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Interpublic Group 10-19 12:43 GMT
(Comment)
Interpublic Group continues to put up outstanding numbers. Third quarter organic net...
Earnings by Dave Novosel, CFA
Interpublic Group continues to put up outstanding numbers. Third quarter organic net revenue soared 5.4%, not far behind the 5.6% increase posted in Q2. U.S. organic growth was 5%, while International growth was 6%. Growth was pretty much widespread across all geographic regions, with Latin America being the best performer (+12%). Reported net revenue rose 3.4%, reflecting the foreign currency impact (-1.3%) and the effect of divestitures (-0.7%). Despite the impressive top line growth, operating margins fell 10 basis points. The primary reason for the decline was the transaction costs associated with the acquisition of Acxiom, which closed on October 1st. If those expenses are excluded, and frankly we are not convinced they should be, operating margins would have increased 50 bps. Management confirmed its forecast for organic revenue growth of 4.0% to 4.5% for the full year, along with a 50 to 70 basis point improvement in adjusted operating margins. IPG borrowed roughly $2 billion in Q3 to pre-fund the Acxiom acquisition. Therefore, leverage has soared to 2.6x. However, as the EBITDA generated by Acxiom is added, we expect leverage to return towards 1.5x or less. Acxiom will add annual revenue of roughly $650 million and EBITDA of approximately $165 million. Free cash flow through the first nine months was negative, which is usual, but Q4 is typically quite strong. IPG will be able to use some of this FCF to help fund the recent deal.
Guangzhou R&F Properties Co. Ltd 10-19 02:35 GMT  
(Report with Analyst's Data Sheet) 
The markets are getting worried and Chinese property developers are under pressure. When its $200 million of new 3-year bonds...
Liquidity Trap by Cedric Rimaud, CFA
Nutrien 10-18 03:31 GMT  
(Report with Analyst's Data Sheet) 
Recent developments have demonstrated that global demand for potash remains strong, supporting price increases despite increased capacity. Nutrien, while better...
Sold Out by Carol Levenson, CFA
KOC Holding AS 10-18 03:17 GMT  
(Report with Analyst's Data Sheet) 
With the release of the American pastor Andrew Brunson and new measures to curb inflation, the news flow on Turkey has improved recently. In this context,...
Back In Favor by Alexandre Dray
Abbott Laboratories 10-17 16:22 GMT
(Comment)
This morning Abbott reported strong third quarter results, with sales buoyed by new...
Earnings by Carol Levenson, CFA
This morning Abbott reported strong third quarter results, with sales buoyed by new products but well balanced among all its product lines. The company implicitly raised its organic sales growth and adjusted E.P.S. guidance slightly despite greater currency headwinds than it had expected. Organic sales rose 8% and adjusted earnings increased by 16%. (All sales references are to organic sales, which excludes currency and M&A/divestiture activity.) The company's Medical Devices business saw 10% sales growth, led by an amazing 40% increase in Diabetes Care, where its glucose monitoring system, FreeStyle Libre, saw sales growth of more than 100%. But all segments saw sales increases in the mid to high single digits. The adjusted pretax margin expanded by 20 basis points to 20.5%, lifted by gross margin expansion partially offset by higher R&D spending. Lacking any balance sheet or cash flow information, we can only observe that interest expense was lower sequentially, implying debt reduction in the third quarter. Management reiterated its intention of paying down debt further, and said debt/EBITDA was down to 2x, which would be a huge sequential improvement from 2.7x as of the second quarter. Management also said no big acquisitions were on the radar screen, not necessarily because of the lack of capacity to do one, but because of valuations. All good news for bondholders and in line with our "improving" credit score.
IBM 10-17 13:17 GMT
(Comment)
After a string of three consecutive quarters in which revenue increased, IBM recorded a 2.1% decline in...
Earnings by Dave Novosel, CFA
After a string of three consecutive quarters in which revenue increased, IBM recorded a 2.1% decline in revenue for the third quarter. The primary culprit was the Cognitive Solutions segment, which includes its Watson offerings and other artificial intelligence products, as revenue plunged nearly 6%. Back when revenue was dropping consistently, Cognitive Solutions was the one segment that was generating growth. The weakness is due to challenges in horizontal applications such as collaboration, commerce, and talent. Revenue in the Technology Services unit fell 2%. Adjusting for the currency effect, overall revenue was flat in Q3. Meanwhile, total cloud revenue rose 10%, significantly lower than the pace of the last few periods. Despite the weak top line, operating margins rose 20 basis points. Margins in Cognitive Solutions were up 200 bps, while margins were up more than 300 bps in the Global Business Services segment. Management attributed the improvement to a shift toward higher value services as well as acquisition synergies. IBM produced roughly $1.9 billion of free cash flow in Q3, and used just over $600 million to repurchases shares. FCF for the full year is likely to be lower than last year because of higher cash taxes, increased capital spending, and a greater use of working capital.
Cenchi 10-17 
CIT 10-02 
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Aug 20, 2018 | Barron's
CL on risk in triple 'B' bonds-Q-"Anticipating where problems may arise isn't easy . Levenson notes that "the downgrades will come after the fact [of a slowdown or recession]. "
Jun 16, 2018 | Barron's
GC on AT&T - Q- "On that score, Gimme Credit, the very independent corporate credit research outfit, last week reiterated its negative stance on AT&T's notes maturing in 2027, given the increase in leverage following the Time Warner acquisition."
Feb 8, 2018 | Financial Times
KS on Wells Fargo - Q- "It is certainly a black eye for Wells Fargo that they have not been able to put the sales incentive scandal behind them, but the growth restrictions are a greater concern for equity investors than for bondholders."
Nov 6, 2017 | Bloomberg
CL on TEVA -Q-"We find it troubling that management, which presumably met with Fitch before the downgrade, was not able to convince the rating agency that it would take more dramatic deleveraging actions in order to preserve investment grade ratings,"
Nov 6, 2017 | Bloomberg
DN on Sprint- Q- "They don't produce enough free cash flow to cut into the debt," "The only possible way to do that is to continue cutting costs."
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