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Macy's 12-12 19:47 GMT
(Comment)
Yesterday, Macy's (M) reported eagerly awaited fiscal third quarter results consistent with its November...
Earnings by Evan Mann, CFA
Yesterday, Macy's (M) reported eagerly awaited fiscal third quarter results consistent with its November 25 preliminary release but lowered fiscal 2024 adjusted EBITDA guidance, partly related to the cumulative $151 million of intentionally misstated small package delivery expense by a former employee. Sales were down 2.4% to $4.7 billion on a 1.3% decline in comparable sales on an owned plus licensed plus marketplace basis while the adjusted EBITDA fell 18% to $273 million and was short of the $280 million consensus estimate on margin contraction. LTM leverage was 1.3x (2.2x rent adjusted) unchanged from fiscal 2023. While fiscal 2024 sales guidance was raised modestly on anticipated better comparable sales on an owned plus licensed plus marketplace basis, the expected decrease in the adjusted EBITDA margin widened by 60 basis points to correct for understated delivery expenses as well as higher expected promotional activity translating to an estimated 18% drop in fiscal 2024 adjusted EBITDA to $1.8 billion from $2.0 billion previously. Encouragingly, Macy's reported continued gains in comparable sales on an owned plus licensed plus marketplace basis of 1.9% for First 50 locations, 3.2% for Bloomingdale's and 3.3% for Bluemercury. We will shortly update our forecast and recommendation and review our credit score.
Saudi Basic Industries Corp 12-12 11:40 GMT  
(Report with Analyst's Data Sheet) 
The petrochemical industry's context remains difficult, characterized by significant overcapacity and relatively weak demand. Despite...
Charting A Steady Course by Franck Bekaert
Canadian Pacific Railway 12-12 11:36 GMT  
(Report with Analyst's Data Sheet) 
Canadian Pacific Railway (CP) overcame several significant challenges in the third quarter, including a major derailment and a labor strike,...
On Track by Jay Cushing, CFA
Ryman Hospitality Properties 12-12 11:33 GMT  
(Report with Analyst's Data Sheet) 
Ryman Hospitality Properties (RHP), a lodging and entertainment REIT, focuses on the group lodging business that has significant...
Group Mix by Kim Noland
Kroger 12-12 00:16 GMT
(Comment)
Like many unhappy marriages/betrothals, this one is ending up in court. Today Albertsons sued Kroger to...
Legal Development by Carol Levenson, CFA
Like many unhappy marriages/betrothals, this one is ending up in court. Today Albertsons sued Kroger to terminate their merger agreement, claiming Kroger did not make its "best efforts" to secure regulatory approval. Albertsons seeks the payment of the $600 million termination fee and "billions" in other expenses. Later today Kroger said it terminated the merger (after its board "reviewed its options" for less than one day). It also told Albertsons that its (Albertsons') termination letter was invalid because Albertsons did not comply with the merger agreement covenants and therefore is not entitled to the termination fee. This finger pointing will no doubt be fought out in the courts for years. In the meantime, as we surmised in yesterday's comment, Kroger approved a new $7 billion share repurchase program, intending to use the "capacity" it has built up while preserving cash for the Albertsons purchase over the past two years. This will begin almost immediately with a $5 billion accelerated share repurchase (ASR). Kroger will also redeem $4.7 billion of bonds issued in August that contained special mandatory redemption provisions designed for just such a situation. It has also terminated its debt tender offer for Albertsons bonds (after extending the offer fifteen times since September 11). Kroger ended the fiscal third quarter with $13.3 billion of short-term investments, which we presume is the "capacity" to which management is referring. Remember, prior to the merger announcement, Kroger typically spent $1-$2 billion annually on share repurchases, so we view the ASR as merely making up for the two-year pause. The cash is sufficient to redeem the bonds and fund the ASR with about $3.5 billion of cash left over. Therefore, debt reduction will offset the ASR, reducing estimated pro forma lease-adjusted leverage by about half a "turn" to 2.8x, with net leverage even lower than this. We viewed Kroger as a "stable" credit with or without the Albertsons acquisition and reaffirm this view taking the ASR into consideration. Moreover, the event risk of another major leveraging acquisition has dimished given the regulatory obstacles.
Falabella 12-11 15:40 GMT
(Comment)
During the company's investor day held in Chile, CFO Juan Pablo Harrison announced that Falabella...
New Guidance by Alexandre Dray
During the company's investor day held in Chile, CFO Juan Pablo Harrison announced that Falabella plans to allocate $650 million for capital expenditure in 2025 as the retailer seeks to return to its historical investment levels. He also stated that the company aims for an EBITDA margin of 12.5% to 13.5% by the end of 2026. Additionally, Falabella has set a goal to achieve breakeven in its e-commerce operations by the end of 2026. As we wrote last October, Falabella has made good progress in improving its credit profile this year, with a clear improvement in its profitability (on higher sales and lower operating expenses) and financial strength (higher profitability and asset monetization plan). This is evidenced by the strong performance of its bonds year-to-date.
Oracle 12-11 13:26 GMT
(Comment)
Oracle posted a 9% increase in revenue for the fiscal second quarter that ended November 30th, continuing...
Earnings by Dave Novosel, CFA
Oracle posted a 9% increase in revenue for the fiscal second quarter that ended November 30th, continuing the acceleration of revenue gains. Cloud services and license support again led the way, this time with an increase of 12%. That gain overshadowed the 3% drop in Services and the 4% decrease in Hardware. Remaining Performance Obligations soared nearly 50% to $97 billion, which management attributed to the trend of larger and longer contracts. Simar to the last few quarters, gross margins fell slightly. However, SG&A spending and R&D spending relative to sales were down, leading to a 70 basis point increase in EBITDA margins. A huge decrease in accounts payable and income taxes payable, along with substantially higher capital expenditures, led to free cash flow of a negative $3.8 billion. The working capital situation should reverse in the second half, but capital spending will likely remain high for the remainder of the year. ORCL continues to spend liberally on the construction of new data centers and indicated that capital expenditures will likely double this year. Anecdotally, management noted that it can start small and then fill up data centers as customers consume more. ORCL added $1.7 billion of debt in the first half. Yet the considerable increase in EBITDA we are projecting for this year should take leverage down to 3.6x vs 4.0x at the beginning of the year. Management issued guidance for an 8% increase in revenue at the midpoint in the third quarter, while cloud revenue is projected to increase 24% at the midpoint. Those are impressive growth rates, yet they were below consensus estimates, causing the stock to fall sharply. But the outlook for bondholders remains positive.
Hewlett Packard Enterprise 12-09 11:27 GMT  
(Report with Analyst's Data Sheet) 
HewlettPackard Enterprise (HPE) closed out fiscal 2024 (ended October 31st) in fine fashion, posting a 15% increase in revenue. Similar...
Served Well By Its Servers by Dave Novosel, CFA
Anglogold 12-12 
Oracle 12-11 
Pactiv Evergreen 12-10 
Wynn 12-10 
Israel Electric 12-09 
Cigna 12-06 
Brighthouse Financial 12-06 
Vale 12-06 
Klabin 12-05 
Ovintiv 12-05 
Royal Caribbean 11-25 
M&T Bank 11-21 
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