ALJJ Stock Price Increases Over 100% Pre-Market: Why It Happened

By Amit Chowdhry ● February 16, 2021
  • The stock price of ALJ Regional Holdings, Inc. (NASDAQ: ALJJ) is trading at over 100% pre-market. This is why it happened.

The stock price of ALJ Regional Holdings, Inc. (NASDAQ: ALJJ) is trading at over 100% pre-market as of 5:21 AM ET. ALJ Regional did not make any major announcements since Thursday, February 11 so it appears that the stock price increase is being driven by external factors.

One of those external factors appears to be an uptick in discussions about the company’s stock price on social media. I am seeing ALJJ being mentioned on a number of social media platforms like Reddit, StockTwits, Facebook, and Discord.

ALJ is a holding company whose wholly-owned subsidiaries are Faneuil Floors-N-More d/b/a Carpets N’ More (Carpets), and Phoenix Color (Phoenix). Faneuil is a leading provider of call center services, back-office operations, staffing services, and toll collection services to commercial and governmental clients across the United States. Carpets is one of the largest floor covering retailers in Las Vegas, and a provider of multiple products for the commercial, retail, and home builder markets including all types of flooring, countertops, and cabinets. And Phoenix is a leading manufacturer of book components, educational materials, and related products producing value-added components, heavily illustrated books, and specialty commercial products using a broad spectrum of materials and decorative technologies.

For the first quarter ended December 31, 2020, ALJ had recognized net revenue of $119.8 million, an increase of $29.4 million, or 32.5%, compared to $90.5 million for the three months ended December 31, 2019. The increase was largely driven by new state unemployment contracts and contract implementation and production at Faneuil and increased component sales primarily related to trade at Phoenix, offset somewhat by lower volumes at Carpets. And ALJ recognized net revenue of $107.3 million for the three months ended September 30, 2020.

ALJ had recognized a net loss of $2.1 million and a loss per share of $0.05 (diluted) for the three months ended December 31, 2020, compared to a net loss of $4.3 million and a loss per share of $0.10 (diluted) for the three months ended December 31, 2019. Most of the improvement was due to the increased margin from new state unemployment contracts and implementation activities at Faneuil and improved volumes in trade components at Phoenix, offset somewhat by lower volumes at Carpets. ALJ recognized a net income of $1.1 million and earnings per share of $0.02 (diluted) for the three months ended September 30, 2020.

And ALJ recognized adjusted EBITDA of $6.3 million for the three months ended December 31, 2020, an increase of $3 million, or 88.0%, compared to $3.4 million for the three months ended December 31, 2019. This increase was a result of new state unemployment contracts, implementation activities and the start of production for new contracts at Faneuil, increased component sales primarily related to trade at Phoenix, offset somewhat by lower volumes at Carpets. ALJ recognized an adjusted EBITDA of $8.8 million for the three months ended September 30, 2020.

ALJ estimates net revenue for the three months ending March 31, 2021, to be in the range of $104 million to $111 million, compared to $96 million for the 3 months ended March 31, 2020.

KEY QUOTE:

“Results for the quarter were higher than prior year as volume at Phoenix for trade components continues to recover and Faneuil continues to benefit from state unemployment contracts. Our quarterly results were impacted by a loss of $5.2 million related to a new contract at Faneuil that was originally planned to be implemented in two physical call centers. However, due to COVID-19, we needed to transition to a 100% work-from-home workforce. Excluding this COVID-19 related loss, the quarter would have been more than $11.0 million of Adjusted EBITDA for the consolidated company. We anticipate losses related to this contract to be lower in the second fiscal quarter of 2021 as we are working toward profitability. Additionally, we previously announced the sale of the Carpets business segment as it was a non-core holding and underperformed over the past several years. We expect this transaction to close during our second fiscal quarter.”

– Jess Ravich, Chief Executive Officer of ALJ

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.