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Freeport-McMoran Copper & Gold 07-27 03:32 GMT  
(Report with Analyst's Data Sheet) 
Freeport-McMoRan (FCX) is raking in the cash flow from operations as the company benefits from significantly higher copper prices...
Raking In Cash Flow by Evan Mann, CFA
Bank of New York Mellon 07-27 03:32 GMT  
(Report with Analyst's Data Sheet) 
With its second quarter earnings report out of the way, Bank of New York Mellon (BK) tapped the corporate debt markets last week, pricing $1.0...
Fee Waivers by Kathleen Shanley, CFA
Interpublic Group 07-26 18:07 GMT
(Comment)
Following a particularly weak quarter a year ago, Interpublic Group delivered a 22%...
Earnings by Dave Novosel, CFA
Following a particularly weak quarter a year ago, Interpublic Group delivered a 22% increase in reported revenue and a 20% rise in organic revenue for the second quarter. U.S. organic growth was 17%, while international growth was 24%. The automotive and retail sectors were particularly strong. Management raised its guidance for full year organic growth to 9% to 10%. That suggests growth of at least 7% over the second half of the year. Operating income was abysmal last year because of the pandemic. But operating margins of 15.3% in Q2 were substantially better than the 10.5% margins delivered in Q2 of 2019. Margins were boosted by the higher sales, real estate and personnel restructuring savings, lower travel and related expenses, and lower bad debt expenses. Management indicated that it expects adjusted EBITA margins of 16% in 2021, a huge increase versus last year, despite anticipated higher spending on travel and meetings in the second half of the year. If the company hits its targets for revenue and EBITA growth, leverage will plunge to 2.2x by year-end, which is down substantially from 4.0x at the end of last year. Assuming IPG pays off the $500 million of notes maturing in October as planned, leverage would drop to 1.9x. Management noted that it is focused on getting back to its share repurchase program but did not provide any specifics.
Intel 07-26 15:23 GMT
(Comment)
Due to the nature of the business, results at Intel can be quite volatile, and that was especially true in...
Earnings by Dave Novosel, CFA
Due to the nature of the business, results at Intel can be quite volatile, and that was especially true in the second quarter. Client Computing Group revenue rose 6.5%, mainly because of a 33% rise in PC unit sales. Data Center Group revenue declined 9.3% due to a very difficult comp versus 2020. Those are the dull ones. Mobileye revenue soared 124%, attributable to the impact of COVID last year. Internet of Things revenue surged 48%. On the flip side, Memory Solutions revenue plummeted 34%. Taking into account all the volatility, total revenue was down 0.5%. Management is more optimistic with respect to the third quarter, providing guidance for an increase of roughly 4%. Whereas the Client Computing Group has seen robust demand in the first half, revenue is likely to drop in the second half. Conversely, Data Center revenue is expected to improve nicely in H2 after declining substantially in H1. The margin story was similarly volatile. Huge improvements in Client Computing Group, Internet of Things, Mobileye, and Memory Solutions were offset by a huge decrease in the Data Center Group and dramatically higher corporate expenses. Gross margins rose by 380 basis points due to a shift in mix. However, they were offset by substantially higher SG&A expenses, particularly for R&D. Margins are likely to be pressured in Q3 and Q4 because of costs associated with the 7-nanometer ramp and some supply constraints. INTC generated $3.7 billion of free cash flow in Q2 and used $500 million to reduce debt. The lower debt will not offset the lower EBITDA we are expecting this year, thereby causing leverage to bump up to 1.2x from 1.1x.
Kinder Morgan 07-26 13:47 GMT
(Comment)
Kinder Morgan reported a 7.7% increase in adjusted EBITDA for the second quarter. The Natural...
Earnings by Dave Novosel, CFA
Kinder Morgan reported a 7.7% increase in adjusted EBITDA for the second quarter. The Natural Gas Pipelines segment posted a 4.7% increase, as transport volumes were up 4%. Product Pipelines segment adjusted EBITDA soared 29% due to huge volume gains; refined products +37%, gasoline +37%, diesel +13%, jet fuel +129%. Terminals segment adjusted EBITDA rose 7.4%, attributable to higher volumes in variable throughput and higher ancillary service fees. The only disappointment was the CO2 segment, where adjusted EBITDA dropped 3.2% because of lower crude volumes and increased well work costs. Based on management's guidance for 2021, second half adjusted EBITDA is likely to fall considerably versus last year. Nevertheless the substantial improvement in EBITDA and the lower debt have pushed leverage down to 4.1x versus 4.7x at the end of last year. Management provided guidance for 2021 distributable cash flow of $5.4 billion. Dividends should be roughly $2.4 billion while growth capital should be approximately $800 million. Working capital is expected to be about $600 million. That would leave around $1.6 billion of available cash. KMI just closed on the $1.2 billion acquisition of Stagecoach Gas Services and just announced the acquisition of Kinetrex for $300 million. Therefore no additional funds will be necessary to fund its outlays. KMI recorded a $1.6 billion non-cash impairment charge in Q2 related to anticipated lower volumes and rates on contract renewals on its South Texas natural gas processing and gathering assets.
Verizon Communications 07-26 12:33 GMT
(Comment)
Verizon added 528K retail postpaid subs in the second quarter, substantially more...
Earnings by Dave Novosel, CFA
Verizon added 528K retail postpaid subs in the second quarter, substantially more than the 352K added last year, and much better than the decline of 170K in the first quarter. It added 275K postpaid phone subs. That led to a 6% increase in wireless service revenue. Consumer revenue soared 11.2%, reflecting an increase in wireless equipment revenue of nearly 48% and a 5% gain in service revenue. Business revenue was up almost 4%, attributable primarily to strength in the Small & Medium Business sector. Verizon Media revenue rose 50%, coming off a weak 2020. Of course, that has less consequence since the unit is being sold shortly. Management raised its forecast for wireless service revenue growth for 2021 to between 3.5% and 4%. Meanwhile, on the wireline side, FiOS revenue was up 5.4%, as the company added 92K broadband subs. However, the promotional environment that boosted the top line resulted in significantly lower margins as activation costs were much higher while the higher mix of equipment revenue was less profitable. Consumer margins dropped 270 basis points, while Business margins fell a little more than 200 bps. Unfortunately, it appears that margins may be under pressure in Q3 as well. In what typically is a strong quarter, VZ generated almost $4 billion of free cash flow in Q2 despite higher cash taxes and higher working capital requirements. The company used that cash along with cash on hand to slash debt by $7.8 billion, which was considerably more than we expected. Consequently, leverage is down to 3.1x, which is better progress than we anticipated.
Mohegan Sun 07-26 02:40 GMT  
(Report with Analyst's Data Sheet) 
Mohegan Gaming & Entertainment (MGE) is recovering from casino closures in the pandemic and its flagship Mohegan Sun casino posted a good second fiscal quarter...
Return Of The Native by Kim Noland
Ecopetrol S.A. 07-26 02:24 GMT  
(Report with Analyst's Data Sheet) 
The potential purchase of the Colombian government's stake in ISA by Ecopetrol S.A. (ECOPET) continues to drive the assessment of the oil producer, as it...
Diversification Play  by Cedric Rimaud, CFA
Johnson & Johnson 07-26 01:53 GMT  
(Report with Analyst's Data Sheet) 
The same day the "big three" drug distributors announced a preliminary global settlement of opioid litigation, JNJ separately announced it had...
Settling Down by Carol Levenson, CFA
Johnson & Johnson 07-21 21:25 GMT
(Comment)
JNJ today announced the finalization of its portion of a nationwide settlement agreement...
Legal Development by Carol Levenson, CFA
JNJ today announced the finalization of its portion of a nationwide settlement agreement regarding opioid litigation by U.S. governmental entities. As previously disclosed, JNJ will pay up to $5 billion over nine years (half the payout period of the smaller, less liquid drug distributors), which amounts to about $560 million annually, which is more than manageable. The company is not admitting to any wrongdoing or liability. As with the distributors settlement, JNJ has the right to determine whether enough states and subdivisions have "opted in" to make the settlement worthwhile. JNJ took a $4 billion pretax charge in 2019 and a $1 billion charge in 2020 in anticipation of such a settlement, although obviously it has not yet paid out any cash. The biggest unknown is how many states and subdivisions will "opt in" to the settlement. If not enough do so to keep the deal alive, then today's sense of relief and closure may be short-lived.
AmerisourceBergen 07-21 21:10 GMT
(Comment)
As rumored in the financial press over the weekend, the "big three" drug distributors today...
Legal Development by Carol Levenson, CFA
As rumored in the financial press over the weekend, the "big three" drug distributors today issued a joint statement announcing they had reached a proposed settlement of a "substantial majority" of the opioid lawsuits filed by governmental entities in the U.S. The terms are similar to those of the preliminary global settlement agreement announced nearly two years ago, and the numbers have not changed from previous reports. The companies can independently determine whether enough states and subdivisions "opt in" to the settlement to make it worthwhile for them to proceed with it. This will be determined over the next few months. The maximum amount to be paid to the states and subdivisions remains $21 billion, to be paid over 18 years. ABC'S allocation (calculated by market size) is $6.4 billion. ABC took a $6.6 billion pretax charge in the fiscal year ended September 2020 for this litigation, which covers its allocation, but obviously it has not yet paid out any cash. Its annual cash requirement works out to around $360 million, which is manageable. We believe there could be dribs and drabs of additional legal costs to settle with other entities, but nothing that would be material to ABC's financial condition. Unsurprisingly, there is no admission of guilt or liability. The biggest unknown is how many states and subdivisions will "opt in" to the settlement. If not enough do so to keep the deal alive, then today's sense of relief and closure may be short-lived.
McKesson Corporation 07-21 21:07 GMT
(Comment)
As rumored in the financial press over the weekend, the "big three" drug distributors...
Legal Development by Carol Levenson, CFA
As rumored in the financial press over the weekend, the "big three" drug distributors today issued a joint statement announcing they had reached a proposed settlement of a "substantial majority" of the opioid lawsuits filed by governmental entities in the U.S. The terms are similar to those of the preliminary global settlement agreement announced nearly two years ago, and the numbers have not changed from previous reports. The companies can independently determine whether enough states and subdivisions "opt in" to the settlement to make it worthwhile for them to proceed with it. This will be determined over the next few months. The maximum amount to be paid to the states and subdivisions remains $21 billion, to be paid over 18 years. McKesson's allocation (calculated by market size) is the largest at $7.9 billion. McKesson took an $8 billion pretax charge in the fiscal year ended March 2021 for this litigation, which covers its allocation, but obviously it has not yet paid out any cash. Its annual cash requirement works out to less than $450 million, which is manageable. We believe there could be dribs and drabs of additional legal costs to settle with other entities, but nothing that would be material to MCK's financial condition. Unsurprisingly, there is no admission of guilt or liability. The biggest unknown is how many states and subdivisions will "opt in" to the settlement. If not enough do so to keep the deal alive, then today's sense of relief and closure may be short-lived.
Steel Dynamics 07-22 
Alcoa 07-20 
Boyd 07-14 
Meritor 07-14 
Walgreens 07-05 
AVIS 07-01 
Caterpillar 06-30 
Ashland 06-30 
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