Illinois Tool Works Inc. posted 3Q 2009 earnings this past Tuesday, October 20th.
The highly diversified industrial parts manufacturer announced a third-quarter profit of $0.66 per share, revenue of $3.580 billion, and net income of $302 million.
Year-over-year EPS declined 11 cents a share from $0.87 per share in 3Q 2008. However, ITW beat the estimates on the street, which were around $0.53 per share.
Overall revenue dropped nearly 20 percent from last year’s third quarter revenues of $4.464 billion and profits fell $151 million from $453.5 million in 3Q 2008. Management was able to offset these significant declines by implementing extremely effective cost measures as operating margins only decreased 1.5% from 15% in 3Q 2008 to 13.5% in 3Q 2009. In addition, operating margins increased by 360 basis points from 2Q 2009. Sales have dropped dramatically from the previous year as almost all of ITW’s end users have significantly reduced production and output, therefore decreasing the demand for ITW’s products. In addition, ITW sells a good chunk of their industrial productions through various distributors who have focused on using up inventory stock piles to fulfill orders instead of purchasing products through ITW in an effort to increase their own performance.
Management expects total revenue for 2009 to fall within $14.124 billion (-11% of 2008 revenue) to $15.075 billion (-5% of 2008 revenue). The 2009 profit outlook range is $1.74 to $1.80 per share. Current estimates on the street range from $1.64 to $1.87 per share. Management was also upbeat about the significant improvement in their auto related sales in North America. This improvement may be slightly illusionary as the auto market was at an incredible low last year and sales were boosted significantly in the 3Q by the temporary “cash for clunkers” program. Regardless, any improvement in the auto industry is a good one. In addition, management has seen a significant increase in the residential housing starts over the past 9 months and projects the housing market in North America to continue its slow creep.
As far as ITW going forward, it is hard to tell. Management does not give any profound or significant guidance and it is clear that their main focus has been on managing operating costs. One of our original catalysts regarding ITW was their strong acquisition history. However, there was an all time low in acquisitions during 3Q 2009, but management has stated that projected acquisitions in the fourth quarter could be as high as $200 million. There is no doubt that ITW is a tremendously diversified company with over 875 operations in 54 countries. It may be worthwhile to wait and see how ITW’s acquisition strategy pans out over the fourth quarter. It is a solid company that has performed well for us, but if management does not focus on increasing shareholder value relatively soon, it should be put up on the chopping block so we can take our gains and using them towards a more worthwhile investment.
-Matthew Opanowski
Saturday, October 24, 2009
3Q 2009 Earnings for Caterpillar Incorporated
Caterpillar Inc. posted 3Q 2009 earnings this past Tuesday, October 20th.
The industrial machine giant announced a third-quarter profit of $0.64 per share, revenue of $7.298 billion, and net income of $404 million.
Year-over-year EPS declined 75 cents a share from $1.39 per share in 3Q 2008. However, CAT destroyed the estimates on the street, which ranged from $0.04 to $0.06 per share.
Overall revenue dropped 44 percent from last year’s third quarter revenues of $12.981 billion and profits fell $464 million from $868 million in 3Q 2008. Despite these significant declines, management is still very pleased with CAT’s performance in light of the economic environment and has implemented effective trough management. The drop in profit was primarily due to significantly lower sales volume worldwide. Instead of purchasing new equipment from CAT, dealers across the world focused on using up current inventory stock piles.
Management has tightened their expected 2009 revenue range to $32 to $33 billion which is slightly lower than the midpoint range of $35 billion they announced at the beginning of the year. However, the 2009 profit outlook range has improved to $1.85 to $2.05 per share, excluding redundancy costs, from the previous range of $1.15 to $2.25 per share. Current estimates on the street range from $1.88 to $2.15 per share. Management also expects revenues for 2010 to increase in the range of 10 to 25 percent of overall revenues in 2009.
On Friday, October 23rd we sold half of our current position in CAT. This was a wise choice as it allows us to capture some of the tremendous return we obtained by purchasing CAT, but also allows us to wait and see what will happen with CAT going forward. Our original thesis was not only that CAT was a recession pick, but that the proposed economic stimulus plans would benefit CAT tremendously. We still have not had a major infrastructure push here in America yet, but it has already begun in China. As a whole, revenues in CAT’s Asia/Pacific region declined the least compared to the other regions CAT operates in. Additionally, since dealers have relied on their inventory to fulfill orders, once the economy starts to pick up so will construction and mining operations and dealers will have to replenish inventories and fulfill orders by going through CAT.
-Matthew Opanowski
The industrial machine giant announced a third-quarter profit of $0.64 per share, revenue of $7.298 billion, and net income of $404 million.
Year-over-year EPS declined 75 cents a share from $1.39 per share in 3Q 2008. However, CAT destroyed the estimates on the street, which ranged from $0.04 to $0.06 per share.
Overall revenue dropped 44 percent from last year’s third quarter revenues of $12.981 billion and profits fell $464 million from $868 million in 3Q 2008. Despite these significant declines, management is still very pleased with CAT’s performance in light of the economic environment and has implemented effective trough management. The drop in profit was primarily due to significantly lower sales volume worldwide. Instead of purchasing new equipment from CAT, dealers across the world focused on using up current inventory stock piles.
Management has tightened their expected 2009 revenue range to $32 to $33 billion which is slightly lower than the midpoint range of $35 billion they announced at the beginning of the year. However, the 2009 profit outlook range has improved to $1.85 to $2.05 per share, excluding redundancy costs, from the previous range of $1.15 to $2.25 per share. Current estimates on the street range from $1.88 to $2.15 per share. Management also expects revenues for 2010 to increase in the range of 10 to 25 percent of overall revenues in 2009.
On Friday, October 23rd we sold half of our current position in CAT. This was a wise choice as it allows us to capture some of the tremendous return we obtained by purchasing CAT, but also allows us to wait and see what will happen with CAT going forward. Our original thesis was not only that CAT was a recession pick, but that the proposed economic stimulus plans would benefit CAT tremendously. We still have not had a major infrastructure push here in America yet, but it has already begun in China. As a whole, revenues in CAT’s Asia/Pacific region declined the least compared to the other regions CAT operates in. Additionally, since dealers have relied on their inventory to fulfill orders, once the economy starts to pick up so will construction and mining operations and dealers will have to replenish inventories and fulfill orders by going through CAT.
-Matthew Opanowski
Friday, October 23, 2009
E.I du Pont De Nemour and Co.
DuPont Released third Quarter earnings on Tuesday, October 20th
Revenue declined 18% to $5.69 billion, missing estimates of $6.27 billion.
The sales drop was mostly due to 12% drop in sales and a 2% drop in prices.
Revened dropped 21% in the U.S, 27% in Europe, the middle East, and Africa.
Even with lower revenue, Dupont managed to increase net income by 11 percent year over year by cutting costs. Net income increased to 409 million, or 45 cents a share, which beat earnings by 12 cents. They decreased costs by about 700 million. In the upcoming quater, managment tends to further decrease costs by shutting plants and cutting jobs.
Full year EPS will be 1.95-2.05, which was narrows the gap from last estimates of 1.70-2.10. However, analysts had the EPS at around $1.83.
Segment
Coatings & Color Technologies and Electronic & Communication Technologies were down by single digit percentages, but but were positive. Performance Materials turned last year's $91 million pre-tax loss to a positive $230 million, however, last years loss was due to a hurricane. Finally, Safety & Protection dipped from $251 million to $93 million on lower demand and an impairment charge..
Overall, Dupont is a good company and there operations are truly unique. Going, foward, at this time we are no long holders of this position and possibly in the future we could reevaluate Dupont and determine any possible buybacks.
Revenue declined 18% to $5.69 billion, missing estimates of $6.27 billion.
The sales drop was mostly due to 12% drop in sales and a 2% drop in prices.
Revened dropped 21% in the U.S, 27% in Europe, the middle East, and Africa.
Even with lower revenue, Dupont managed to increase net income by 11 percent year over year by cutting costs. Net income increased to 409 million, or 45 cents a share, which beat earnings by 12 cents. They decreased costs by about 700 million. In the upcoming quater, managment tends to further decrease costs by shutting plants and cutting jobs.
Full year EPS will be 1.95-2.05, which was narrows the gap from last estimates of 1.70-2.10. However, analysts had the EPS at around $1.83.
Segment
Coatings & Color Technologies and Electronic & Communication Technologies were down by single digit percentages, but but were positive. Performance Materials turned last year's $91 million pre-tax loss to a positive $230 million, however, last years loss was due to a hurricane. Finally, Safety & Protection dipped from $251 million to $93 million on lower demand and an impairment charge..
Overall, Dupont is a good company and there operations are truly unique. Going, foward, at this time we are no long holders of this position and possibly in the future we could reevaluate Dupont and determine any possible buybacks.
Thursday, October 22, 2009
Monday, October 12, 2009
25 Things the iPhone has Rendered Useless
http://www.maclife.com/article/feature/25_things_ipod_has_rendered_useless
Wednesday, October 7, 2009
Nike Earnings Report
Nike released 1st Qtr FY2010 earnings on September 29,2009.
Revenue was down 12% versus prior year to $4.8B.
Diluted EPS up 1% from prior year to $1.04.
Inventories down 7% versus prior year.
Net Income was basically flat at $513M.
On the close of Sept. 29th NKE traded at $60.09 and the next day Sept. 30th, they closed up 7.7% to $64.70.
As of 12:35 on Wednesday October 7, 2009, they were trading at $63.14.
Since June 30th to today, their share price is up nearly 22%.
Bloomberg 19 Analysts covering it. 9 Buys, 9 Holds, and 1 Sell.
Goldman Sachs has a Buy/Neutral recommendation and a target price of $75.
Will continue to monitor.
~Michael A. Williams
Revenue was down 12% versus prior year to $4.8B.
Diluted EPS up 1% from prior year to $1.04.
Inventories down 7% versus prior year.
Net Income was basically flat at $513M.
On the close of Sept. 29th NKE traded at $60.09 and the next day Sept. 30th, they closed up 7.7% to $64.70.
As of 12:35 on Wednesday October 7, 2009, they were trading at $63.14.
Since June 30th to today, their share price is up nearly 22%.
Bloomberg 19 Analysts covering it. 9 Buys, 9 Holds, and 1 Sell.
Goldman Sachs has a Buy/Neutral recommendation and a target price of $75.
Will continue to monitor.
~Michael A. Williams
Wednesday, September 16, 2009
Apple Can Remain Great Without Jobs
http://gizmodo.com/5352100/inside-steves-brain-apple-can-remain-great-without-mr-jobs
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