fiscal

Many Los Angeles residents will soon be paying significantly more for trash collection after the City Council voted Tuesday to finalize a dramatic fee increase.

The trash program had become heavily subsidized, to the tune of about $500,000 a day, which officials said was no longer viable given the city’s dire financial straits, which left them scrambling to close a nearly $1-billion budget deficit earlier this year.

Having the cost subsidized by the city for so long contributed to that deficit, according to City Administrative Officer Matt Szabo.

“It should have been corrected a long time ago,” Szabo said. “If we didn’t get this rate increase, the subsidy would have been more than $200 million this year.”

The city hadn’t raised trash pickup fees in 17 years, and a 2016 state law governing organic waste disposal significantly increased operational costs. Large raises for city sanitation workers and rising equipment costs also bumped up expenditures.

Once the new fees go into effect, probably in mid-November, residents of single-family homes or apartments with four units or less will pay $55.95 a month per unit.

That sum is more than double the $24.33 a month that occupants of triplexes and fourplexes had been paying, and a roughly 50% increase on the $36.32 previously paid by residents of single-family homes and duplexes.

Those customers put their waste in black bins for regular trash, blue bins for recycling and green bins for organic waste, which are emptied by city workers once a week. Larger apartment buildings will be unaffected by the changes, because their waste collection is administered through a separate program.

The fees will increase by an additional $10 over the next four years.

By next year, the increased fees will reflect the actual cost of trash pickup and will be on par with or slightly below what residents pay in nearby cities such as Long Beach, Pasadena, Culver City and Glendale.

Still, the new fees will almost certainly engender sticker shock for L.A. residents already contending with skyrocketing insurance premiums, rising rents and eye-popping grocery prices. Rates will be reduced for low-income customers who qualify for the city’s EZ-SAVE or Lifeline programs.

The City Council approved the increase on a 12-2 vote, with Councilmembers Monica Rodriguez and Adrin Nazarian dissenting.

Last week, the council also voted to raise the prices and hours of city parking meters.

“After approving a $2.6-billion Convention Center expansion, the council is asking residents to pay more for basic services like trash collection while delivering less. That doesn’t reflect the priorities of working Angelenos,” Rodriguez said after Tuesday’s vote. “I can’t, in good conscience, support that approach.”

A number of factors catalyzed the city’s financial issues, which exploded into public view during the budget process earlier this year. Los Angeles had taken in weaker than expected tax revenues, paid out more in legal liabilities and adopted large-scale raises for city employees.

When Mayor Karen Bass first presented her budget in the spring, layoffs for more than 1,600 city workers were on the table. She and the City Council were ultimately able to avoid those cuts through a number of cost-saving measures.

Tuesday’s final vote on the trash fees came nearly six months after the council gave preliminary approval to the plan.

The matter was complicated by Proposition 218, a 1996 statewide ballot measure designed to make it harder for local governments to raise taxes and fees. To satisfy the proposition’s requirements, the city had to hold public hearings and give every affected resident the opportunity to weigh in via a notice mailed to their homes before the increase could move forward.

The fee hike legislation still has to be signed by the mayor and formally published by the city clerk. The fee can’t go into effect until 31 days after that, or mid-November at the earliest.

The city budget, however, was calculated under the assumption that the new fees would go into effect Oct. 1. The delay will leave the city on the hook for an extra $500,000 a day.

Because Tuesday’s vote was not unanimous, the ordinance will receive a second reading next week before the council formally approves it and sends it to the mayor — a technicality that will cost the city $3.5 million. The mayor plans to sign it as soon as she receives it, her office said.

The delay to mid-November will cost the city a total of at least $22 million, creating another deficit that will have to be adjusted for down the line.

Still, some residents decried the ballooning fees, with one calling the increase “preposterous.”

“Listen to our cries,” the person, who did not give their name,said in a written public comment. “We can barely keep a roof over our heads — at this time! Los Angeles is falling apart. It is your job to fix it more practically.”

The Historic Highland Park Neighborhood Council also opposed the rate hike, arguing that residents are already facing steep cost-of-living increases and that layering more fees on top of that would be “neither fair nor sustainable.”

The last time the city increased trash fees, back in the summer of 2008, City Controller Kenneth Mejia was a few months out of high school, George W. Bush was in the Oval Office and Katy Perry’s “I Kissed a Girl” was topping the Billboard charts.

Amid a global economic downturn, the city was facing widespread cuts, and leaders looked — as they often do — to the price tag of city services to try to balance the budget.

Times staff writers David Zahniser and Dakota Smith contributed to this report.

Pro-Dex (PDEX -1.03%), a developer and manufacturer of powered surgical instruments for medical device OEMs, released its Q4 FY2025 earnings on Sept. 4, 2025. The company reported GAAP revenue of $17.5 million, up from $15.0 million a year earlier, but faces margin pressure as gross margin contracted to 20%. Net income (GAAP) fell to $1.2 million, with diluted earnings per share at $0.36. These results showed top-line growth in line with recent management emphasis, but also highlighted new cost and margin risks facing the business.

Overall, the quarter demonstrated growth momentum, with caution signals on profitability and working capital.

Source: Pro-Dex. Note: Fiscal 2025’s fourth quarter ended June 30, 2025. Fiscal 2024’s Q4 ended June 30, 2024.

Business Overview and Focus Areas

Pro-Dex specializes in designing and manufacturing powered surgical devices, with a core focus on products that rely on its patented adaptive torque-limiting technology. These tools are primarily marketed to original equipment manufacturers (OEMs), especially for orthopedic, cranio-maxillofacial (CMF), and thoracic surgery applications.

The company’s recent strategic objectives emphasize deepening customer penetration, especially among its top accounts. Investment in R&D continues to be a priority, seeking to expand its torque-limiting technology into broader surgical markets. Success depends on continued product innovation, managing customer concentration risk, and maintaining robust regulatory compliance for quality and safety.

Quarterly Performance Details: Key Metrics and Drivers

Revenue (GAAP) grew sharply in Q4 FY2025, led by increased shipments to a small group of existing customers. In the company’s words, “revenue to our top three customers” accounted for the majority of the gain. Sales of a next-generation powered surgical handpiece to its largest customer contributed meaningfully during FY2025, driving both quarterly and full-year growth. While higher sales indicate progress in leveraging existing relationships, the narrow customer base remains a structural risk. The largest customer accounted for 75% of FY2025 revenue, while the top three comprised 94% of sales.

Gross margin, which measures profit after production costs, contracted significantly from 27% to 20% in Q4 FY2025 compared to the prior year. Management attributed the drop in Q4 FY2025 to a less favorable product mix — a shift back toward legacy device shipments rather than newer, higher-margin models — and to new tariff costs that increased indirect manufacturing expenses. Despite this quarterly pressure, full-year gross margin (GAAP) improved to 29% in FY2025, thanks to gains earlier in the year and stronger sales of newly launched products. However, margin weakness in Q4 FY2025 highlights vulnerability to production mix and external cost headwinds.

Operating expenses increased by $409,000 from a year ago, reaching $2.1 million in Q4 FY2025, due to higher personnel costs across selling, general and administrative, and engineering functions. These investments support future growth and product development, but add to cost pressure when gross profit is under strain. This rise in ongoing expenses contributed to a 43% drop in operating income in Q4 FY2025.

Net income (GAAP) decreased from $1.6 million in the prior-year quarter to $1.2 million, influenced by both lower gross profit and higher operating costs. On a diluted per-share basis, earnings (GAAP) fell to $0.36 from $0.46. Management notes that full-year net income (GAAP) for FY2025 rose more sharply, aided in part by unrealized gains from investments, but warns that such non-operating swings can add volatility and do not reflect ongoing core business trends.

Looking Ahead: Guidance and Watch Points

Management reported a record order backlog of $50.4 million as of June 30, 2025 (FY2025). Management described this backlog as supporting expectations for continued revenue and operating income growth in FY2026. The earnings release also mentioned plans to cooperate with customers on tariff cost sharing and intentions to further strengthen management and manufacturing processes. However, no specific financial guidance for revenue or earnings was provided for the next quarter or the coming fiscal year.

Investors should monitor several key areas in upcoming quarters. These include: trends in margin recovery or further erosion from cost or product mix effects; the pace at which inventory and accounts receivable return to more normal levels; and how quickly Pro-Dex can diversify its customer base to reduce dependency on a single large buyer. Close attention to working capital and liquidity will be important, given the sharp decrease in cash balances in Q4 FY2025 as funds were absorbed by increased inventory and accounts receivable.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Toro (TTC -1.22%), a global leader in turf, landscape, and irrigation equipment, reported its fiscal 2025 third-quarter earnings on Sept. 4, 2025. The results highlighted a notable divide: the Professional segment posted robust growth and margin expansion, while the Residential unit experienced significant declines. Adjusted diluted earnings per share (EPS) reached $1.24, exceeding the analyst estimate of $1.22 (non-GAAP), and improving from $1.18 last year (adjusted, third quarter fiscal 2024). However, net sales were $1.13 billion, down 2% from $1.16 billion in the prior year, and slightly below previous guidance. An $81 million non-cash impairment tied to slower recovery in the Spartan business held reported diluted EPS to $0.54.

Management commented: “Our Professional segment continues to perform well, our innovation pipeline remains robust, and our strong cash generation supports our investments in continued growth as well as returning capital to shareholders. We are navigating today’s environment from a position of strength, supported by our market leadership, operational excellence, and the financial flexibility to create long-term value. This disciplined approach to managing through cycles while investing in our future is how we build enduring value for all stakeholders.”

Results broadly matched the lower end of revised expectations.

Business Overview and Strategic Focus

Toro is best known for its power equipment and irrigation solutions targeting professionals and homeowners. Its product lineup spans mowers, irrigation systems, snow blowers, and construction tools, sold under brands tailored for golf courses, landscapers, sports fields, and everyday consumers.

Recent years have seen Toro prioritize its innovation pipeline, cost efficiency programs, and targeted acquisitions. The company’s growth relies heavily on bringing new products to market, advancing sustainability goals, and expanding its global dealer-distributor network. Success depends on staying ahead in product development, integrating acquisitions like Spartan, and navigating fluctuations in consumer and professional market demand.

Quarter in Detail: Segment Performance and Key Developments

The Professional segment, which includes equipment for golf courses, sports fields, underground construction, and commercial contractors, anchored the quarter’s results. Segment net sales increased 5.7%, while operating margin jumped 2.5 percentage points to 21.3%. This rise was due to higher shipments of underground construction equipment and golf/grounds products, along with gains from Toro’s ongoing AMP (Amplifying Maximum Productivity) cost savings initiative and reduced marketing costs. Management reported that productivity and net price gains in the Professional group offset some of the impact from prior-year asset sales.

Professional segment earnings were $198.5 million, up from $165.7 million in the same period last year. The segment’s growth is important because it accounted for 77.6% of company-wide revenue for fiscal 2024. It now accounts for roughly 82% of company-wide revenue, contributing to overall profitability even as other areas lagged. Demand remained steady for core Professional products, especially those related to infrastructure and turf care.

The Residential segment, focused on products for homeowners like mowers and snow throwers, continues to struggle. Residential segment net sales were $192.8 million, down 27.9% from $267.5 million in the same period last year, and operating margin shrank to just 1.9%. Management cited weak homeowner demand and a slow recovery for channel partners and dealers. Higher input costs, promotions, inventory adjustments, and disappointing battery-powered product adoption rates all contributed to the segment’s margin compression. This softness triggered an $81 million non-cash impairment charge tied to the Spartan trade name, acquired as part of Toro’s purchase of the Intimidator brand lineup.

The company’s gross margin slipped by 1.1 percentage points due to these pressures, but adjusted operating margin held steady at about 13.6%. Free cash flow improved year to date for the first nine months of fiscal 2025, helped by better working capital management. No major acquisitions were made during the period. In line with its shareholder return strategy, Toro paid $113.8 million in dividends in the first nine months of fiscal 2025 and repurchased $290 million in stock in the same period.

Product, Innovation, and Market Trends

Toro continued to focus on product development and innovation across its core segments. Product and process innovation, especially connected and autonomous solutions, remained a strategic theme.

In Residential, the company’s push toward battery-powered lawn mowers and snow throwers saw limited traction, reaching only about 7% penetration versus a 20% internal target. This lag in battery adoption led to excess inventory and pricing pressure, impacting both margins and inventory valuation. The decrease in residential segment earnings was partly due to higher sales promotions and incentives, reflecting tougher channel conditions and efforts to reduce inventory of both gasoline and battery-powered equipment.

Total international net sales fell 8.7% year over year, suggesting that global demand trends were mixed. About half of the company-wide revenue decline is traced to non-core divestitures completed last year, an expected impact as the company backs away from low-priority product lines. Management acknowledged that alternative power products and sustainability priorities remain part of its long-term strategy, yet these did not materially influence current quarter results.

AMP productivity gains are on track, delivering $75 million in annualized cost savings, with a goal of at least $100 million in run rate savings by 2027. Key risks noted by Toro include the uncertain pace of recovery in U.S. residential demand, ongoing input cost inflation, and the need for continued improvements in channel inventory.

Outlook and Investor Watchpoints

Looking forward, Toro maintained its full-year fiscal 2025 outlook at the lower end of previous ranges. Management continues to expect flat to down 3% in net sales for fiscal 2025 compared to fiscal 2024, and adjusted diluted EPS of around $4.15. These forecasts account for continued softness in Residential demand, along with projected cost savings and expected Professional market resilience. Guidance also reflects anticipated tariff headwinds and persistent cost pressures for materials and logistics.

Toro gave no new specifics on revenue growth timing for Residential or on potential recovery in consumer spending. The company’s priorities remain on executing the AMP cost reduction program, monitoring battery-powered product adoption, and improving inventory efficiency. Investors should keep an eye on trends in Professional segment demand and any shifts in the channel as indicators of future performance. The company continued its dividend payments during the period.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

GitLab (GTLB -1.89%), a leading provider of an integrated platform for software development, security, and operations, reported its Q2 FY2026 results on Sept. 3, 2025. Revenue reached $236 million, exceeding management’s revenue guidance range of $226 million–$227 million. Adjusted EPS came in at $0.24, up from $0.15 in the same period last year and also ahead of guidance offered back in the Q1 report. Adjusted operating margin moved to 17% in Q2 FY2026, up from 10% one year ago.

The quarter underscored robust customer and enterprise expansion and continued focus on AI-driven innovation, although leadership transitions and slight margin pressures introduced areas to watch for the coming quarters.

Source: GitLab. Note: Fiscal 2026’s second quarter ended July 31, 2025. Fiscal 2025’s Q2 ended July 31, 2024.

Business Overview and Strategic Focus

GitLab serves organizations ranging from startups to multi-national enterprises with its all-in-one DevSecOps platform, reflecting GitLab’s core proposition—a single application that helps customers manage every step of the software development lifecycle, from planning to code writing to deployment and monitoring. The platform streamlines workflows, increases code delivery speed, and helps reduce security risks by integrating all these functions into a unified experience.

The company’s open-core approach encourages thousands of community members to contribute improvements and new features, supporting rapid innovation. In recent years, GitLab has moved to enhance its artificial intelligence (AI) capabilities inside its platform, aiming to give customers smarter automation, better code suggestions, and advanced security features. Expanding into enterprise accounts, deepening cloud partnerships, and furthering AI integration have been key areas of focus.

Quarter Highlights: Growth Drivers and Product Developments

The reported quarter saw GitLab achieve a 29% increase in GAAP revenue. Those generating over $100,000 in recurring annual revenue now total 1,344, up 25 % from last year’s reporting period. Total customers spending more than $5,000 annually rose 11% to 10,338.

The platform’s subscription-based model, combining both software as a service (SaaS) and self-managed options, generated $212.7 million (GAAP), up from $163.2 million in Q2 FY2025. Remaining performance obligations, a measure of future contracted revenue not yet recognized, increased by 32% year-over-year. The dollar-based net retention rate, which measures how much recurring revenue is retained from existing customers after accounting for churn, upgrades, and downgrades, held steady at a healthy 121%.

It launched a public beta of GitLab Duo Agent Platform, described as an AI orchestration layer that integrates with multiple external artificial intelligence tools. This product is meant to help customers quickly adopt AI-driven development through their preferred large language models. Strategic expansion continued with a three-year partnership with Amazon‘s AWS to broaden the Dedicated (single-tenant) service, specifically targeting compliance-heavy and public sector environments.

Gross margin, a key profitability indicator measuring the percentage of revenue remaining after direct costs, slipped slightly to 90% on a non-GAAP basis, down from 91% in Q2 FY2025. Although operating margins improved, the company reported a GAAP net loss, influenced by stock-based compensation and other non-cash accounting charges. The cash position strengthened, with cash and equivalents rising to $261.4 million, providing flexibility for ongoing investment and operations.

Looking Ahead: Guidance and Key Watch Areas

For Q3 FY2026, management projects revenue of $238 million to $239 million, implying year-over-year growth of about 30%. Full-year guidance for FY2026 forecasts revenue of $936 million to $942 million. The company provided guidance for non-GAAP operating income of $133 million–$136 million for FY2026, and similarly raised its forecast for non-GAAP diluted earnings per share to $0.82–$0.83 for FY2026. Revenue guidance, however, was maintained at its previous level.

Leadership changes are a notable point going forward. GitLab’s Chief Financial Officer is stepping down as of September 19, 2025, with the interim CFO promoted from within the finance function. Additional new executive appointments may support scaling as the company grows. Investors will likely monitor how the company manages its margin trends, continued enterprise customer gains, and execution on its AI strategy, all while facing strong competition in developer and security software markets. GTLB does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Gap (GAP -0.18%), the well-known apparel retailer behind the Old Navy, Gap, Banana Republic, and Athleta brands, posted its second quarter fiscal 2025 results on Thursday, Aug. 28. The company reported flat revenue at $3.7 billion. Earnings per share came in at $0.57, outpacing the $0.55 consensus. Comparable sales, which measure sales at stores open at least a year, rose 1%, extending a string of positive results. Gross margins (GAAP) and operating profits (GAAP) slipped, with pressures from higher tariffs and last year’s one-time revenue boost falling away.

Overall, the quarter matched forecasts, with GAAP profits a bit higher than Wall Street expected, but growth was modest and margins tightened.

Source: Gap. Note: Fiscal 2025 second quarter ended on Aug. 2, 2025, and fiscal 2024 second quarter ended on Aug. 3, 2024.

Gap’s Business and Key Focus Areas

Gap operates four major apparel brands: Old Navy, Gap, Banana Republic, and Athleta. Each targets a different segment of the clothing market, from value and casual basics to athletic wear and modern business fashion. The company relies on both brick-and-mortar stores and online platforms, aiming to offer a seamless shopping experience across channels.

Recently, Gap has focused on strengthening its brand identity for each label, improving the efficiency of its supply chain, and investing in technology and digital sales capabilities. Management considers brand relevance, omni-channel retail strength, supply chain adaptability, and inventory discipline as key to success. Sustainability and talent development remain priorities, with ongoing work to foster a responsible and inclusive business culture.

Quarterly Highlights: Financial and Operational Review

GAAP net sales held steady year over year at $3.7 billion, closely aligning with company guidance and analyst forecasts. Comparable sales increased 1%, compared to a 3% increase in the same quarter last year. Sales at Old Navy, the company’s largest brand, ticked up 1% and comparable sales rose 2%. The Gap brand also delivered 1% higher sales, with comps up 4%, shrugging off the maturity headwinds typical among legacy brands. Banana Republic’s revenue dipped 1%, but comparable sales moved to a positive 4%, suggesting signs of stabilization in the brand’s repositioning efforts.

In contrast, Athleta, the company’s athletics and lifestyle brand, remains a weak spot. Sales sank 11%, and comparable sales dropped 9%. The segment continues to undergo a strategic reset, with management stating that further improvements will “take time.” Store sales overall declined 1%, while online sales increased 3%, now accounting for 34% of total revenue, highlighting the ongoing shift toward digital retailing.

Profitability was affected by cost and margin pressures. Operating income was $292 million, flat from the prior year. The operating margin edged down to 7.8%. Gross margin, which is the share of revenue left after paying for goods sold, narrowed by 1.4 percentage points year over year to 41.2% (GAAP). Management attributed this to a combination of higher input costs from increased tariffs, and the absence of a positive impact from a previous year’s credit card partner agreement. Merchandise margin, which isolates the profitability of actual product sold, also decreased by 1.5 percentage points year over year. Rent, occupancy, and depreciation costs were slightly improved as a percentage of sales, providing a modest offset.

Inventory levels climbed 9% to $2.3 billion. This increase stemmed from faster receipts and higher costs per item due to tariffs, rather than excess inventory. Nonetheless, With sales pacing flat, elevated inventory levels could pose a risk of future markdowns if consumer demand softens. Free cash flow (non-GAAP) slowed dramatically to $127 million for the first half (26 weeks) of FY2025, reflecting a drop from $397 million in the same period of FY2024. The company’s cash position improved, with $2.4 billion available in cash and short‑term investments at quarter-end, up 13% year over year.

Gap continued to return capital to shareholders, distributing $62 million in dividends and repurchasing $82 million in stock. The quarterly dividend was $0.165 per share. The company ended the quarter with 2,486 company-operated stores, down by 20 for the year to date, as it continued to optimize its store footprint. Franchise stores held steady at approximately 1,000 locations worldwide as of August 2.

Brand and Channel Performance in Detail

Old Navy remains Gap’s largest and most consistent brand. Its product mix focuses on family casual apparel, activewear, and denim. Comparable sales increased by 2%, offsetting some softness elsewhere, though the year-over-year growth rate slowed from recent quarters. Strategic efforts to reinvigorate the brand and focus on active and denim categories are ongoing.

The Gap brand, known for its modern essentials and collaborations, posted a 4% comparable sales increase, delivering its seventh consecutive quarter with positive comps. Marketing initiatives and new partnerships helped drive renewed relevance, which management described as part of a systematic brand “reinvigoration playbook.”

Banana Republic, which aims for modern business and elevated casual wear, reported a 1% drop in total sales but a 4% comp sales increase, suggesting better performance at well-established locations. Ongoing brand repositioning, with a focus on storytelling and marketing, may be starting to have a positive effect, though leadership continues to watch this segment closely.

Athleta, specializing in performance-driven women’s apparel and lifestyle products, struggled as its “reset” continues. With a double-digit sales decline and comparable sales down 9%, further improvements are expected to take time. Management has flagged the need to bolster both product and marketing efforts for this segment. Elsewhere, online sales remain a bright spot, up 3% from a year prior and now accounting for 34% of total revenue. Physical store closures continue, a legacy of ongoing store optimization and an attempt to focus on more productive square footage.

Looking Forward: Management Guidance and Key Watchpoints

Management reaffirmed its financial outlook for fiscal 2025. It expects overall net sales to grow 1%–2% and forecasts a full-year operating margin in the range of 6.7%–7%, lowered from last year due to an expected 1.0–1.1 percentage point negative impact from tariffs. Leadership projected net sales to rise by 1.5%–2.5% year over year in Q3 FY2025 and guides for a notable decrease in gross margin from the prior year, driven largely by increased tariff costs and timing of certain investments.

Investors should watch for developments related to inventory management, margin trends as tariff impacts lift costs, and the pacing of the Athleta turnaround. Digital sales growth and continued omni-channel investments also remain key themes as the apparel market continues to evolve.

Revenue and net income are presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

PVH (PVH 1.09%), the owner of Calvin Klein and Tommy Hilfiger, reported its fiscal second quarter earnings on August 26, 2025. The Q2 FY2025 results featured better-than-expected revenue (GAAP) and earnings (non-GAAP), but gross margin declined in Q2 FY2025 compared to the prior year. Non-GAAP EPS of $2.52 for Q2 FY2025 exceeded guidance of $1.85–$2.00, although it fell short of last year’s $3.01. Total revenue (GAAP) for Q2 FY2025 was $2.17 billion, up 4% in the second quarter of 2025 compared to the same period last year and above expectations for a “low single digit” revenue increase in Q2 FY2025. Overall, the quarter delivered sales outperformance and showed core brand resilience but also highlighted persistent cost, margin, and inventory challenges.

Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Priorities

PVH is a global apparel company known primarily for its Calvin Klein and Tommy Hilfiger brands. It operates in over 40 countries through wholesale, retail, and digital platforms, with its core offering being branded clothing and accessories. Together, Calvin Klein and Tommy Hilfiger accounted for more than 90% of PVH’s revenue in FY2024, reflecting their central importance.

Recent business focus has centered on strengthening its core brand positioning, expanding digital commerce offerings, and bringing more product categories in-house rather than licensing them out. Within this strategy, success depends on steady demand for branded products, investment in marketing and innovation, a balanced global footprint, and supply-chain resilience. The ability to manage costs while maintaining brand value and adapting to shifting consumer behavior is crucial for PVH’s longer-term growth.

Quarterly Developments and Performance Drivers

In Q2 FY2025, PVH posted GAAP revenue growth above expectations, led by both Calvin Klein and Tommy Hilfiger. Tommy Hilfiger generated $1,135.9 million in sales in Q2 FY2025, up 3.9% year over year (GAAP). Calvin Klein delivered $980 million in revenue (GAAP) for Q2 FY2025, rising 5.3%. The Americas region was a particularly strong driver, with 11% revenue growth in Q2 FY2025, attributed mainly to wholesale and from moving previously licensed women’s categories in-house in Q2 FY2025, which shifted revenue streams and timing. Europe, the Middle East, and Africa (EMEA) saw a smaller gain of 3.4% in Q2 FY2025 (GAAP), but on a constant-currency (non-GAAP) basis, it was down 3% in Q2 FY2025. Asia-Pacific region revenue fell 1% year over year in Q2 FY2025 (GAAP), mainly due to continued pressure in China and a soft wholesale market.

Direct-to-consumer (DTC) channels, including the company’s own stores and e-commerce platforms, recorded 3.7% revenue growth in Q2 FY2025. However, when excluding exchange rate effects, DTC was flat. Digital commerce specifically was up 3% in Q2 FY2025, but also flat in constant currency, indicating that digital sales are not yet outpacing the overall market or translating brand engagement into rapid growth.

Gross margin, the percentage of sales remaining after accounting for production and sourcing costs, declined from 60.1% in the prior year period to 57.7% in Q2 FY2025 on a GAAP basis. Management attributed this decline in Q2 FY2025 to several factors, including promotional discounting, cost pressures from higher tariffs on goods imported into the U.S, and the impact of bringing previously licensed women’s categories in-house. These in-house transitions typically generate more reported revenue but often at a lower margin at the outset. Additional sources of margin impact in Q2 FY2025 included an unfavorable mix between wholesale and retail channels, increased freight costs, and some incremental discounting to customers as a result of Calvin Klein delivery delays.

Inventories at the end of Q2 FY2025 were up 13% from the prior year. Management described this build as mostly strategic, aiming to ensure better availability of “core” product categories, especially moving into the next quarter. This can aid sales if demand holds, but it also introduces risk if the market stalls and excess stock leads to heavier discounting. Licensing revenue—money earned from letting other companies use PVH’s brands—declined 3% year over year in Q2 FY2025 as women’s product lines shifted from licensing to direct management. No significant new acquisitions or licensing expansions were announced during the quarter.

In terms of product lines, Calvin Klein’s best performance was in underwear and fashion denim, with management highlighting product innovation and new marketing campaigns featuring celebrity talent like Bad Bunny. Tommy Hilfiger focused on summer campaigns including collaborations with major sports events and teams, such as the F1® The Movie and the US SailGP racing team. Both major brands benefited from targeted investment in product innovation and broad marketing engagement, though the company did not break out detailed sales growth numbers for specific sub-categories beyond the main brands.

The ongoing transition of product categories from licensed to in-house models as part of the branded strategy had notable financial effects. While this contributed to higher reported revenue in Q2 FY2025, it initially pressured gross margins and reduced licensing income. The company also continues to face increased U.S. tariffs, which are expected to produce a $1.15 per share drag on FY2025 non-GAAP earnings per share, up from previous projections of $1.05. Ongoing operational initiatives are aimed at mitigating these cost pressures, but full offset has yet to be realized.

Looking Ahead: Management Guidance and Key Issues

Management updated full-year revenue guidance for FY2025 to “increase slightly to up low single digits,” an improvement from previous forecasts of “flat to increase slightly.” The outlook for full-year non-GAAP operating margin held steady at about 8.5% for FY2025, a significant step down from last year’s 10.0% non-GAAP margin. Full-year non-GAAP earnings per share guidance for FY2025 was reaffirmed at $10.75–$11.00, compared to $11.74 (non-GAAP) last year, and continues to reflect substantial tariff-related and margin headwinds. Q3 FY2025 is projected to see flat to modest revenue growth and non-GAAP EPS between $2.35 and $2.50, compared to $3.03 in Q3 FY2024.

Investors and observers will want to track whether inventory build translates into improved sales or heavier future markdowns, as well as any recovery in Asia-Pacific performance. Additional focus areas include the ability to maintain brand health, especially as elevated promotional activity persists and margin recovery efforts continue. Management flagged continued cost pressures, especially from tariffs and promotional activity, while reiterating its focus on digital and brand-building initiatives. No dividend is currently paid on PVH shares.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

Napco Security Technologies (NSSC 4.26%), a leader in commercial and residential electronic security solutions, reported mixed results in its earnings release on August 25, 2025. Recurring Service Revenue (RSR) was a standout, but equipment sales and gross margins both declined year-over-year. Net income (GAAP) and diluted earnings per share (GAAP) also dropped. This quarter marked stabilizing trends in some areas but ongoing pressure in others.

Business Overview and Key Focus Areas

Napco Security Technologies designs and manufactures security hardware and software for commercial, industrial, and residential buildings. Its products include intrusion alarms, access control hardware, electronic locks, and monitoring platforms that support safety and communication needs.

The company’s most important focus lately has been on building up recurring service revenue, which delivers predictable, high-margin income. This service is tied to cellular connectivity subscriptions for things like security alarms and remote management. Innovation and R&D spending continue to support this shift, while cost efficiency from Dominican Republic-based manufacturing helps protect margins. Increasing sales to the school safety market and providing complete, integrated security solutions remain top priorities for the business.

Fourth Quarter Developments: Revenue Trends, Product Mix, and Margins

GAAP revenue edged up just under 1% from the prior year, reaching $50.7 million. Recurring Service Revenue stood out with a 10% increase to $22.4 million. This revenue comes from monthly or annual charges for services like StarLink radios, which provide cellular communication and alarm connection, as well as the newly launched MVP Access platform for cloud-based entry control. RSR now makes up nearly half of total sales and enjoys a gross margin of 91%—by far the most profitable segment in the portfolio.

In contrast, equipment sales—revenue from physical security products such as alarms and electronic door locks—declined 5% year over year to $28.3 million. The company did manage a 27% sequential gain in equipment sales versus the previous quarter, suggesting distributors may be starting to rebuild inventory. However, the full-year picture shows a notable 16% decline in equipment sales for FY2025. Management cited ongoing distributor “destocking”—meaning dealers bought less to use up old inventory—as a reason for weak hardware revenues in Q3 FY2025. This hurt overall gross profits, even as RSR improved.

Gross profit margin dropped to 52.8% from 55.3% compared to the prior year. The company maintained its industry-leading RSR margin at 91%. Selling, general, and administrative expenses grew, including higher R&D and legal costs. Net income fell 14 % to $11.6 million, while adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization—a measure of core operating performance) shrank 7.6 %.

Despite these profit headwinds, Napco made significant improvements in operating cash flow, which reached $53.5 million (GAAP) for FY2025, thanks to reductions in inventory. The balance sheet remains solid, with $83.1 million in cash and no debt as of June 30, 2025. The company also highlighted its use of cash for shareholder returns: during FY2025, it paid $18.6 million in dividends and spent $36.8 million on stock buybacks.

The quarter included the public launch of the MVP Access platform, a cloud-based system enabling remote and recurring management of building and door security. This product launch is important because it expands the recurring service base, which management hopes will soon surpass the 50% threshold of total revenue, compared to 48% for FY2025. Investments in R&D also increased, reaching $12.6 million for FY2025, or almost 7% of net sales—supporting a pipeline of new products and features.

Looking Ahead: Guidance and Investor Watchpoints

Management maintained its dividend at $0.14 per share, with no increase or decrease for the coming period. It did not provide specific sales or earnings guidance for fiscal 2026, only indicating optimism about improving hardware demand and ongoing strength in recurring services. Continued pressure on EPS and margins means recovery in hardware and cost control will be key areas to monitor.

Investors should watch for any major change in equipment order trends, progress in recurring service mix, and signs of margin stabilization in the coming quarters. With no formal forward guidance offered, visibility on the timing of a broader rebound in hardware sales remains limited. NSSC does pay a dividend, which was unchanged at $0.14 per share.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

On Wednesday evening, the world’s wealthiest man announced that his sojourn in the nation’s capital is almost over. “As my scheduled time as a Special Government Employee comes to an end, I would like to thank President @realDonaldTrump for the opportunity to reduce wasteful spending,” Elon Musk posted to X, the social media platform he owns.

While Musk was quick to add that the White House’s Department of Government Efficiency mission “will only strengthen over time as it becomes a way of life throughout the government,” his departure will represent the effective end of DOGE as we know it. As the Wall Street Journal reported, “much of DOGE’s work will shift to the White House Office of Management and Budget,” which is headed by Russell Vought.

The DOGE team claims it identified about $175 billion in total savings. Given the federal government spent $6.75 trillion in fiscal 2024 alone, that may seem like a mere drop in the bucket. And given that Musk himself once vowed to identify taxpayer savings in the trillions of dollars — albeit without much of a timeline attached to that pronouncement — it certainly is a bit disappointing.

But consider some of the specific outrageous spending outlays identified by Musk’s team as ripe for the cutting board, such as $382 million from alleged fraudulent unemployment benefits (as the Department of Labor had previously flagged) and astonishing extravagance on the foreign stage — for instance, $2 million to an organization in Guatemala advocating gender-affirming healthcare and $20 million to a “Sesame Street”-inspired early childhood initiative in Iraq.

Such ideologically driven spending is emblematic of what Vought, in a Newsweek op-ed written two years ago during the Biden-era presidential interregnum, described as the “the scourge of a woke and weaponized bureaucracy.” The brief DOGE experiment, which uncovered tens of thousands of combined government contract and grant terminations that would shock the conscience of most Americans with any inclination toward sound fiscal stewardship, is proof that such a “woke and weaponized bureaucracy” isn’t merely speculative — it really exists.

There is probably a lot more, furthermore, where that $175 billion in flagged waste came from. And Vought, who has worked with Musk since last year, is the right man to continue the mission once Musk fully returns to the private sector.

There are now at least two additional steps that must be taken — one pressing short-term item and one more difficult longer-term item.

The reconciliation budget in the so-called “Big Beautiful Bill” that passed the House last week, and which is now pending before the Senate, did not incorporate the DOGE cuts. It seems there is a procedural reason for this: The DOGE cuts are technically post hoc rescissions of presently appropriated money, and rescissions of current outlays are typically subject to their own process. An obscure figure known as the Senate parliamentarian controls the process by which the annual reconciliation budget bill — a favored tool because it permits a Senate majority to bypass the chamber’s legislative filibuster — can pass muster. And Capitol Hill Republicans apparently fear that including the DOGE rescissions would endanger President Trump’s desired bill.

But without Congress actually enacting the DOGE cuts into law, history will show this entire exercise to have been largely futile. Accordingly, Vought and the White House’s Office of Management and Budget must, following the reconciliation bill’s passage and enactment into law, transmit a fresh rescission package to Speaker Mike Johnson’s desk. It is extraordinarily important that the Trump administration and the Republican-led Congress demonstrate not merely that they can identify excessive spending but also that they are willing to cut it.

The longer-term problem is thornier.

While DOGE has served a useful function, and while Vought’s office can probably identify a good amount more in the way of “woke and weaponized bureaucracy” cost-cutting measures, it is a matter of basic mathematics that something more will be needed to begin to rein in America’s soaring annual deficits and our shocking national debt.

The Republican Party of Donald Trump has moved in a strongly populist direction on issues of political economy. On many fronts, such as antitrust and industrial policy efforts to reshore vital supply chains, such a shift is very much welcome.

But at some point, both Republicans and Democrats alike are going to have to find some way to come together and put our entitlement programs — above all, Medicare and Social Security — on a path to sustainability. The political optics of being perceived as “cutting” either of these programs are simply horrible, so any attempt at reform will not be easy. But it must be done anyway, as the recent Moody’s downgrade of the U.S. credit rating makes starkly clear. The longer we wait, the more credit downgrades and interest payment spikes we risk.

Basic game theory suggests that neither party will want to blink first. Recall the 2012-era political ads accusing then-GOP vice presidential candidate Paul Ryan of throwing grandmothers off cliffs. The politics are nasty, divisive and radioactive. But this must get done. So we’ll have to find some way to force everyone to do it together. And in the meantime, as a down payment, let’s just make sure DOGE’s crucial work was not done in vain.

Josh Hammer’s latest book is “Israel and Civilization: The Fate of the Jewish Nation and the Destiny of the West.” This article was produced in collaboration with Creators Syndicate. @josh_hammer