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Kansas City Southern 10-20 21:14 GMT
(Comment)
Kansas City Southern reported strong third quarter earnings, despite the impact of...
Earnings by Philip C. Adams, CFA
Kansas City Southern reported strong third quarter earnings, despite the impact of Hurricane Harvey in late August/early September. Net income available to common was $129.2 million, up $8.2 million YOY. Revenues of $657 million were up 9% from a year earlier on 3% volume growth. Carloads were up 3%, although they had been trending 6% higher before the hurricane. Operating income of $234 million was 17% higher YOY, and the operating ratio was 64.4%, a 250 bp improvement from a year ago. Carload growth was the strongest for petroleum products (LPG), frac sand, and crude oil (off a low base). Hurricane Harvey's impact was estimated at $19-23 million of lost margin, plus approximately $7 million of operational items, for which KSU will file insurance claims (12 months to resolution). Full year capex guidance was affirmed at $550-560 million. For the nine months ended September 30, KSU's FFO was $695 million, versus capex and all other investments of $534 million and dividends of $105 million, for FCF of $56 million. Share repurchases were $320 million (completing a $200 million authorization and beginning an $800 million authorization.) Net debt at the end of the quarter was $2.55 billion, up $239 million, and 36.6% of capitalization, up 220 bps. KSU sees enormous potential in N-S trade with Mexico, particularly in petroleum products, plastics, and wresting additional intermodal business from truckers. Capital programs include the transition from construction to operations of the Sanchez yard, the Sasol rail terminal (to be finished by YE2017), and the opening of a unified cargo processing center at Laredo, Texas, which will allow a single point of inspection (Mexico and U.S.) for northbound trains. KSU is actively engaged in Washington, seeking to make sure the administration understands the importance and potential for exports as a result of NAFTA.
Schlumberger 10-20 16:28 GMT
(Comment)
Schlumberger reported strong third quarter financial results, with net income attributable of...
Earnings by Philip C. Adams, CFA
Schlumberger reported strong third quarter financial results, with net income attributable of $545 million, versus $176 million a year ago, and bringing the 9-month total to $749 million. The sequential revenue gain was $443 million (6%) to $7.9 billion, led by North America's $400 million gain (18%) to $2.6 billion. SLB said nearly its entire fleet of hydraulic fracturing capacity has been redeployed, against the headwinds of Hurricane Harvey and some weakness in the offshore GoM. Consolidated pre-tax operating income was $1.1 billion, up 11% sequentially. Third quarter CFO was $1.9 billion (after $134 million of working capital consumption) versus capex of $598 million, SPM investments of $164 million, business acquisitions of $18 million, and dividends of $693 million, for excess cash of $559 million. Share buybacks were $98 million. For the first nine months of 2017, CFO was $3.41 billion (after working capital use of $1.47 billion), versus capex of $1.48 billion, SPM investments of $492 million, business acquisitions of $382 million, and dividends of $2.09 billion, resulting in a cash deficit of $1.03 billion. Share repurchases total $868 million. SLB has funded the cash shortfall using cash on hand, which totaled $4.95 billion at the end of September. Net debt is $12.2 billion, down $385 million from June 30, but up $2.1 billion from YE2016. Yesterday it was announced SLB and Torxen Energy are acquiring the Palliser Block (Alberta, Canada) from Cenovus Energy for C$1.3 billion (about $1.0 billion). This is the largest SPM ("Schlumberger Production Management") investment to date, involving assets adjacent to acreage awarded to the SLB/Torxen JV earlier this year. SLB will be the majority non operating owner, with the rights to exclusive service provision. SLB management said the cost of acquisition is the extent of its cash investment, with the JV expected to fund its own production and growth from cash flow. SLB views prudent reinvestment of excess cash into SPM as being a higher priority than share buybacks, and we tend to agree - provided the SPM investments earn their keep.
Celanese Corporation 10-20 13:54 GMT
(Comment)
Although Celanese's (CE) third quarter adjusted EBITDA exceeded the consensus estimate...
Earnings by Evan Mann, CFA
Although Celanese's (CE) third quarter adjusted EBITDA exceeded the consensus estimate on higher Acetyl Chain pricing and the commercialization of new projects in Materials Solutions, overall results were hampered by disruptions related to Hurricane Harvey. Third quarter sales increased 18% to $1.6 billion and the adjusted EBITDA margin contracted 250 basis points. With the margin decrease offsetting a part of the sales gain, third quarter adjusted EBITDA rose 8% to $423 million. For the LTM, leverage held mostly steady at 2.1x. The company raised its 2017 guidance to the higher end of the expected 9-11% adjusted earnings per share growth on improvements in the Acetyl Chain, increased project commercialization in AEM, and acquisition integration. We will update our projections and review our rating shortly.
Goldman Sachs 10-20 03:20 GMT  
(Report with Analyst's Data Sheet) 
Goldman Sachs (GS) has taken some flak from investors this year, given that its fixed income business has underperformed, both in absolute terms, and...
New Disclosures by Kathleen Shanley, CFA
Canadian Pacific Railway 10-20 03:04 GMT  
(Report with Analyst's Data Sheet) 
Earlier this week, Canadian Pacific Railway (CP) reported good third quarter earnings, plus a disciplined growth message that we thought...
Disciplined Growth by Philip C. Adams, CFA
Crown Holdings 10-19 19:12 GMT
(Comment)
Crown posted a decent third quarter, beating consensus earnings estimates and sending its stock...
Earnings by Kim Noland
Crown posted a decent third quarter, beating consensus earnings estimates and sending its stock to a 52 week high. Revenue was up 6%, better than we expected and adjusted EBITDA in the quarter also climbed about 6%. Credit measures remain strong with stable leverage in the 3.5x range. We will be updated our estimates and bond opinion soon in a full report.
Avianca Holdings SA 10-19 16:54 GMT  
(Report with Analyst's Data Sheet) 
The pilots of Avianca Holdings SA (PFAVHC) have been on strike since the end of September onwards, and, despite the company having obtained a ruling...
Turbulences by Cedric Rimaud, CFA
Cenovus Energy 10-19 13:11 GMT
(Comment)
Cenovus Energy announced an agreement to sell crude oil and natural gas assets in southeastern...
Asset Sale by Philip C. Adams, CFA
Cenovus Energy announced an agreement to sell crude oil and natural gas assets in southeastern Alberta to Torxen Energy and Schlumberger for C$1.3 billion. CVE noted proceeds will be used, as have those of other closed or pending asset sales (Pelican Lake - C$975 million; Suffield - C$512 million) to repay the company's C$3.6 billion asset-sale bridge facility. The facility was part of the financing package for CVE's buyout of ConocoPhillips' 50% interest in the Foster Creek Christina Lake oil sands venture partnership, plus certain other COP conventional assets in Alberta and British Columbia. CVE says it continues to target C$-5 billion of announced asset sale agreements by year end 2017 and remains committed to returning its leverage (net debt/adjusted EBITDA) to below 2.0x (versus over 6x at the end of June).
International Business Machines 10-19 02:35 GMT  
(Report with Analyst's Data Sheet) 
IBM claimed at the beginning of the year that its second half results would be much better than in the first half. We tend to be...
Inflection Point? by Dave Novosel, CFA
Bottom Ten 10-19 01:37 GMT  (Report)
The high yield market continues to chug along with the total return for the second quarter up 2.1% (slower than 2.7% in the first quarter). Even so, weak...
Bottom Ten by Gimme Credit
Turkiye Petrol Rafinerileri A.S. 10-18 23:13 GMT  
(Report with Analyst's Data Sheet) 
Last week, Turkiye Petrol Rafinerileri A.S. (Tupras, TUPRST) issued $700m of new 7-year bonds at a yield of 4.5%. Tupras will use...
Do Well by Alexandre Dray
For Clients Only: New High Yield Bottom Ten is here!
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AbbVie 10-02 
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Oct 14, 2017 | Associated Press
PA on Pacific Gas and Electric Co.- Q- Investors "are spooked,"
Oct 12, 2017 | Reuters
KN on Toys R Us -Q- "We rated the bonds Underperform when they were trading at 95," "We are especially good at warning bondholders about deteriorating situations,"
Sep 22, 2017 | Barron's
KN on Toys "R" Us- Q- Long-term secular trends for the industry are troublesome: birth rates are lower in developed countries and mobile phones and computers are replacing Toys? core video games and electronics,"
Sep 20, 2017 | Financial Post
KN on Toys "R" Us -Q- "We don't find this outcome surprising given the fundamentals besetting Toys"R" Us as Amazon and Wal Mart have continued to use the toy business as a loss leader and have created profitability issues "
Sep 5, 2017 | Bloomberg
CL on United Technologies -Q- "Unless United Technologies finds a painless way to use some of its offshore cash, we estimate that its leverage would soar from 2.4 times to nearly 4 times, an all-time high"
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