Today - Thursday, July 30, 2015
- Bunge (BG -4.8%) shares are sharply lower after the agricultural commodities trader posts Q2 earnings far below expectations, citing weak oilseed processing margins in Canada and Europe and an unexpectedly steep drop in demand for its food products in Brazil.
- Q2 earnings in the agribusiness segment, which buys, sells, stores and transports crops and processed products, plunged 57% Y/Y, while profit in the food and ingredients segment sank 68% as edible oils margins and volumes contracted amid rising unemployment, inflation and currency devaluation in Brazil.
- Bumper crop harvests in the U.S. and the Black Sea region, which would boost BG's asset utilization, and strong soy processing margins in China could lift H2 returns, CEO Soren Schroder said in this morning's earnings call; full-year EBITDA in agribusiness is expected to top $1B from $464M as of June 30.
- With a Q2 miss on the books, Iron Mountain (NYSE:IRM) now expects 2015 revenue to be at the low end of a prior $3.03B-$3.15B guidance range (consensus is at $3.08B). Adjusted EPS and FFO/share are expected to grow 1%-5% on a constant currency basis. The 2015 FFO/share consensus in actual dollars is $2.09, 8% below a 2014 level of $2.27.
- Key numbers: Storage rental revenue fell 1.2% Y/Y in Q2 to $461.2M, and service revenue 6.7% to $298.5M. Gross margin fell 10 bps to 57.1%, with a 330 bps drop in services GM offsetting an 80 bps increase in storage rental GM. Operating expenses fell 1.5% to $630.2M. Net volume rose 2.8% Y/Y to 526 CuFt MM, after rising 3.5% in Q1; North America +1.2%, Western Europe +3%; other international +9.7%.
- Forex had a 5.7% impact on total revenue growth. Ahead of the Recall deal, IRM ended Q2 with $117.1M in cash, and $4.8B in debt.
- Q2 results, earnings slides
- Dow -0.12%.
- 10-yr +0.1%.
- Euro -0.62% vs. dollar.
- Crude -0.53% to $48.53.
- Gold -0.43% to $1,088.60.
2:00 PM| 1 Comment
- "Over the coming year we intend to make large increases to our annual investment," writes Cimpress (NASDAQ:CMPR) CEO Robert Keane in an investor letter (.pdf) accompanying his company's FQ4 report. "We expect this to have a negative impact on free cash flow, net operating profit after tax and EBITDA of $25 million to $30 million in fiscal year 2016 depending on which of these three financial metrics is considered."
- In tandem with the spending/cash flow forecast, Cimpress says it will "longer provide detailed annual guidance for our revenue, GAAP, and non-GAAP earnings per share."
- The changes are overshadowing an FQ4 beat fueled by strong sales within Cimpress' Vistaprint unit. Vistaprint revenue doubled Y/Y in FY15 on a constant currency basis, aided by a stronger focus on high-end printing service customers.
- FQ4 results, PR
- The toymaker sector has another publicly traded stock in its group after Spin Master debuted today in Canada.
- The company raised C$220M ($169.0M) through an IPO without the owners giving up much control due to the dual class of shares.
- Spin Master is listed on the Toronto Stock Exchange under the symbol TOY. Shares are up 1.4% from where they priced.
- Toy watch: Jakks Pacific (JAKK +1.4%) and Hasbro (HAS -1.1%) have generated large share price gains this year, while Mattel (MAT +1.7%) has lagged. All three companies are seen benefiting from an upcoming slate of studio blockbusters heavy on characters that can be turned into toys. Spin Master is more game-focused than driven by characters, but has signed a new licensing deal to distribute Teletubbies products.
- With many other chipmakers (including microcontroller rivals such as TI and Atmel) having already provided soft Q3 outlooks, NXP (NASDAQ:NXPI) is rallying in spite of providing light Q3 revenue guidance with its Q2 EPS beat and in-line sales. Merger partner Freescale (NYSE:FSL) is naturally along for the ride.
- Cost controls helped NXP beat Q2 EPS estimates: GAAP operating expenses fell 1% Y/Y to $393M - R&D totaled $195M and SG&A $198M. Also: $162M was spent on buybacks, and gross margin (non-GAAP) rose 20 bps Q/Q and 10 bps Y/Y to 48.7% (above guidance of 48.5%). Q3 GM guidance is at 48.5%-49%.
- iPhone NFC chip sales fueled a 39% Y/Y increase in Secure Connected Devices revenue to $276M. Apple M8 motion co-processor sales drove a 29% increase in secure interfaces/power revenue to $303M. Secure ID solutions (smart cards/EMV) revenue fell 4% to $257M, automotive rose 8% to $310M, and standard products (power management and logic ICs) rose 2% to $322M.
- Q2 results/Q3 guidance, PR
- Unsurprisingly, Express Scripts (ESRX -0.6%) takes a dim view of the proposed price of the cholesterol-lowering PCSK9 inhibitor Praluent (alirocumab). Last Friday, co-developers Sanofi (SNY +1.6%) and Regeneron Pharmaceuticals (REGN +0.4%) announced that the wholesale acquisition cost (WAC) of the once-every-two-week injection will be $40 per day or $14,600 per year. This is several orders of magnitude above the cost of statins, which average $2 - 3 per day.
- WAC is the average price that wholesalers and distributors pay for the drug. Patients will, of course, pay quite a bit more.
- Pharmacy benefit managers, still feeling the pinch from Gilead's (GILD +1.8%) HCV meds Sovaldi and Harvoni, will likely ratchet up their opposition as Praluent's U.S. launch commences.
- Related tickers: (AET +0.9%)(CTRX)(CNC +0.9%)(CI -0.7%)(HUM)(MRK +0.3%)(OCR +0.4%)(UNH -0.7%)(CVS -0.5%)
- HubSpot (HUBS -0.5%) chief marketing officer Mike Volpe "has been terminated for cause following a determination that Mr. Volpe violated the Company's Code of Business Conduct and Ethics in connection with attempts to procure a draft manuscript of a book involving the Company."
- In addition, content VP Joe Chernov resigned "before the Company could determine whether to terminate him for similar violations." Legal authorities have been notified.
- Chairman/CEO Brian Halligan has been "appropriately sanctioned" by the board for being aware of Volpe/Chernov's actions and failing to report them "in a timely manner." However, the board concluded Halligan wasn't involved in Volpe/Chernov's actions. He'll keep his job.
- Kipp Bodnar, formerly HubSpot's VP of marketing, is the new CMO. Q2 results arrive on the afternoon of Aug. 6.
- Standard Motor Products (SMP +6.2%) announces a new buyback allowance of up to $10M worth of its common stock.
- The buyback program is on top of an existing $10M allowance which still has $3M remaining on it.
- Previously: Standard Motor Products misses by $0.22, misses on revenue
- Previously: Standard Motor Products declares $0.15 dividend
- Citing an expected ~10% Q/Q decline in sales to the access/service provider equipment market, Cavium (NASDAQ:CAVM) guided on its earnings call (transcript) for Q3 revenue of $105M (+/- $2M) and EPS of $0.37-$0.39, below a consensus of $110.7M and $0.45. However, a soft outlook was expected in light of the pressures many other chipmakers with strong mobile infrastructure exposure have reported.
- When asked about mobile weakness, CEO Syed Ali suggested both end-market demand and inventory buildups were to blame. India was declared to be "the only bright spot" for mobile infrastructure spend. "[S]ervice provider, give or take is roughly around 40% of our total revenues. 50% is enterprise and broadband is roughly 10% ... the wireless infrastructure which was running in 2014, Q2 and Q3, with China shipping up in high volumes. We are now down on that wireless infrastructure business over 30% year-over-year."
- Enterprise/data center demand remains healthy, with sales expected to rise by a high-single digit % Q/Q. Cavium says it now has "well over 30" customers for its ThunderX ARM server/appliance CPU platform. The first ThunderX production units have shipped in Q3 ahead of an expected Q4/2016 ramp.
- Two new "meaningful" design wins for the LiquidIO IP/security accelerator adapter line began shipping in June, and four tier-1 OEMs are said to be developing switches featuring Cavium's Xpliant switching ICs (began sampling in Q1, will compete against Broadcom/Marvell's offerings).
- Q2 results, PR
- The FDA approves an expanded label for Otsuka America Pharmaceutical's (OTCPK:OTSKY) (OTCPK:OTSKF) antidepressant Abilify (aripiprazole) to include the new injection site of the deltoid (shoulder) muscle. Previously, the only approved site for intramuscular administration was the gluteal (rear end) muscle. Patients will, no doubt, be appreciative.
- Dow -0.01%.
- 10-yr +0.05%.
- Euro -0.68% vs. dollar.
- Crude +0.2% to $48.89.
- Gold -0.36% to $1,089.40.
- Siemens (OTCPK:SIEGY +2.8%) is higher after reporting a slight decline in FQ3 net profit to €1.36B ($1.49B) from €1.37B in the year-ago quarter, but the result is clearly better than the analyst consensus forecast of €1.03B.
- Siemens also is sticking to its full-year outlook, saying it expects a strong FQ4 despite a softening market outlook.
- FQ3 revenues gained 8% to €18.84B on strong growth in the company’s health care, energy management, digital factory and building technologies units; new orders rose 4%, helped by a €1.6B long-term train maintenance order in Russia at Siemens Mobility.
- FQ3 industrial profit margin of 9.5% was down from 10.1% a year ago, as profitability in the health care and energy management divisions slightly offset profit declines at the power and gas business, but analysts had expected a profit margin of 9.2%.
- Profit at the power and gas unit sank 47% to €289M, partly hurt by €106M in charges connected with one project’s higher material costs and customer delays, as well as lower margins in the gas turbine business and higher selling and R&D expenses.
- "If the Company's sales execution does not materially improve and our voice continues to remain unheard, we will have to seriously consider seeking the election of replacements to the Company's Board of Directors at the next annual meeting," writes Violin Memory (NYSE:VMEM) activist investor Clinton Group in an open letter.
- Clinton: "As you know, we requested a meeting with a subset of the Board of Directors to discuss a number of topics germane to creating shareholder value. We believe that a productive meeting benefiting the Company's shareholders can be held without your stated need of a nondisclosure agreement. Your refusal to hold a meeting with an interested shareholder like us in the ordinary course is disappointing."
- The firm also doesn't think much of an upbeat letter provided by Violin to Clinton on July 14. "[T]he stock price is down 24% since the last quarterly earnings report. Furthermore, the stock price today is down 48% since the beginning of the year and down 33% since Mr. [Kevin] Denuccio was named CEO."
- Clinton called on Violin to put itself on sale back in 2013. A temporary standstill agreement was reached in April 2014.
- Cloud Peak Energy (CLD -3.7%) is not immune to challenging market conditions, even if it is in better position than its coal mining peers, Cowen analysts say as they cut CLD's price target in half to $5.
- After examining CLD's Q2 loss, the firm says CLD can expect flat 2016 results if market pressure persists, but the company still remains the preferred play for Powder River Basin recovery exposure, given its lower relative risk profile.
- Other coal names are mixed: Arch Coal (ACI +13.9%), which missed Q2 earnings expectations, is higher, while Peabody Energy (BTU -0.4%) is slightly lower.
- Control4 (NASDAQ:CTRL) is posting big gains ahead of this afternoon's Q2 report. 332K shares have been traded thus far vs. a 3-month daily average of 311K.
- The home automation hardware/software provider remains down 41% YTD thanks to earnings/guidance disappointments. With 3.5M shares (19% of the float) shorted as of July 15, some shorts might be taking profits before earnings arrive.
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