Q4 2008 Earnings Call Transcript

March 12, 2009, 2009 8:30 am ET

Market Analysis Commentary:  Relative Price Volume Momentum Tracks scans the Russell 3000 components for stocks that are moving up or down on relatively strong surging volume. Such stocks may signal institutional buying or selling and have a tendency to continue further in their current market direction. From a contrarian perspective, buying and selling on extreme volume also has a tendency to produce short term reversals of a stock’s market direction on the following day of trading.

Moving Up on Surging Volume

Q3 2008 Earnings Call

October 30, 2008 9:30 a.m. ET

Q2 2008 Earnings Call Transcript

August 5, 2008 8:30 am ET

LIN TV Corp. (TVL)

Q1 2008 Earnings Call

May 8, 2008 8:30 am ET

Earnings: Wednesday After Close

• Brookdale Senior Living (BKD): Q1 EPS of -$0.54 misses consensus of -$0.34. Revenue of $481M in-line. Shares: +0.5%.
• Andersons (ANDE): Q1 EPS of $0.42 misses consensus of $0.58. Revenue of $713M vs. consensus of $501.5M. Sees 2008 EPS of $3.65-4.00, better than consensus of $3.68. Shares: -1.9%.
• Conseco (CNO): Q1 EPS of -$0.03 misses consensus of $0.25. Revenue of $1.14B vs. consensus of $1.19B. Shares: +0.5%.
• Crocs (CROX): Q1 EPS of $0.09 just misses consensus of $0.10. Revenue of $198.5M vs. consensus of $197M. The company still sees 2008 revenue growth of 15-20% and adjusted EPS of $1.54-1.64, vs. consensus of $1.60. Shares: flat.
• Dun & Bradstreet (DNB): Q1 EPS of $1.14 beats consensus of $1.12. Revenue of $415M vs. consensus of $4114M. Shares: +0.8%.
• Encore Acquisition (EAC): Q1 EPS of $1.08 beats consensus of $0.87. Revenue of $269M vs. consensus of $237M. Shares: +3%.
• Gildan Activewear (GIL): FQ2 EPS of $0.35 misses consensus of $0.36. Revenue of $294M vs. consensus of $287M. Sees full-year EPS of $1.45-1.50, down from a previous $1.85-1.90, short of consensus of $1.58. Shares: -1.4%.
• Hansen Natural (HANS): Q1 EPS of $0.29 misses consensus of $0.35. Net sales of $212M vs. consensus of $221M. Shares: -12.95%.
• Internap (INAP): Q1 EPS of $0.06 in-line. Revenue of $62M vs. consensus of $64M. Sees full-year revenue growth of 13-18%. Shares: -3.4%.
• Liberty Global (LBTYA): Q1 EPS of -$0.45 misses consensus of -$0.07. Revenue of $2.6B vs. consensus of $2.56B. Shares: flat.
• NeuStar (NSR): Q1 EPS of $0.31 beats consesus of $0.27. Revenue of $117.4M vs. consensus of $114.4M. Sees 2008 EPS of $0.90, short of consensus of $1.32, and revenue of $500-515M vs. consensus of $512M. Shares: -10.4%.
• News Corp. (NWS): FQ3 EPS including a $1.7B tax-free gain on its deal with Liberty Media of $0.91 vs. consensus of $0.31. Revenue of $8.75B vs. consensus of $8.65B. Shares: +1.3%
• Service Corp (SCI): Q1 EPS of $0.20 beats consensus of $0.18. Revenue of $573.5M vs. consensus of $593M. Shares: +27.5%.
• Willbros Group (WG): Q1 EPS of $0.52 beats consensus of $0.40. Revenue of $492M vs. consensus of $387M. Raises full-year EPS guidance to $1.70-1.95 from $1.65-1.90; consensus is $1.81. raises full-year revenue guidance to $1.8-2B from $1.6-1.8B vs. consensus of $1.73B. Shares: +6.9%.

Earnings: Thursday Before Open

• AbitibiBowater (ABH): Q1 EPS of -$3.74 misses consensus of -$2.60. Revenue of $1.73B vs. consensus of $1.63B.
• Barr Pharmaceuticals (BRL): Q1 EPS of $0.57 misses consensus of $0.79. Revenue of $608M vs. consensus $684M.
• Cablevision (CVC): Q1 EPS of -$0.11 misses consensus of $0.02. Revenue of $1.72B vs. consensus of $1.70B.
• Celgene (CELG): Q1 EPS of $0.36 beats consensus of $0.34. Revenue of $463M vs. consensus of $444M.
• Citadel Broadcasting (CDL): Q1 EPS of -$0.03 misses consensus of $0.01. Revenue of $206M vs. consensus $202M.
• Dendreon (DNDN): Q1 EPS of -$0.23 beats consensus of -$0.25. Revenue of $31K vs. consensus of $110K.
• Dynegy (DYN): Q1 EPS of -$0.18 misses consensus of $0.05. Revenue of $774M vs. consensus of $895M. The loss was primarily driven by mark-to-market writedowns of $284M.
• Edison International (EIX): Q1 EPS of $0.92 in-line. Revenue of $3.08B vs. consensus of $3B. Sees full-year EPS of $3.61-4.01 vs. consensus of $3.78.
• El Paso (EP): Q1 EPS of $0.29 misses consensus of $0.30. Revenue of $1.26B vs. consensus of $1.35B. Sees full-year to be sharply higher than $1.00-$1.10, vs. consensus of $1.14.
• Expeditors International (EXPD): Q1 EPS of $0.30 just misses consensus of $0.31. Revenue of $1.31B in-line.
• Fortress (FIG): Q1 EPS of -$0.74 misses consensus of $0.14. Revenue of $201M vs. consensus of $160M.
• Gap (GPS): Sees Q1 EPS of $0.30-0.32, better than consensus of $0.27, and full-year EPS of $1.20-1.27 in-line.
• Gymboree (GYMB): Sees Q1 EPS of $0.83-0.85, better than consensus of $0.76. Sees Q2 EPS of $0.18-0.20, short of consensus of $0.21. Sees full-year EPS of $3.10-3.15, better than consensus of $3.04.
• King Pharma (KG): Q1 EPS of $0.36 vs. consensus of $0.35. Revenue of $432M vs. consensus $453M.
• Lin TV Corp (TVL): Q1 EPS of $0.03 beats consensus of $0.02. Revenue of $93M vs. consensus of $94M. Sees Q2 Revenue of $103-105M vs. consensus of $106M.
• Macquarie Infrastructure (MIC): Q1 EPS of -$0.04 misses consensus of $0.07. Revenue of $279M vs. consensus $267M.
• Nasdaq (NDAQ): Q1 EPS of $0.48 just misses consensus of $0.49. Revenue of $918M vs. consensus of $861M. Gross profit margin was flat at 34.3%.
• Plains Exploration & Production (PXP): Q1 EPS of $1.43 beats consensus of $0.99. Revenue of $623M vs. consensus of $567M.
• Progress Energy (PGN): FQ3 EPS of $0.58 misses consensus of $0.63. Revenue of $2.07B vs. consensus of $2.27B.
• Swift Energy (SFY): Q1 EPS of $1.61 misses consensus of $1.65. Revenue of $199M vs. consensus of $191M.
• Trump Entertainment (TRMP): Q1 EPS of -$0.59 misses consensus of -$0.42. Revenue of $228M vs. consensus $229M.
• Unilever NV (UN): Q1 EPS €0.47, up 34%.
• Virgin Media (VMED): Q1 EPS of £0.32. Revenue of £1B and a net loss of £104.4M.
• Vonage (VG): Q1 EPS of -$0.06 beats consensus of -$0.07. Revenue of $225M vs. consensus of $223M. Vonage added 30,000 net subscriber lines to more than 2.6 million.
• Warner Music (WMG): FQ2 EPS of -$0.23 misses consensus of -$0.12. Revenue of $800M in-line.

Today's Markets

• Asian markets closed mainly lower Thursday. Nikkei -1.13% to 13,943. Hang Seng -0.63% to 25,450. Shanghai +2.17% to 3,656. BSE Sensex -1.49% to 17,081.
• Everything is down in Europe at midday. FSTE -0.25% to 6,245. CAC -0.27% to 5,061. DAX -0.40% to 7,047.
• U.S. futures are up from Wednesday's close. Dow +0.26% to 12,868. S&P +0.34% to 1,400. Nasdaq +0.26% to 1,965.
• Gold is flat at $871. Black gold is down 0.4% to $123.04/barrel.

TheStreet.com has published its Short-Squeeze stocks of the week, and among them is LIN TV (TVL), the television and digital media company.

Late last week, LIN Television (TVL) announced it had secured a retransmission deal with Dish Network Corp. (DISH), formerly Echostar Communications, for 26 television stations in 17 of its local markets. In its March 13, 2008 note to clients, a Bear Stearns analyst estimates this deal to be worth approximately $3.6 million per year (based on an estimated 1 million subscribers at $0.30 per subscriber, per month). The note goes on to state that, “we believe TVL is on track for $13 million of retransmission fees in 2008 based on the 4Q run rate and now are more confident of the $25 to $30 million in fees longer term as reflected by this deal”. They maintain an Outperform rating on TVL.

Retransmission fees, for those not in the day to day of the television industry, are fees paid by cable and satellite operators to local broadcast television stations for the right to retransmit the over the air broadcast signal to their subscribers as part of their overall programming offering to consumers. While the concept of retransmission consent has been around for a while, it is only in recent years that television broadcasters have been able to maximize the revenue opportunities therein, primarily as a result of the ongoing battle between satellite operators such as Dish and Directv (DTV) and cable operators including Comcast (CMCSA), Charter (CHTR), Cablevision (CVC), Time Warner (TWX) and a myriad of smaller carriers. Television broadcasters have historically had two options by law when negotiating with cable carriers- retransmission consent and “must-carry”. Must-carry is simply an obligation of the cable operator to carry the local television station on its system so long as the television station meets certain standards and conditions, but no consideration is otherwise given by the cable companies. On the other hand, retransmission consent is the free-market negotiation between the parties for cable carriage. In the past, it may have had a monetary component to it, but more often provided the broadcaster better or additional channel positions and other promotional consideration for the right to redistribute their signals. Both create a no-lose situation for local broadcasters in expanding their reach beyond the over the air signal, but retransmission consent heavily rewards broadcasters who invest in quality news operations, syndicated programming and network affiliations that consumers desire. Rupert Murdoch was known to use retransmission consent to his fullest advantage in the 1990’s. Newscorp (NWS) capitalized heavily on the strength of the Fox Network and its owned and operated television stations to secure national carriage for many of the then fledgling cable networks that are now highly profitable franchises for that company. EW Scripps Co. (SSP) is another company that used this strategy to create lucrative national cable networks on the backs of its television station group. Others, such as Belo Corp (BLC), used the negotiating leverage of their station groups to launch local and regional news networks on cable systems. Cable operators were willing to provide additional channel capacity then as they wanted to ensure they continued to offer such things as local news and sporting events, but did not want to pay-out rights fees to do so. In addition, capacity was not as constrained or as valuable as it would become, hence the concessions were made. However, cable positions did eventually became much more in-demand with the proliferation of niche cable networks on both the analog and digital tiers of their systems, and cable operators significantly curtailed this practice. The introduction of satellite television as a formidable competitor forced the cable companies to revisit their stance on retransmission consent, though. The likes of Dish and Directv began aggressively seeking new ways to offer differentiated content, and broadcasters eventually persuaded regulators to mandate certain retransmission rights on satellite as well. This put many broadcasters in an enviable position, and finally gave them significant leverage to demand cash payments from the cable companies in the retransmission consent process.

LIN TV Corp. (TVL)

Q4 2007 Earnings Call

February 27, 2008 8:30 am ET

In their cover story this week, Barron's identifies a handful of industries and companies where “investors who play their cards right could see big payoffs in debt-laden companies whose shares have been pummeled in recent months”.

One of the areas they feature is operators of radio and television stations, considering these levered equity plays with stocks that “could rebound sharply when the credit climate improves”.

Fortune Magazine recently released its annual list of “100 Best Companies to Work For”, and for the third year in a row, not a single traditional media company makes the list. Repeating last year’s honors, Google (GOOG) again tops this year’s list that seems to contain a wide sampling of all industries including tech, financial services, retail, hotel chains, accounting firms, healthcare, and even homebuilders… pretty much everyone but traditional media and entertainment companies.

Yesterday, Reuters reported from the North American Auto Show in Detroit that "U.S. auto sales will likely fall again in 2008 due to economic stress on consumers, raising pressure on struggling Detroit automakers to cut prices or use sales incentives". Given the latest turmoil in the equity markets and rising general sentiment that a recession is forthcoming or possibly already here, these comments won't likely come as a huge surprise to many.

What is intriguing in these comments from an event sponsored by the Society of Automotive Analysts is not weaker sales forecasts but rather the potential escalation of incentive programs by manufacturers to stimulate sales. Over the past 18 months, the industry has not been aggressively pursuing incentives which usually accompany large scale advertising campaigns to raise awareness of them. As a result, this has had a detrimental impact on the traditional media sectors--television, radio and newspaper--that rely heavily on automotive spending to drive revenue growth.

How to Fix an Old-Media Stock by Andrew Bary

Summary: TV stocks ascend as audiences grow and advertising and retransmission fees from cable/satellite companies generate profits. Belo (BLC) has 19 highly-ranked TV stations in fast growth areas like Texas and Seattle, and four newspapers. Takeover candidates and competitors NexStar (NXST) and Lin TV (TVL) have both doubled this year, but despite Belo having made half its projected annual revenues of $354 million and 70% of its $91m cash flow in Q1 already, newspaper revenues (-11%), and cash flow (-10%) took Q1 profits down to $0.15 from $0.16 in Q1'06. Analysts project $1.05/share profits for 2007, down from $1.19 in 2006. If Belo's TV and newsprint were to split, bulls see $30 shares: Belo's TV channels at an industry average of 13.4x 2007 cash denotes $20.60 shares, near its current $22. And 8x cash for its newspapers would add another $10. The controlling Decherd family doesn't want to sell, so hiking Belo's $0.50/share dividend (2.2% yield) to 5% from the $1.60/share cash flow generation would please shareholders. Belo's $2.3 billion value, with $1.3b of that debt or 3x cash flow, makes leveraged share buybacks possible too.

This should help offset some of 2006’s $1.65 billion in political spending on local TV. On the web, experts believe that local TV’s business could grow 50%+ in 2007. The web could now account for 2.5% of industry revenues in 2007. These new revenue streams are ramping up at the same time the drag network compensation has had on local TV players is waning.

Summary: TV stocks have declined in recent years because of a fragmenting audience, ad dollars moving to the internet, and TiVo viewers skipping commercials. But the recent sale by The New York Times Co. (NYT) of a group of TV stations to a private-equity group for $575 million clobbered Street estimates of $425m, suggesting there may still be a strong market for smaller outlets due to the popularity of their local newscasts, and because broadcast TV is gaining viewers at the expense of cable. Three operators -- Gray Television Inc. (GTN), Lin TV Corp. (TVL), and Nexstar Broadcasting Group Inc. (NXST) -- have typical LBO characteristics, including considerable debt, and sub-$1 billion market cap. GTN stations' ratings lead in 24 of its 36 markets, NXST has a low cash-flow valuation with lots of appreciation potential, and TVL might get a buyout bid from a shareholder that owns almost half of its stock already. Hearst-Argyle Television Inc. (HTV) is big, but majority holder Hearst conglomerate already owns 74% of the shares, and may well buyout the rest of its holders.
Related Links: Important TV News from this Week's CE Show, The Consolidation of Local Media, Why Broadcast TV Has No Need to Fear Video Sharing

AES Corp. (AES) - BMO
FQ2 2006 Revenue Estimate: $3.01B
FQ2 2006 EPS Estimate: $0.17
FQ3 2006 Revenue Estimate: $3.10B
FQ3 2006 EPS Estimate: $0.24
Last Quarter FQ4 2005 reported on 04/04/06 BMO
EPS Estimate: $0.19 ¦ EPS Actual: $0.27
04/04/06 Close: $17.13 Change($): $0.45 Change(%): 2.6%
04/05/06 Close: $17.00 Change($): ($0.13) Change(%): -0.8%

Big Companies Put Record Sums Into Buybacks