said my parents have a place down there. I mean, they live in Syracuse, which is, you know, obviously the snowiest city in the United States, so they get away for the, but they'll, you know, they do that every year kind of like regardless of what's going on. So I think that's who they're selling to. And their customers didn't get stimulus checks. They didn't have this, like, big bump, like, you know, we saw in Foot Locker and some

other lower end guys. So they've kind of just been steady at a grow. And they are a, what we learned is a first look. So if I'm going on vacation or if I'm going to the beach, a lot of their customers will use Tommy Baum as their first look. And a small portion of them are recurring ones that make up the lion's share of profits. It's something else that we learned. And I think that gives us confidence that this is more than just a one year, you know, like we said,

COVID beneficiary. And Eric, I just wanted to add something to, I thought you made a great point. Hey, no discounting. I'm just looking at their website off the corner of my eye, and it's, you know, everything on there, we're talking the Thursday after Black Friday, right? So lots of brands are still doing lots of discounting, trying to get those Christmas sales in. I don't really see any, I'm only looking at the men's polos and T-shirts. I don't see anything discounted. You know, the one offer I do see is if you spend $175, they'll give you a $50 gift card that you can use in January, right? So they're almost like

pre-selling something. Obviously, there's a cost of that gift card, but they're saying spend $175 now, get 50, which I'm very familiar with these things, because what they're hoping is, when you come to spend that 50, your basket adds it to 100. You throw another $50 in cash there. And either way, the gross margins on these things are very high. So they could, they'll be probably even if you only spend that $50 gift card, but they're hoping they get that. It encourages a repeat visit. They're encouraging repeat behavior. So I think that's really smart. and you know i'm saying that because it sounds $50 gift card on 175 they're discounting and technically yes but that's you know miles apparel is one i like they're doing hey everything's 40% off

spend 100 and get an extra 10% off spend 200 get next like they're nowhere close to that they're doing a small discount to encourage repeat visit and a a big basket so that i think that kind of speaks to the brand strength but just i love capital returns i love capital allocation i think they've i'll let you guys talked to the share buybacks. As you mentioned, Johnny Waugh's acquisition, they've got plenty of cash. They could continue share buybacks. Might slow down a little in Q3 and Q4 just as they close and integrate. But let's just talk. They've done dividends for a long time. I'm rambling. I'll throw it over to you guys capital returns for the company. Management focuses on Gap EPS. So I think for us, we were, okay, these guys are aligned with us. And I think you brought up a great

point is, you know, we'd love for them to own some stock. They have some stuff we love for own more, but because they are, you know, aligned with shareholders, you think we'll keep delivering for us. And historically, they, you know, they had debt on the balance sheet maybe seven years ago, paid it all off, built up a huge surplus of cash and kind of weighs down your P.E. multiple. So people are kind of like, what that is going to do with it? They bought back $100 million dollars of stock, which was, I think, five and a half percent of shares outstanding, which is just phenomenal. There's almost no stock-based compensation. in this business either so it's just pure to the bottom line and going forward you know now they have

about a hundred million dollars on the credit revolver just from johnny was we'll pay that down by you know second half the next year and then from there we're kind of hoping they'll you know keep building up that cash we like this business to be very well capitalized um they're not opening up new locations that much so there really is no you know upfront capital investment here like we see a lot of the smaller guys that are like bootbar just a great example they did a conference phone said what going to triple our store base. This isn't that story. They have 110 locations and it will probably have 120 in like three years. And that's because it's a premium brand, right? Like there are only so many locations when you're selling a $100 pullovers. That's great, but you're not going to sell

a $100 pullovers in, you know, I'm from New Orleans. You're not going to do it 30 minutes outside New Orleans in some small town. Like it needs to be in a premium location. Again, these are floral brands. So you're probably going to want to do it in New York City makes lots of sense because everybody wants a flagship, but you're probably going to want to do it in a Naples, right, with a warm climate, beaches close by, all that type of stuff. Eric, did you want to add anything there? No, I think that's right. You've got the growth has come from pricing, higher, you know, turns for store, and then, you know, this improved channel as opposed to a huge growth by, you know, new store opening profile. Well, guys, I think we've covered all of my notes, most of my questions

and everything. I do just want to, again, I think we've done a great job. covering it. We talked about valuation. We talked about what kind of the shorts and the street might be missing, what people might be missing when they think this is industrial. But I just want to turn it over to y'all. Is there anything you think we kind of glanced over that we should have hit harder or anything we didn't talk about that you think people should be thinking about as they look at this name? So we've talked a lot about the kind of like the perception of peak or sales. But I think one of just as important perhaps more so is the peak kind of earnings and margin. I think Brandon mentioned earlier, this mix shift that's occurred is, you know, that's a

permanent structural change. In fact, there's actually some tailwinds to this being moderation cotton prices, freight costs, moderation that are shipping a lot by air last year to meet inventory in a short notice. Now that's going to go by freight. Freight rates have also declined. And, you know, some of those other kind of, you know, we're looking at a margin profile, I think that is, sustainable, if not, will increase, so versus what I think is perceived, at least on the bare side, is a reversion back to 2019 levels. And next couple quarters, I think they'll be disproved, if not, you know, in the next quarter. Brandon, anything else from you?

Yeah, I think it's very comprehensive. Appreciate the detail there. You know, one of really interesting, too, I think maybe we'll just touch on if it close is the inventory on everyone's mind. Like, oh, my God, these guys got a bunch of inventorying out to discount. I think what we found really encouraging was that inventory is actually two or three percent below where it was in Q219. Revenue is up 25 percent, just about. And what they did, and we've started to appreciate more, is they did a created a ship from store inventory management system just in 2020. And they've also reduced their skew town massively over the year.

So they used to have 15 polos or, you know, it was an insane amount of bull. Now they don't have as many. Maybe only two or three different price tiers, good, better, best. And that's just drastically reduced their inventory. So we think going into the key holiday season, they're very well positioned. And, you know, we're excited to see what they do. Just on inventory with Tom Bahama, like, look, there's always fashion risk. And inventory and retail is always a concern.

And I kind of agree with you. And we can talk about what they said in the call and everything. but this Tommy Pahama, I would guess it doesn't have as much kind of fashion or stale risk as is something more fashionable, you know, like my, my floral polo or whatever is going to be, it's going to be in demand in 2022. It's going to be in demand in 2023. Like, I would guess there's just a little less obsolescence risk. Would you agree with that or am I kind of off? Because it is high price. Maybe you do need to keep it a little bit fresher. Right. And that's kind of awful for not referencing this up sooner. but, you know, Eric and I aren't fashion guys. I haven't really, you know, retail guys. It's not where we play. But what we did like is, you know, if you go back, you know, 10 years and you look at Tommy Bama Polo, it's, you know,

it's just really selling the, you know, dad's over 65. And like their fashion trends aren't really changing that fast. So that's what really, I think, gave us confidence in this business. And you mentioned crocs, like, you know, crocs can be really cool one year. It's actually big with dads and then not so cool the next year. and they did really take a initiative or less coming into COVID to switch what they called it one third basic two third fashion they flipped it the two third basic one third fashion and that's

where we saw with the reduced queue count and that's where they're positioned today and that gives you a huge benefit in the queue next year where your past season you're not having to dump last year's fashion inventory they didn't sell so they really cleaned up the business nicely And just on inventory, I'll log you guys another softball because I know it's been a bear case. They've said, oh, they're over inventory. You know, I just, when I was reading the Q's who call, they sounded very confident on it. And then a couple weeks later, they came out and actually raised their guidance for the year. Like, I kind of thought that would put the inventory issue to rest short term at least.

Now, I've certainly seen companies say, you know, as recently as this year in April, they said, don't worry inventory is fine sales trends are picking up and then they come back in report in july they say june was a disaster we're over inventory we're everything must go we're marketing down so it's not that they're completely off the hook they they could have been wrong trends could have turned they could be like there's all sorts of things but i did kind of think that got put to bed at least temporarily by that eric did you want to add anything there you know i think that's right and frankly the fact that they're not discounting would suggest that you know you'll get a polo for 50% off reference from Ralph Lauren. You can't at Time Bahamas. Their quality and pricing power is going

to demonstrate through this period where a lot of peers are being forced to cut prices. Well, hey, guys, I think I'll wrap it up there. I should have mentioned right at the top of the show. They've put together a PDF presentation that walks through all of their thesis, all of their bullpoints, valuation, everything. I'll include a link in the show notes. I'll tweet it out. So I'm sure people will be able to find that there, but people should be sure to check that out. Brendan, Eric, thank you guys so much for coming on. Looking forward to having you guys again. And more than that, looking forward,

I'll send you some reviews from the Marlon Bar. I think Tommy's up my dad's angle, so maybe I'll get him something for Christmas. I'm going to be sending you guys some reviews, doing some due diligence on this thing. I look forward to it. Great. Thank you, Anna.

I appreciate the time. Thanks again, guys. Talk to you all soon. All right, I'm here with Thomas Lee, the founder of DeLupa. Thomas, I guess you wanted to start off by just asking, you know, why don't you tell people they hear the 30-second brief

at the beginning of every podcast, but what is DeLUPA and kind of why did you start the company up? Yeah, hey, thanks, Andrew. Yeah, so DeLUPA is a company that, you know, my co-founders and I started about three and a half years ago. The idea was really borne out of the pain point where as a former TMT by sign analyst, it was very annoying to build and update models, right? You spend a lot of your time building models and updating these models,

but really you want to be spending most of the time thinking about your assumptions, and thinking about the macroeconomic situation as it pertains to your company and not the data entry data-scarping piece of it. So DeLUPA was really created just to automate a way as many of those problems as possible. Very simply, Delupa aims to serve two purposes. The first purpose is in a click of a button,

your existing models should update, right? No ifs, no buts, everything just works. And it almost feels like magic to a lot of our users because what you're used to doing earnings season is you sit there, you open up the AK and the tank queues and you start punching in numbers. You're trying to juggle, you know, four different earnings calls. You know, everyone is asking you what is going on. You are trying to figure out what is going on. And you have this very mundane task to do of updating your models. If you don't get it done in time, the next day it just starts snowballing and snowballing. And

earning season just becomes a really painful period of time for most animals. Right. Back then, it was by far the most time-consuming period of my quarter. And what DeLUPA does is it simplifies all of those problems away into a simple click. You click a button, your model updates, and you're off to the races to do the stuff that you actually enjoy as an analyst. The second value of the LUPA is we have scrubbed thousands of companies. At this point, we have all over 3,000 companies of financials. And we've read every 10-Q, every AK, every investor deck, we pulled out every KPI. every adjustment, guidance, financials,

every tiny detail that you're expected to scrub to build a model we have done. We've built a bunch of tools around it such that you can audit into every single number. So not only our data hyper-accurate, every single data point is auditable, and you can have access to everything. So what people do like about that is,

if you're renting to a new name or a new space, you can just download a spreadsheet of everything that the company has, ever disclosed. And it's a very good starting point to build a new model because it doesn't come with assumptions that you don't agree with. It doesn't come with, you know, 15 different tabs that's difficult to work through. It's just a clean set historical data for you to use. So in short, that's what we do, right? We give you perfect data. We update your models for you. You know, and you didn't even mention when you were mentioning the earnings season thing. You didn't even

mentioned my the absolute analyst nightmare where a company goes and they change their segment reporting right and then your whole model's blown up because you need to go back and it's like oh no like everything's done you've got everything custom built so just for people if someone goes and downloads one of your models you know i'm sure people are familiar with you go on to some like fly by night financial sites and it's just they've got a computer kind of pulling things and people are really familiar with oh all the data can be messy it's playing from the wrong thing like are you having actual, obviously computer scraping a lot of it, but are you having an actual analyst go in and kind of guarantee every model that they're looking at? Yeah, we do. So in short, we have close to

200 AI algorithms that is checking every single data point. But on top of that, we also have a team of about 200 financial analysts, right? We check every single data point twice to make sure that they're correct. But more importantly, like Andrew, you pointed out, one of the big problems is restatements, resegmentation, or companies just disclosing new data. We're able to identify all the new data for you such that in a single email will tell you, hey, company access reporter earnings, here's everything new that they have disclosed. Here's the file with all of the data. Everything new that's been disclosed is now highlighted in bright yellow.

So you no longer have this question of like, did the company disclose something new and I just happened to miss it? Because it's very easy to miss, especially if the data is buried in a footnote. It's super easy to miss that. But for our customers, that no longer is a problem. And as you said, the analysts can spend less time kind of digging through the things and just putting numbers into a model and more times thinking about, hey, this new disclosure, is it actually useful? How does it change my impact on the business? Things like that. Who's your typical customer who's actually using the LUPA? Yeah, our customers generally fall into four buckets. The first bucket and probably our biggest bucket are hedge funds. Most of these hedge funds tend to be long short credit. The second bucket are long-inories and mutual funds. Very simple. similar use case to hedge funds, right? Maintainting models, you're going to keep them updated.

The third bucket is investment banks primarily in the equity research division, right? Just like their by-side counterparts, the cell site has to maintain models. The difference is obviously sales that publishes the models and publish research and so on. And what a lot of our big investment bank customers have told us is the reality is nobody actually wants to be updating the model, but is something important in their process so that they can start thinking about research notes to ride management calls to get on and so on. So that's the third bucket. And the fourth bucket is private equity. Private equity don't really maintain models the way like the long short equity analyst

would, but they spent a lot of time thinking about industries. They set a lot of time thinking about, you know, how does this company come to something my portfolio and so on. So what we see them do is instead of building individual company models, they have a tendency to build KPI models for industry costs. right? Like we have customers building an industry model for every single software companies, AR and one Excel sheet. And you notice like over 250 software companies out there. So if you have that Excel sheet, you can maintain it updated again at a click

of a button versus what they historically had to do, which is open 258Ks and manual legal food. I'm very familiar with that task. Anything else, people who are thinking about Tulipa, kind of listeners of the podcast who are thinking about Tulipa should know or where can they reach out to find out more about you guys? Yeah, so you can reach out to us just by going to our website, d-a-o-o-o-o-o-a-com. There's contact details up there. You know, one of the, you know, as a listener of the podcast myself, like one of the things I know a lot of listeners care about is like just a granularity of things that's being disclosed.

It's almost as in the level of detail and the way companies do disclose or choose not to disclose certain numbers is almost as important. important as the financials, if you will. So what a lot of customers have told us that's interesting is, after they've downloaded their sheets, they realize that there is so much data that the company has actually disclosed that they weren't even aware of, right? That might be a period of time, but the company was burying footnotes, tiny details, and then they stopped that process for a year and they restarted the process. Like that level of detail is something that you don't get anywhere else.

You know, it's a little off script, but it's so dumb, and it's something I've thought about writing about before. Like a lot of times I'll follow a company for a year or two. And there'll be a disclosure that they make that I won't really pay any attention to. And I can't tell you the number of times like nine months later when I'm smarter on the company or something weird happens to the company. Like, oh, that's why they're making that disclosure. Like the disclosures that companies make, they generally don't, they generally don't put them out there for no reason, right? Like it actually takes time and effort for them to get into the SEC statements for lawyers to approve them, all that type of stuff. So they're generally there

for a reason and one of the nice things with the tracking and stuff is if it's there you can track it and you can quickly go to it see how it's changing and as you said see anything new because especially when new stuff comes like hey a lawyer probably told somebody it's really important for you to disclose this or the CFO when it said hey if we disclosed this to our investors they're going to be really excited about it and it might move to stock or something so like there really is a reason so that's completely off script but it really struck something I've thought about a lot Any last thoughts before we got this up? Yeah, and to that point, yeah, the last thought is sometimes it's also relevant when a company doesn't disclose something.

Right? So where it gets very interesting, a lot of people have pointed out to us is because we do such a good job as stringing together to tie in series of data, especially in stuff like it's in the chart or it's in a footnote, and you just don't realize when the company has dropped that disclosure. But when you open up the loop of file, you see every single disclosure, and therefore, every single, time series. So when you notice that something has stopped being disclosed, that's sometimes that's a key signal for you to pay attention to what's going on. Oh, 100%. And obviously, short sellers especially are all over this. Hey, this company used to disclose unit economics, or are they used to disclose churn? And now they've stopped disclosing it. So anyway, I think we

should probably wrap it up here. But Thomas, this has been great. Anybody can go check out dilupa. That's d-a-l-o-o-pa.com to kind of check the company out. And Thomas, thanks again for coming on. Thank you, Andrew. A quick disclaimer. Nothing on this podcast should be considered an investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. Please do your own work and consult a financial advisor. Thanks.