Royal Caribbean reported 2Q results Wednesday after the close. EPS for the quarter was $0.43, in-line with street expectations of $0.42 & below our estimates of $0.54. Earnings this quarter were overshadowed by two salient points: an internal accounting error regarding interest expense & an underperformance in the Eastern Mediterranean segment as a direct result of the geopolitical events in Libya & Greece. As a result, management decreased full-year guidance by $0.10 (or $0.20 including the accounting change) to $2.85-$2.95 from $3.05-$3.15.
Excluding the one-time revision related to interest expense, EPS for the quarter was $0.47 & above street expectations & management guidance of $0.40-$0.45. Key metrics, including cash flows, operating income, net yields & net cruise costs were not impacted by the accounting error. While management cited that the error was both internal & embarrassing, we do not believe that the issue is material. The internal accounting staff was incorrectly marking the amortization of undisclosed assets & the law firm Bronstein, Gewirtz & Grossman is currently investigating the issue.
Growth in net yields for the quarter, reported to be +3.8%, were lower versus our modeled +7.0% due to the lagging East Mediterranean segment. Excluding Mediterranean sailings, yields were 9.8%, which we believe show’s strength in the company’s underlying business. Demand across all regions (excluding the Mediterranean) remains strong & management stated that their ability to leverage pricing power remains intact. The company decreased net yield guidance for full-year 2011 to 5% from the prior range of 5%-7%, citing continued uncertainty in the Middle East/Europe & the resulting deterioration in demand. We would like to note that itineraries in the troubled regions account for approximately 13% of RCL’s business.
The stock was hit hard after the release, falling over 13% on Thursday. While the accounting error may affect the short-term credibility of management, it was likely the downward revision to year-end guidance that caused the sell-off. The unfortunate events in the Middle East & Europe have turned what was expected to be an above-average year into a mediocre one. Management remains positive & our bullish thesis on both the cruise industry & RCL has not changed. In regards to cost-basis, we will continue to monitor where the stock is trading & evaluate any additional buying opportunities.
Ian
Sunday, July 31, 2011
Saturday, July 30, 2011
Chesapeake Announces Q2FY2011 Earnings- 7/28/2011
Chesapeake Energy Corporation announced its 2011 second quarter financial and operational results. They reported 2011 Second Quarter profit of $510 million, or 68 cents per share, doubling its year-ago earnings of $255 million, or 37 cents per share. Excluding items, earnings arrived at 76 cents per share, while revenue surged 65% to $3.32 billion. The results surpassed expectations, with the consensus estimate calling for a profit of 72 cents per share on $2.77 billion in revenue. Output rose 9.3% during the quarter, said the natural gas giant. Net Income to Common Stockholders of $467 Million. The Company Adjusted Net Income Available to Common Stockholders of $528 Million, or $0.76 per Fully Diluted Common Share, Adjusted Ebitda of $1.4 Billion and Operating Cash Flow of $1.2 Billion. The company reported production of gas of 277 billion cubic feet of natural gas equivalent (bcfe).
Thursday in its second-quarter earnings statement, Chesapeake announced that Utica wells were “liquids-rich,” indicating that oil and wet gas were being found, along with natural gas. The company also said it is seeking a joint venture partner as it begins drilling more wells in the Utica shale. Chesapeake already has drilled five wells in Carroll County and is working on a sixth. McClendon said the company has five drilling rigs operating in the Utica shale. He expects to have eight rigs by the end of this year and 40 rigs drilling by the end of 2014. McClendon said Chesapeake’s work in the Utica shale will be a “key driver in the future growth” of Ohio’s economy and hopefully this will lead to growth for the company as a whole. “It’s pretty much the most ideal place in America for a new (oil and natural gas) play to develop,” McClendon said.
During the first half of 2011, Chesapeake continued the industry’s most active drilling program drilling 759 gross operated wells (480 net wells with an average working interest of 63%) and participating in another 708 gross non-operated wells (104 net wells with an average working interest of 15%). The company’s drilling success rate was 98% for company-operated wells and 99% for non-operated wells. During the first half of 2011, Chesapeake’s drilling and completion costs of $3.427 billion included the benefit of approximately $1.129 billion of drilling and completion carries from its joint venture partners.
The Company Increased its Full-Year 2011 and 2012 Production and Capital Expenditure Outlook and it largely offsets oilfield service inflation through its wholly owned oilfield service businesses and its 30% Stake in frac Tech. Chesapeake Energy is currently trading at $34.35.
-Cody
Thursday in its second-quarter earnings statement, Chesapeake announced that Utica wells were “liquids-rich,” indicating that oil and wet gas were being found, along with natural gas. The company also said it is seeking a joint venture partner as it begins drilling more wells in the Utica shale. Chesapeake already has drilled five wells in Carroll County and is working on a sixth. McClendon said the company has five drilling rigs operating in the Utica shale. He expects to have eight rigs by the end of this year and 40 rigs drilling by the end of 2014. McClendon said Chesapeake’s work in the Utica shale will be a “key driver in the future growth” of Ohio’s economy and hopefully this will lead to growth for the company as a whole. “It’s pretty much the most ideal place in America for a new (oil and natural gas) play to develop,” McClendon said.
During the first half of 2011, Chesapeake continued the industry’s most active drilling program drilling 759 gross operated wells (480 net wells with an average working interest of 63%) and participating in another 708 gross non-operated wells (104 net wells with an average working interest of 15%). The company’s drilling success rate was 98% for company-operated wells and 99% for non-operated wells. During the first half of 2011, Chesapeake’s drilling and completion costs of $3.427 billion included the benefit of approximately $1.129 billion of drilling and completion carries from its joint venture partners.
The Company Increased its Full-Year 2011 and 2012 Production and Capital Expenditure Outlook and it largely offsets oilfield service inflation through its wholly owned oilfield service businesses and its 30% Stake in frac Tech. Chesapeake Energy is currently trading at $34.35.
-Cody
Thursday, July 28, 2011
BAX- Kills 2Q earnings, raises FY 2011 guidance
Baxter has reported strong earnings for Q2 along with guidance for Q3. They reported a net income for the second quarter ending June 30, 2011 at $615 million, or $1.07 per diluted share, which beat our estimate of $543 million, or $0.94 per share. Net sales for the second quarter of 2011 were $3.54 billion, compared to $3.19 billion for the same quarter of 2010.
For the third quarter of 2011, the company expects sales growth, excluding the impact of foreign currency, of 3 to 4 percent (or 6 to 7 percent including the benefit of foreign currency) and earnings per diluted share of $1.07 to $1.09, before any special items. For full-year 2011, Baxter now expects earnings, before special items, of $4.27 to $4.32 per diluted share versus previous guidance of $4.20 to $4.28 per diluted In addition, the company expects to generate cash flows from operations of approximately $2.8 billion.
Baxter also announced today that it has established Baxter Ventures to invest up to $200 million in equity in promising early-stage companies developing therapies that complement Baxter’s existing portfolio.
“Baxter’s mission is to apply innovative science to develop therapies and medical technologies that save and sustain patients’ lives,” said Robert L. Parkinson, Jr., Chairman and Chief Executive Officer of Baxter. “As the company’s internal capabilities have advanced our late-stage pipeline, we have the capacity to further accelerate the early-stage development of essential therapies.”
Baxter was trading at 62.15 earlier this week and nearly hit it’s price target of $62.66 before falling over 3% as the market continued to slip today and closed at $58.70.
For the third quarter of 2011, the company expects sales growth, excluding the impact of foreign currency, of 3 to 4 percent (or 6 to 7 percent including the benefit of foreign currency) and earnings per diluted share of $1.07 to $1.09, before any special items. For full-year 2011, Baxter now expects earnings, before special items, of $4.27 to $4.32 per diluted share versus previous guidance of $4.20 to $4.28 per diluted In addition, the company expects to generate cash flows from operations of approximately $2.8 billion.
Baxter also announced today that it has established Baxter Ventures to invest up to $200 million in equity in promising early-stage companies developing therapies that complement Baxter’s existing portfolio.
“Baxter’s mission is to apply innovative science to develop therapies and medical technologies that save and sustain patients’ lives,” said Robert L. Parkinson, Jr., Chairman and Chief Executive Officer of Baxter. “As the company’s internal capabilities have advanced our late-stage pipeline, we have the capacity to further accelerate the early-stage development of essential therapies.”
Baxter was trading at 62.15 earlier this week and nearly hit it’s price target of $62.66 before falling over 3% as the market continued to slip today and closed at $58.70.
EW- Reports mediocre earning, market reacts
EW reported a net income for the quarter ended June 30, 2011 of $58.1 million, or $0.48 per diluted share, compared to net income of $57.5 million, or $0.48 per diluted share, for the same period in 2010. Excluding special items from both periods, detailed in the reconciliation table below, second quarter diluted earnings per share were $0.49, an increase over the prior year of 6.5 percent but on the lower side of most estimates. Second quarter net sales increased 18.1 percent to $431.2 million compared to the same period last year. Underlying sales growth was 11.0 percent.
"Growth outside the U.S. was particularly strong this quarter, including another impressive quarter for trans catheter heart valves," said Michael A. Mussallem, chairman and CEO. "Our core heart valve and critical care product lines continued to perform well globally. And, we were pleased with the FDA advisory panel's recommendation for approval yesterday, which reinforces our confidence in a 2011 U.S. launch for the Edwards SAPIEN trans catheter heart valve."
For the second quarter, the company reported Heart Valve Therapy sales of $263.1 million, representing 22.5 percent growth over last year. Underlying sales grew 14.8 percent. Trans catheter heart valve sales were $85.3 million, a 60.3 percent increase over 2010, or 45.7 percent on an underlying basis. These results were driven by strong procedure growth and continued adoption of the new 29mm Edwards SAPIEN XT valve in Europe.
Edwards Lifesciences Corporation announced that for third quarter 2011, it expects diluted earnings per share, excluding special items, in the range of $0.37 to $0.39. The Company reaffirmed fiscal 2011 guidance and expects for diluted earnings per share, excluding special items, of $2.01 to $2.07.
EW dropped rapidly from $81 a share and fell below the current price target of 75.90. It is closed today at $72.46.
"Growth outside the U.S. was particularly strong this quarter, including another impressive quarter for trans catheter heart valves," said Michael A. Mussallem, chairman and CEO. "Our core heart valve and critical care product lines continued to perform well globally. And, we were pleased with the FDA advisory panel's recommendation for approval yesterday, which reinforces our confidence in a 2011 U.S. launch for the Edwards SAPIEN trans catheter heart valve."
For the second quarter, the company reported Heart Valve Therapy sales of $263.1 million, representing 22.5 percent growth over last year. Underlying sales grew 14.8 percent. Trans catheter heart valve sales were $85.3 million, a 60.3 percent increase over 2010, or 45.7 percent on an underlying basis. These results were driven by strong procedure growth and continued adoption of the new 29mm Edwards SAPIEN XT valve in Europe.
Edwards Lifesciences Corporation announced that for third quarter 2011, it expects diluted earnings per share, excluding special items, in the range of $0.37 to $0.39. The Company reaffirmed fiscal 2011 guidance and expects for diluted earnings per share, excluding special items, of $2.01 to $2.07.
EW dropped rapidly from $81 a share and fell below the current price target of 75.90. It is closed today at $72.46.
Life Technologies (LIFE) 2Q 2011
Life Technologies (LIFE) shares fell 5.33% today after releasing second quarter results. The company reported increased revenues from $906 million to $945 million, a growth rate of 4%. Shrinking margins caused net income and EPS to fall, however, and under-perform analyst expectations. Net income fell from $175 million to $163 million, while non-GAAP earnings per share fell from $0.91 to $0.89. Analysts expected EPS of $0.95 and top-line revenues of $961 million.
The main drivers of the company's under-performance were lower sales in research lab products, a growth slowdown China, and the recent Japanese earthquake. Throughout the year, academic and private medical research has seen a drop in government funding, which has hurt the sales of their life sciences kits, a significant portion of their revenues. The firm has also seen an expected slowdown in the Chinese markets, as it has switched commercial strategies. Lastly, the earthquake in Japan disrupted the launch of a new genetic sequencer, which hurt profit margins as the firm was forced to sell the less profitable sequencer upgrades.
Going forward, budget cuts in the academic and private research realms will continue to hurt the sales of the company's kit products. Management expects the budget cuts to persist for at least the rest of the year. However, the firm now expects to see higher growth rats in China, as they reap the benefits of the strategy turnaround. In addition, as the effects of the Japanese earthquake fade away, the company will be able to sell the more profitable generic sequencers versions, as opposed to the upgrades at lower margins.
Ryan
The main drivers of the company's under-performance were lower sales in research lab products, a growth slowdown China, and the recent Japanese earthquake. Throughout the year, academic and private medical research has seen a drop in government funding, which has hurt the sales of their life sciences kits, a significant portion of their revenues. The firm has also seen an expected slowdown in the Chinese markets, as it has switched commercial strategies. Lastly, the earthquake in Japan disrupted the launch of a new genetic sequencer, which hurt profit margins as the firm was forced to sell the less profitable sequencer upgrades.
Going forward, budget cuts in the academic and private research realms will continue to hurt the sales of the company's kit products. Management expects the budget cuts to persist for at least the rest of the year. However, the firm now expects to see higher growth rats in China, as they reap the benefits of the strategy turnaround. In addition, as the effects of the Japanese earthquake fade away, the company will be able to sell the more profitable generic sequencers versions, as opposed to the upgrades at lower margins.
Ryan
Fiserv Q2 Earnings
Fiserv beat estimates, on adjusted EPS of 1.13 vs. consensus of 1.08, and guided FY11 EPS towards the top of range. Adjusted earnings per share from continuing operations for the first six months of 2011 were up 10 percent to $2.15 compared with $1.95 in 2010. GAAP earnings per share from continuing operations for the second quarter of 2011 was $0.67, which included a loss from early debt extinguishment of $0.26 per share, compared with $0.85 in 2010. GAAP earnings per share from continuing operations for the first six months of 2011 was $1.45, which included a loss from early debt extinguishment and severance expenses of $0.34 per share, compared with $1.65 in 2010.
Management was particularly bullish on Q4 2011 and FY 2012 because sales of existing products have been strong, and increasing regulatory clarity in the banking sector might lead to increased capital spending. CEO Jeff Yabuki was excited by the sales trends, "our highly valued and differentiated solutions led us to record the largest quarterly sales attainment in the company's history." He also commented on the regulatory environment, “The big regulatory news in the quarter was the fed's finalization of Durbin. While Durbin will negatively impact debit interchange revenue for larger institutions, albeit at a level better than originally signaled, the fed did confirm the creation of a 2-tier interchange system that will exempt debt issuers with less than $10 billion in assets from the interchange caps. We view this as positive for our business in the near and the mid-term.”
JP Morgan and Goldman Sachs have raised their target price to $67, but remain neutral. Oppenheimer reiterated its outperform call with a target price of $72, which mirrors UASBIG’s target of $72.49. On the day, FISV was flat, while the overall market declined more than 2%. UASBIG’s cost basis is 62.13, or 1% above today’s market price of 61.45.
An updated target price will be posted within 7 days.
-Zach
Management was particularly bullish on Q4 2011 and FY 2012 because sales of existing products have been strong, and increasing regulatory clarity in the banking sector might lead to increased capital spending. CEO Jeff Yabuki was excited by the sales trends, "our highly valued and differentiated solutions led us to record the largest quarterly sales attainment in the company's history." He also commented on the regulatory environment, “The big regulatory news in the quarter was the fed's finalization of Durbin. While Durbin will negatively impact debit interchange revenue for larger institutions, albeit at a level better than originally signaled, the fed did confirm the creation of a 2-tier interchange system that will exempt debt issuers with less than $10 billion in assets from the interchange caps. We view this as positive for our business in the near and the mid-term.”
JP Morgan and Goldman Sachs have raised their target price to $67, but remain neutral. Oppenheimer reiterated its outperform call with a target price of $72, which mirrors UASBIG’s target of $72.49. On the day, FISV was flat, while the overall market declined more than 2%. UASBIG’s cost basis is 62.13, or 1% above today’s market price of 61.45.
An updated target price will be posted within 7 days.
-Zach
Wednesday, July 27, 2011
ECL 2Q-2011
Net Income for the Cleaning Products fell from $125.9 million from $129.3 million a year earlier. However, revenue rose 11.7% to $1.7 billion from the same quarter last year. ECL also beat the mean estimate of 63 cents per share, by reporting an adjusted 64 cents per share. Sales growth was led by US Cleaning & Sanitizing, Asia Pacific and Latin America, and a strong performance from acquisitions had offset the higher delivered product costs.
Ecolab chairmen, President and CEO attributed the company’s success to organic sales, recent acquisitions and pricing plans. The company plans on transforming Europe into a higher growth, more efficient and more profitable region. Despite, anticipated higher raw material costs, they remain on target to noticeable improvement in their operating margin in Europe.
Gross Margin shrank 1.3% to 49.3%, primarily due to increased costs which rose 14.8%. Revenue has risen in the last 4 consecutive quarters. Also, Net Income has dropped in the last two quarter, but has topped expectations with net income over the same two quarters.
-Jim
Ecolab chairmen, President and CEO attributed the company’s success to organic sales, recent acquisitions and pricing plans. The company plans on transforming Europe into a higher growth, more efficient and more profitable region. Despite, anticipated higher raw material costs, they remain on target to noticeable improvement in their operating margin in Europe.
Gross Margin shrank 1.3% to 49.3%, primarily due to increased costs which rose 14.8%. Revenue has risen in the last 4 consecutive quarters. Also, Net Income has dropped in the last two quarter, but has topped expectations with net income over the same two quarters.
-Jim
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