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Alcoa Corporation 10-21 17:32 GMT
(Comment)
Alcoa Corporation's (AA) third quarter revenue was down 8% year over year to $2.4 billion...
Earnings by Evan Mann, CFA
Alcoa Corporation's (AA) third quarter revenue was down 8% year over year to $2.4 billion as increased alumina and aluminum shipments were more than offset by lower alumina and aluminum pricing as well as a decrease in bauxite shipments. With the adjusted EBITDA margin contracted on lower metal prices, third quarter adjusted EBITDA declined 27% to $284 million, exceeding the $219 million consensus estimate due to higher prices. LTM leverage was 2.2x, deterioration from 1.1x in 2019. Free cash flow for the nine months was down $65 million to $114 million on lower earnings before $198 million of net asset sales. On a sequential basis, fourth quarter adjusted EBITDA is expected to be flat for bauxite, down $10 million for alumina on higher energy costs and timing of shipments, and $50 million lower for aluminum on increased power costs in Europe, maintenance, and seasonal labor. We will update our model and review our recommendation shortly.
Kernel Holding S.A. 10-21 08:36 GMT
(Comment)
Kernel priced its new $300m Eurobond maturing in 2027 at par, or a yield of 6.75%. The...
New Issue by Alexandre Dray
Kernel priced its new $300m Eurobond maturing in 2027 at par, or a yield of 6.75%. The company plans to use the proceeds to finance its concurrent tender offer for its 2022 notes, with the remaining proceeds (if any) to be used for general corporate purposes. Separately, the company reported the early tender offer results, with $285.9m of 2022 notes having been validly tendered as of Oct. 19 (early tender deadline). This yield is in line with what we forecasted in our latest report (dated October 15, 2020) where we recommended participating in this new bond issue. The short-term outlook is mixed due to the combination of higher capital expenditure and more challenging business conditions. Yet, Kernel is now alleviating this risk with the partial refinancing of its bonds maturing in January 2022 with longer-dated bonds. The company's credit profile should improve in FY21/22 as Kernel will be able to substantially cut its capital expenditure and benefit from its new ongoing investments (new greenfield oilseed processing facility, co-generation heat, power units and a new grain export terminal).
CIT Group 10-21 02:29 GMT  (Report)
CIT Group's (CIT) share price plunged earlier this year, reflecting the bank's exposure to sectors hard-hit by Covid-19. Although the company returned to...
Exit Strategy by Kathleen Shanley, CFA
Graphic Packaging Holding Co. 10-21 02:21 GMT  
(Report with Analyst's Data Sheet) 
Graphic Packaging (GPK) has posted strong operating results in the COVID-19 induced downturn, including its recent third quarter. The...
Packaging Strength by Kim Noland
United Company RUSAL Plc 10-21 02:10 GMT  
(Report with Analyst's Data Sheet) 
When reading through Alcoa's 3Q earnings published last week, we think that United Company RUSAL Plc (RUALRU, Rusal) should also post a...
Eager For Norilsk Dividends by Alexandre Dray
Exelon 10-21 01:58 GMT  
(Report with Analyst's Data Sheet) 
Press reports say Exelon is discussing with advisors separating its generation business from its regulated utilities. Exelon has had considerable bad press since July...
Split Decision by Carol Levenson, CFA
Intel 10-20 15:45 GMT
(Comment)
Intel announced that it is selling its NAND flash memory and storage business to SK Hynix for $9 billion...
Asset Sale by Dave Novosel, CFA
Intel announced that it is selling its NAND flash memory and storage business to SK Hynix for $9 billion. Intel will keep its Optane line of memory products, an advanced type of storage used heavily in data centers. Intel will forfeit roughly $5.6 billion in annual sales. Intel plans to use the proceeds to invest in differentiated technology that will deliver long-term growth. To the extent that Intel is losing EBITDA, but not the debt associated with those assets, leverage may actually bump up slightly. However, if those investments prove to be worthwhile, they will generate future EBITDA that could restore leverage to existing levels. Recall that leverage is just over 1x, so a slight increase in not really a concern.
IBM 10-20 15:19 GMT
(Comment)
IBM posted a 2.6% decline in revenue for the third quarter, as revealed a couple of weeks ago when the...
Earnings by Dave Novosel, CFA
IBM posted a 2.6% decline in revenue for the third quarter, as revealed a couple of weeks ago when the separation of the managed infrastructure services business was announced. Adjusting for the currency impact and divestitures, revenue fell 3.1%. The decrease adds to the string of revenue declines at the company. But the drop was less than the decreases in the two previous periods. Revenue in the Cloud and Cognitive Software segment rose 7%, led by the strong performance of Red Hat (+17%). But revenue was down in each of the other units. Systems revenue dropped 15%, marked by declines in IBM Z and storage. Global Financing plummeted 20% because of the wind-down of OEM commercial financing. Global Business Services fell 5%, which management attributed to the weaker economic environment stemming from the coronavirus and the resulting project delays and reduced demand for discretionary offerings. Technology Services was down 4%. Despite the revenue decline, pre-tax operating margins rose more than 200 basis points. Cloud & Cognitive Software margins jumped more than 800 basis points. IBM has added more than $1 billion of debt in 2020 to bolster liquidity. The additional debt and lower EBITDA has led to an increase in leverage to 4.4x, up from 3.9x at the beginning of the year. But management promised to start paying down debt, beginning with cash on the balance sheet, which totaled more than $14 billion at the end of the quarter. Management also committed to a stable and growing dividend. Moreover, IBM intends to be quite acquisitive in areas such as hybrid cloud, AI, and security. Therefore, there will be little cash for share repurchases. Buybacks have been suspended until the company restores its credit metrics to where they were prior to the Red Hat deal.
Hewlett Packard Enterprise 10-20 02:16 GMT  
(Report with Analyst's Data Sheet) 
Hewlett Packard Enterprise (HPE) updated its financial guidance at an analyst day last week. Management is expecting currency-adjusted...
High Expectations by Dave Novosel, CFA
Shimao Property Holdings Ltd 10-20 02:02 GMT  
(Report with Analyst's Data Sheet) 
The property management arm of Shimao Property Holdings Ltd. (SHIMAO) has launched an initial placement offering to raise the...
Hong Kong IPO by Cedric Rimaud, CFA
Bristol-Myers 10-03 
Cleveland-Cliffs 09-29 
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