Tuesday 06 March 2018 by Zoe Lai Week in review

Company updates – USD traded bonds

While Research doesn’t cover USD companies, we provide a brief results summary for companies where we have the largest USD bond holdings

Companies include – Ausdrill, Avon, Barminco, BHP Billiton, Dean Foods, Ensco, Frontier, Hertz, JC Penney, McDermott, Newcrest, Noble, QBE, TransAlta, Transocean

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Please note we have provided a list of all USD bonds available and pricing, yields and credit ratings from the companies below at the end of the note.

Ausdrill half year results

On 26 February 2018, Ausdrill released its interim financial report for the half year ended 31 December 2017.

Key points:

  • Sales revenue of USD439.7m, up 17.9%
  • Profit from continuing operations of USD35.3m, up 163.5%
  • EBITDA up 40.6% to USD92.2m
  • Operating cash flow down 31.4% to USD40.1m
  • More than USD400m in contract extensions and new work won since 30 June 2017
  • Cash reserves of USD218.6m and improved gearing of 17.5% provides strong balance sheet and flexibility to fund growth
  • On target to achieve earnings guidance of 40% uplift for FY18
  • Operating cash flow impacted by increase in working capital for three new project start ups

For more information, visit the Ausdrill investor relations page.

Read our Ausdrill research compendium report.


Avon International Operations Inc.

On 15 February 2018, Avon released its fourth quarter results for 2017.

Key points:

  • Total revenue down 2%, excluding Brazil, top 15 markets would have been flat
  • Nearly double digit margin driven by gross margin and cost savings. Over USD250m in cost savings for the full year more than offset pressure from inflation, field and selling, and distribution
  • Pricing is not keeping pace with inflation in key markets

Source: Avon Products Inc., company reports

  • Adjusted income tax provision at USD51m, up USD7m from FY16
  • Cash flow from operating activities at USD271m, up USD143m from FY16
  • The company will repay the remaining USD238m left of the 2019 notes and retain the financial flexibility to fund investments

For more information, visit the Avon investor relations page.


Barminco half year results

Barminco released its results presentation for the half year ended December 2017.

Key points:

  • Financial performance up on quarter one delivering strong first half results
  • Revenue increased from AUD292m in 1H16 to AUD282.4m
  • Costs decreased from AUD239m in 1H16 to AUD228.3m
  • Trading EBITDA up 12.2% to AUD54.1m
  • Continued excellent safety record
  • All contracts performing well
  • Nova Bollinger contract extended
  • Rampura Agucha contract extended
  • AUMS continued solid performance

For more information, visit the Barminco investor relations page


BHP Billiton half year results

On 20 February 2018, BHP Billiton released its results presentation for the half year ended 31 December 2017.

Key points:

  • Free cash flow of USD4.9bn
  • 6% volume growth expected in FY18
  • USD2bn productivity gains targeted over two years to end FY19
  • Net debt of USD15.4bn, within the USD10-15bn range for FY18

Financial performance:

Source: BHP Billiton, company reports

For more information, visit the BHP investor centre.


Dean Foods full year results

On 26 February 2018, Dean Foods announced its full year 2017 results.

Key points:

  • Adjusted EBITDA of USD87.3m, down from USD111.95m in FY16
  • Total outstanding debt was approximately USD902.4m at 31 December 2017, net of USD16.5m cash on hand
  • Net cash provided by operating activities at USD144.8m, down from USD257.4m in FY16
  • Free cash flow provided by continuing operations of USD38.07m, down from USD112.77m in FY16
  • Adjusted earnings in line with guidance; excludes tax reform benefit of USD44m
  • Executing commercial agenda of strategic plan to win in private label and build and buy strong brands
  • Aggressive approach to driving operational excellence through an enterprise wide cost productivity plan targeting an incremental USD150m minimum annual run rate savings by 2020; in advanced stages of design and initial execution across all areas of the company
  • Improving capabilities through investments in people, technology and infrastructure

For more information, visit the Dean Foods investor relations page.




Ensco plc full year results

On 26 February 2018, Ensco released its full year 2017 results.

Key points:

  • Adjusted EBITDA of USD92.6m, down from USD164.1m in FY16
  • Income loss from continuing operations of USD208.5m, compared to USD30.6m in FY16
  • Operating income of USD253.4m, up from USD80.7m in FY16
  • Total debt of USD5.06bn, up from USD4.75bn in FY16
  • Net debt to capital at 30.9%, up from 30.7% in FY16
  • USD2.8bn of contracted revenue backlog excluding bonus opportunities
  • USD2.9bn of liquidity
    • USD0.9bn of cash and short term investments
    • USD2.0bn available under the company’s revolving credit facility
  • USD4.8bn of long term debt
  • USD49m of transaction costs related to the Atwood acquisition in 4Q17, of which USD42m is included in general and administrative expense and USD7m in contract drilling expense
  • USD19m of tax expense in 4Q17 tax provision primarily related to recent changes in US tax legislation
  • USD7m of discrete tax expense in 4Q16 tax provision

For more information, visit the Ensco investor relations page.


Frontier Communications full year results

On 27 February 2018, Frontier released its full year 2017 results.

Key points:

  • Total revenue of USD2.22bn
  • Consumer customer churn improved to 1.98% from 2.08% in 3Q17, driven by both CTF FiOS ® and Legacy
  • Net loss of USD1.03bn, driven by goodwill impairment, partially offset by tax benefit
  • Adjusted EBITDA of USD919m, in line with guidance range
  • Purchased USD110m principal amount of senior unsecured notes
  • Board of Directors suspended the quarterly cash dividend on the company’s common stock

For more information, visit the Frontier investor relations page




Hertz full year results

On 28 February 2018, Hertz released its full year 2017 results.

Key points for consolidated US and international car rental:

  • Worldwide revenue increased 4% in 4Q17
  • Total revenues at USD2.09bn, up from USD2bn in FY16
  • Total expenses of USD2.27bn, down from USD2.47bn in FY16
  • Net income in 4Q17 of USD616m, including a one time benefit of USD679m related to US tax reform
  • Net benefit of USD679m in 4Q17 from the remeasured valuation of net deferred tax liabilities
  • Adjusted corporate EBITDA increased to USD21m from USD12m in FY16
  • Absolute sales through highest return retail channel grew 6% in 4Q17
  • Vehicle utilization was 81% compared to 78% in 4Q16
  • Core rental fleet decreased 4% year over year; ride hailing fleet grew to 22,000 vehicles as of year end

For more information, visit the Hertz financials page.



 

JC Penney full year results

On 2 March 2018, JC Penney released its fourth quarter 2017 earnings conference call presentation.

Key points:

  • Adjusted EBITDA of USD972m, down USD37m from FY16
  • Retired over USD600m in outstanding debt
  • Amended and extended USD2.35bn senior secure asset based revolving credit facility with extended maturity and improved pricing terms
  • Received credit rating upgrade from Standard & Poor’s to B+

For more information, visit the JC Penney investors page.




McDermott International full year results

On 21 February 2017, McDermott reported its full year 2017 financial and operational results.

Key points:

  • Revenue of USD718.1m, up from USD641.8m in FY16
  • Operating income of USD53.9m, down from USD6.3m in FY16
  • Cash provided by operating activities at USD300,000, down from USD52.6m in FY16
  • Exceptional order intake of USD2.2bn in 4Q17 in backlog of USD3.9bn coupled with significant increase in revenue opportunity pipeline
  • The company’s “One McDermott Way” approach continues to drive excellent operational performance leading to over 60% adjusted operating income increase for FY17
  • Strong balance sheet with cash of USD408m and low net debt; total current liabilities of USD706.93m, down from USD709.34m
  • Long term debt of USD512.71m, down from USD704.39
  • 2018 guidance reflects continued strength of the business ahead of proposed combination with Chicago Bridge & Iron Company

For more information, visit the McDermott investor relations page.




Newcrest half year results

On 15 February 2018, Newcrest released its 2017/18 half year financial results presentation.

Key points:

  • FY17 EBITDA of USD624m, down from USD783m in FY16
  • Cash flow from operating activities at USD453m, down from USd601m from FY16
  • Net debt at USD1.44bn, down from USD1.5bn in FY16
  • Gold production of 1.14m ounces at a group all in sustaining cost of USD860 per ounce
  • Free cash flow of USD134m enabling a 4% reduction in net debt to USD1.4bn
  • Net debt reduced by USD63m
  • Within all four financial policy metrics
  • On track to achieve guidance in productions, costs and capital expenditure

For more information, visit the Newcrest investor relations page.


Noble full year results

On 21 February 2018, Noble Corporation reported its full year 2017 results.

Key points:

  • Operating revenues at USD329m, down from USD410m in FY16
  • Total operating costs and expenses of USD439m down from USD1.79bn in FY16
  • Strong fleet performance and record safety results
  • Contract backlog sustained at approximately USD3bn
  • New revolving credit facility extended to 2023
  • Liquidity of USD2.5bn, including cash of USD663m
  • Completed issuance of USD750m of senior unsecured guaranteed notes
  • Further management of debt maturities following recent tender offer

For more information, visit the Noble investor relations page.


 

QBE Insurance full year results

On 26 February 2018, QBE Insurance announced its full year 2017 results.

Key points:

  • Statutory net loss after tax of USD1,249m, up from USD844m in FY16
  • Statutory result includes the non cash write down of USD700m of goodwill and USD230m of deferred tax asset in North American operations
  • After tax loss on a cash basis of USD258m
  • Adjusted combined operating ratio of 104.1%, up from 93.7% in FY16 that is consistent with the “around 104%” estimate released 23 January 2018
  • Net earned premium up 7%, assisted by reinsurance cost savings
  • Positive prior accident year claims development of USD37m
  • Probability of adequacy of outstanding claims strengthened to 90.0%, up from 89.5% in FY16
  • Improved expense ratio of 15.7%, down from 16.5% in FY16
  • Net investment return for the year of 3.2%, up from 2.9% in FY16
  • Debt to equity of 40.8%, up from 33.8% in FY16 and above the company’s 25% to 35% benchmark range. This was impacted by non cash write down of North American Operations’ goodwill and deferred tax asset
  • Cash remittances from operating divisions broadly stable at USD1.02bn, down from 1.1bn in FY16

For more information, visit the QBE investor relations page.



TransAlta full year results

On 2 March 2018, TransAlta Corporation reported its full year 2017 results.

Key points:

  • Free cash flow totalled USD328m, up USD72m from FY16
  • FFO was USD804m for 2017, up USD70m from FY16
  • Total net debt was approximately USD3.4bn, down more than USD500m from the beginning of the year
  • Liquidity available at the end of the year remains at a similar level compared to last year following the payment received in November from FMG for the sale of the Solomon Power Station
  • Net loss attributable to common shareholders was USD190m compared to net earnings of USD117m in 2016. Earnings in 2017 was negatively impacted by lower comparable EBITDA of USD82m, as well as the reduction of the US tax rate announced in December (USD105m)

For more information, visit the TransAlta investor relations page.





Transocean full year results

On 20 February 2018, Transocean reported its full year 2017 results.

Key points:

  • Contract drilling revenues were USD589m, compared with USD699m in the third quarter of 2017
  • Other revenues were USD40m, compared with USD109m in the previous quarter
  • Revenue efficiency was 92.4%, compared with 97.1% in the prior quarter
  • Operating and maintenance expense was USD389m, compared with USD323m in the previous quarter
  • Net loss attributable to controlling interest was USD111m, compared with net loss attributable to controlling interest of USD1.42bn in the third quarter of 2017
  • Adjusted net loss was USD93m, excluding USD18m of net unfavourable items. This compares with adjusted net income of USD64m in the prior quarter, excluding USD1.48bn of net unfavourable items primarily related to the retirement of six floaters
  • Cash flows from operating activities were USD257m, down from USD384m in the prior quarter
  • Contract backlog was USD12.8bn as of the February 2018 Fleet Status Report
For more information, visit the Transocean investor relations page.

Summary foreign currency bonds from the companies listed above



Note: The bonds listed are available to wholesale clients only. This is not a complete list of all USD bonds tradeable at FIIG. For more information on the bonds provided in this update or other USD bonds, please contact your FIIG relationship manager.
*Prices accurate as at 5 March 2018, subject to change
Source: FIIG Securities, Bloomberg


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