Calpine: Not As Distressed As Everyone Thinks
Dichotomy Capital • 16 Comments
Dichotomy Capital • 16 Comments
Mon, Oct. 10, 7:37 AM
- Calpine (NYSE:CPN) agrees to acquire Noble Americas Energy Solutions, the largest U.S. independent supplier of power to commercial and industrial retail customers, from commodities trader Noble Group for $800M plus ~$100M of net working capital at closing.
- CPN says it expects to recover ~$200M through collateral synergies and the runoff of acquired legacy hedges, mostly within the first year, resulting in expected net cash deployed of ~$700M, including working capital.
- CPN says the deal will more than double the volume of retail load it is able to serve across the U.S. from its complementary wholesale power generation fleet.
Fri, Jul. 29, 12:58 PM
- Calpine (CPN -5.8%) is lower after posting a surprise Q2 loss, its third straight quarterly loss, on lower than expected revenues of $1.16B, even as its Texas fleet broke its record for Q2 power generation.
- CPN blames the Q2 loss on mark-to-market losses driven by increases in forward power and natural gas prices, causing it to narrow its guidance on full-year adjusted EBITDA to $1.8B-$1.9B vs. its previous outlook for $1.8B-$1.95B and adjusted free cash flow to $710M-$810M from prior $710M-$860M.
- CPN says it plans to close its aging 400 MW Clear Lake power plant in Texas within the next two years.
Fri, Jul. 29, 6:05 AM
Thu, Jul. 28, 5:30 PM
Tue, Jul. 26, 3:58 PM
- Calpine (CPN +0.4%) is upgraded to Buy from Hold with a $20 price target, raised from $18, at Deutsche Bank, citing CPN's strong presence in the Texas energy market and its likelihood to benefit from market tightening.
- After lagging peers NRG Energy (NRG -0.1%) and Dynegy (DYN +1.3%) by ~20% YTD, Deutsche Bank sees an attractive entry point for CPN, calling it a power company with a "best-in-class fleet and regional diversification."
- The firm says CPN's balance sheet has improved, EBITDA is projected to grow ~15% organically within two years, free cash flow yield is ~20%, and management's tone has shifted increasingly into offense mode.
Thu, May 12, 9:59 AM
- Cheniere Energy (LNG +5.8%) pops higher at the open on news of the appointment of Jack Fusco as its new President and CEO effective immediately, confirming earlier reports.
- Fusco had served as CEO at Calpine (CPN +0.7%) during 2008-14 and was Executive Chairman since 2014; CPN names Frank Cassidy, one of its directors, as its new Chairman.
- Fusco succeeds Neal Shear, a former head of Morgan Stanley’s commodities division who became interim CEO after LNG ousted its founder, Charif Souki, in December.
- Fusco’s target compensation for 2016 will be ~$9M, including a $1.25M salary, $1.56M target bonus and $6.25M long-term incentive that will pay out over three years, and he has agreed to buy $10M worth of LNG stock by Dec. 31; Souki made $54M in his last year with the company.
- The new hire is “a major positive step” for LNG, according to Carl Icahn, who is credited with pushing Souki out.
- Now read Cheniere Energy: An inexpensive natural gas play
Fri, Apr. 29, 6:11 AM
- Calpine (NYSE:CPN): Q1 EPS of -$0.56 misses by $0.41.
- Revenue of $1.61B (-2.4% Y/Y) beats by $310M.
Thu, Apr. 28, 5:30 PM| Thu, Apr. 28, 5:30 PM | 3 Comments
Wed, Mar. 23, 3:39 PM
- TransCanada (TRP -0.5%) is working with JPMorgan Chase to find buyers for more than $7B in assets to help finance its acquisition of Columbia Pipeline Group (CPGX +0.1%), Bloomberg reports.
- Assets reportedly for sale include a portfolio of U.S. Northeast merchant power plants, including the Ironwood natural gas power plant in Pennsylvania, the Ravenswood gas- and oil-fired generation plant in New York, hydroelectric power assets in New England, the Kibby wind power operation in Maine, and Ocean State Power gas generation facilities in Rhode Island; a minority stake in TRP’s Mexican natural gas pipeline business also is up for sale.
- The power plants could attract interest from P-E investors such as Blackstone, D.E. Shaw, Macquarie and Riverstone Holdings, as well as strategic peers including Calpine (CPN -2.8%) and NRG Energy (NRG -5.7%), Morningstar's Travis Miller says.
Tue, Mar. 8, 3:49 PM
- Calpine (CPN -4.9%) is downgraded to Hold from Buy at Argus, reflecting lower power prices driven by weak demand and excess generation capacity.
- Argus also expects power prices to remain weak in the coming quarters and does not see a near-term catalyst for CPN shares.
- Over the long term, however, the firm thinks CPN is well positioned to benefit from its primarily natural gas-fired plants and its ability to provide flexible and efficient power generation.
- The firm maintains its 2016 adjusted EPS estimate of $0.75, down from $1.08 in 2015, reflecting expectations for lower power prices, and sets a 2017 EPS estimate of $1.06; consensus EPS estimates are $0.63 for 2016 and $1.02 for 2017.
Fri, Feb. 12, 3:13 PM
- Calpine (CPN -6.6%) is sharply lower after reporting a Q4 loss of $0.13/share on $1.44B in revenues, down 26% Y/Y but better than analyst expectations.
- CPN said it benefited from energy hedging but was hurt by lower power prices and lower profit spread from lower natural gas prices; it also took a $36M hit from having part of its Geysers geothermal power complex offline from California wildfires.
- CPN said its total amount of energy generated increased 3.6% in Q4, driven by an 11% increase in its Texas segment.
- CPN also reaffirmed its previous guidance for the year for adjusted EBITDA of $1.8B-$1.95B.
- Considering the weak overall market for power generation companies, CPN enjoyed a relatively strong year with a good advantage going forward, said analysts at Tudor Pickering Holt.
Fri, Feb. 12, 6:03 AM
- Calpine (NYSE:CPN): Q4 Adjusted Net Income of $67M.
- Revenue of $1.44B (-25.8% Y/Y) beats by $260M.
Thu, Feb. 11, 5:30 PM
Mon, Jan. 25, 11:18 AM
- EnerNOC (ENOC +53.1%) surges more than 50% after the U.S. Supreme Court upholds a federal rule that pays large users to conserve power.
- The Court says the FERC acted within its authority with its Demand Response Rule, which helps large consumers reduce their power use.
- "This case has been an overhang for the industry of demand response for a number of years, so to have a final resolution at the highest court in the land is a huge victory," ENOC President David Brewster tells Bloomberg.
- U.S. power producers that sell into competitive markets such as include NRG Energy (NRG -6.7%), Exelon (EXC -2.1%), Dynegy (DYN -9.1%), Calpine (CPN -5.7%) and American Electric Power (AEP -0.9%) would have benefited if the rule was eliminated.
Sat, Jan. 16, 3:34 PM
- The group got together last Monday, meaning it had the year's ugly first week to mull over, but not the year's equally ugly second week. Jeff Gundlach is a new member and fans won't be surprised at his bearish macro outlook.
- He's been outspokenly against the Fed's tightening monetary policy and drops a few interesting points: There's only a 60-basis point difference between GDP growth rates in the U.S. and Europe - with European GDP actually trending higher while U.S. GDP tracks lower. Yet the ECB has set negative rates and is talking about boosting QE, while Fed has eliminated QE and is raising rates. More? Of 118 Fed rate hikes since about 1945, nominal GDP was above 5.5% on 112 of those occasions, and averaged 8.6%. Only twice since 1945 has the Fed boosted while GDP was below 4.5% - the last time was 1982, and the central bank had to reverse course almost immediately. Nominal GDP today looks to be headed to about 2%.
- As for stock picks, Oscar Schafer finds a number of beaten-up names. Among them is Evertec (NYSE:EVTC), which owns the transaction-processing business in Puerto Rico (it was spun out of BPOP in 2010). Suffice it to say, Evertec is being penalized by its domicile. But the company is expanding across Central and South America. Even if things don't improve in Puerto Rico, the company should do fine. If things get better there, the stock's a home run.
- His other favorites: Calpine (NYSE:CPN), CommScope Holding (NASDAQ:COMM), and NICE-Systems (NASDAQ:NICE).
Tue, Jan. 12, 3:02 PM
- Morgan Stanley upgrades the regulated utilities industry to In-Line from Cautious, believing the market will better differentiate high-growth names from others in 2016 and that the valuation gap between undervalued public companies and overvalued private companies will begin to close.
- The firm names Dynegy (DYN -2.7%) its top overall pick in the space, but also remains Overweight on NRG Energy (NRG -2.7%) and Calpine (CPN -4.5%), while maintaining its Underweight rating on Consolidated Edison (ED -1.5%), Southern Co. (SO -0.9%) and Public Service Enterprise (PEG -0.5%).
- Stanley also downgrades Laclede (LG -1.9%) and Pinnacle West (PNW -2.4%) to Underweight from Equal Weight.