Chicago Bridge and Iron Earnings

Chicago Bridge and Iron reported earnings on May 2^nd, 2013 after the market closed. Earnings beat consensus by reporting an EPS of $.82, up 12.8% against expected earnings. Revenue was reported at $2.3 billion, higher than consensus of $2.18 billion and a surprise of 5%.

Safety has been a priority of CBI and they have shown excellence in this field, with not a single fatality having occurred in over 2.5 years. CBI showed improvement and growth in essential components this past quarter, highlighted by their Lummus technology. Lummus technology, the main revenue driver, posted an annual record of $727 million in revenue, up 35% on the year-over-year. With projects being awarded in the fourth quarter including Aramco storage tanks and spheres in Saudi Arabia, technology awards from Shell in Singapore and West Lake in the US, backlog is continuously increasing. With the purchasing of Shaw Group on February 13^th, the company is looking to restructure and completely integrate the environmental and plant services that Shaw provided.

For the future, Lummus technology looks to continue to be a main contributor to revenue growth. If awards are going to be continuously given to Lummus, it could be contributing over $1 billion annually. CBI closed on Friday at $55.22, up 2.96% on the day after being marginally down in after-hour trading following earnings being released. With a strong backlog and a possibility of awards coming in that could return up to $10 billion annually, I reiterate our BUY rating for Chicago Bridge and Iron.

- Peter Rodrigues Industrial Junior Analyst

Actavis Pharmaceutical Releases First Quarter and Increases Guidance

Actavis Pharmaceuticals released first quarter results prior to the market open on May 2^nd 2013. Net revenue increased 24.0% from $1.52B to $1.9B when compared to the same quarter last year, nearly missing analyst estimates of $1.96B. The three main segments of revenue for Actavis are the Actavis Pharma, Actavis Specialty Brands, and Anda Distribution. Actavis Pharma, driven mostly by International sales, increased 37.0%. After the inclusion of legacy Actavis, international sales increased 254.0%. Actavis Specialty Brands increased 19.0% to $130.7MM, mainly from new product lines. Anda Distribution revenues decreased 23.0%, due largely to new third party product launches. 

EPS on a non-GAAP basis increased 21.0% to $1.99, beating analyst estimates of $1.87. After posting tremendous results, management reevaluated their operations and increased guidance for the full year. EPS for the year increased $0.40 on both the high and low end from $7.70 - $8.10 to $8.10 - $8.50. Revenue was kept consistent at $8.1B. 

Investors reacted positively to the EPS beat and raised guidance; they opened 2.6% at $107.06 from the previous close of $104.39. It eventually cooled down and ended the day with a total gain of 2.0% at $106.49. We reiterate our BUY rating as talks of a Valeant merger and positive earnings outlook should help push the company higher as time passes.

Masimo Delivers Strong First Quarter Results; Upgraded by Citi

Masimo Corporation reported 1Q13 earnings on May 2^nd, 2013 after market close. On a year over year basis, total revenue for the quarter increased 14.0% from $119.2MM to $135.9MM, beating my estimates of $134.3MM and street consensus of $134.5MM. Product revenues for Masimo increased 15.0% from $112.2MM to $128.6MM, beating my estimates of $127.3MM. Worldwide direct product revenue, which accounts for 84.0% of total product revenue grew 13.0%, while OEM sales, which accounts for the other 16.0% of product revenue, grew 26.0%. Rainbow products, which is the main driver of my thesis, increased 24.0% in revenue with a 19.0% increase in unit shipments. Net Income increased 3.8% to $16.4MM, slightly above my estimate of $16.1MM. EPS on a non-GAAP basis increased 3.7% on a year over year basis and was in line with street consensus of $0.28, but missed my estimate by $0.01. 

Joe Kiani, CEO of Masimo Corporation, was very pleased with their first quarter performance. A strong increase in demand for their products coupled with growth in all of their divisions lead management to believe they have a strong strategy. Masimo repurchased 778,000 shares for the quarter largely due to strong cash flow and a belief that they are going to keep growing. 

On May 3^rd 2013, the first trading day after releasing earnings, Masimo quickly shot up 11.0% to $22.27, compared to the previous day close of $20.06. This strong jump was largely attributed to two things: a positive Masimo earnings release and an upgrade from Citi, switching their SELL rating to a NEUTRAL. Masimo ended the day up 6.4% to $21.34. My outlook for Masimo remains positive as they begin to progress with their rainbow products and continue to improve their Cash Flow. Their strategy of share repurchasing and effective implementation into new hospitals lead me to believe that there is much more foreseeable growth. I reiterate a BUY rating for Masimo Corporation.

ATW Q2 Earnings Release

Atwood Oceanics, Inc. reported Q2 earnings after the close on Wednesday, 5/1.  The company reported diluted EPS of $1.28 per share on revenues of $253.2 million.  This beat consensus EPS of $1.23 and met consensus revenue estimates for the quarter.  The stock reacted positively on Thursday, ending up 3.2%.  On Friday, the stock was up another 2.6% to close at $51.44. 

Going forward, management believes that the company is in good shape.  It believes in the strength of its improved jackup fleet, and is in advanced talks for contract extensions for two of its jackup rigs, whose contracts are coming due in the next few months.  Atwood has secured 5 years of contract backlog on its three newbuild jackup rigs, all in Thailand.  This can be attributed to the fact that Thailand is the fastest growing country in Southeast Asia, and companies are actively pursuing expansion.  These contracts should also work to give Atwood Oceanics a better reputation within that region, leading to more future successes. 

The Atwood Advantage is the company’s second drillship, expected for delivery in June 2014.  Currently the drilling vessel is on par with its construction schedule, and Atwood has been actively marketing it.  There have been discussions about a possible two year contract for its services with a number of un-named companies.  Management currently believes that the rig will end up operating in either the Gulf of Mexico or off of the West African Coastline. 

In the quarter, many of its rigs experienced lower than expected downtime and more efficient upgrades and maintenance.  We should not expect the company to undertake more than one overhauling project in the rest of this fiscal year, so revenues should continue to grow as downtime will be at a minimum.

My projections and price target, for the moment, remain exactly the same with a twelve month target of $62.05.  For this past quarter, I had projected diluted EPS of exactly that of the company’s operations, $1.28, on $252.7 million in revenue, just 500 thousand dollars below reported amounts.

Spirit Airlines 1Q2013 Earnings

Spirit Airlines (SAVE) reported first quarter 2013 earnings on Tuesday that were better that expected. Revenue for the quarter was approximately 370 million dollars, 1 percent above estimates of 366 million and an increase of 23 percent YOY. Additionally,  revenue per available seat mile (RASM) was up 170 basis points year over year but approximately 150 basis points of that was a result of Easter falling in March this year rather than in April. EPS also grew in the quarter, up 38 percent yoy to .45, on higher margins as a result of lower fuel costs over the quarter. This beat analyst consensus of .42 by about 6 percent. The stock traded higher about 4.5 percent on the news.

Moving forward, we still see strong growth potential of Spirit Airlines. Currently management is looking to expand into about 400 markets, and with the lowest fare prices in the industry, is poised to capture market share when it moves into these areas. Additionally, we expect margins to continue to increase as revenue per available seat mile increases, while at the same time cost per available seat mile decreases. EBITDA margin expanded 180 basis points for the quarter and we expect similar expansion to occur for the year. Also, as Spirit continues to get deliveries for its new Airbus A320's, costs should decline as these planes are about 15 percent more fuel efficient then the older A319's. As a result we reiterate our BUY rating on Spirit Airlines, with an updated 2013 price target of $33.80.