Wednesday 02 August 2017 by FIIG Research Company updates

Company updates – Adani Abbot Point Terminal, American Axle, Ensco plc, Hertz and Transocean

This week, we provide a comprehensive research report for Adani Abbot Point Terminal, 2Q17 results for Ensco and American Axle and Hertz rescinded its redemption notice on the 2019 notes

Adani Abbot Point Terminal

We have provided a 2017 research report for Adani Abbot Point Terminal.

The research report is available here.External link - opens in a new window

American Axle & Manufacturing Holdings, Inc. - 2Q17 results

On 28 July 2017, American Axle & Manufacturing Holdings, Inc. (AAM) reported its second quarter 2017 results.

According to the company, its strategic actions drive record quarterly sales and business diversification. AAM's 2Q17 results also reflect the impact of the acquisition of Metaldyne Performance Group Inc. that was completed on 6 April 2017.

Key points:

  • 2Q17 sales increased to USD1.76bn as compared to USD1.03bn in 2Q16
  • Non General Motors company sales in 2Q17 increased to a record USD969.7m (55.2% of sales), as compared to USD333.9m (32.6% of sales) in 2Q16
  • Adjusted EBITDA was USD325.7m (18.5% of sales), as compared to USD164.8m (16.1% of sales) in 2Q16.
  • Adjusted free cash flow was USD141.6m as compared to USD105.0m for the second quarter of 2016.

The link to AAM’s results announcement is available here.External link - opens in a new window

Ensco plc – 2Q17 results

On 26 July 2017, Ensco plc reported its second quarter 2017 results.

Key points:

  • 2Q17 revenues were USD458m, which declined 35% compared to the year-ago period (excluding USD205m of early contract termination settlements received during 2Q16). The revenue decline was due to fewer rig operating days due to a decline in reported utilization to 56% (2Q16: 61%) and previously announced sales of rigs that operated a year ago.
  • Ensco reported a 2Q17 adjusted loss of USD30m, or USD0.10/share, coming in just ahead of the USD0.13/share consensus loss estimate
  • Management remains committed to the Atwood acquisition and expects the acquisition to close by end-3Q17.

The link to Ensco’s results announcement is available hereExternal link - opens in a new window

Hertz rescinded its redemption notice on the 2019 notes

On 28 July 2017, Hertz Corporation rescinded its notice of conditional full redemption of its USD 6.75% senior notes due 2019. The notice was “rescinded in its entirety because the conditions precedent set forth in such notice will not be satisfied on or prior to the redemption date set forth in such notice.”

Hertz, in its sole and absolute discretion, has the ability to rescind its notice of redemption in the event that such conditions precedents have not been so satisfied by 29 July 2017. However, the company did not provide any reasons to elaborate why the conditions precedent have not been satisfied.

The company’s parent company Hertz Global Holdings, Inc. (Hertz Global) has scheduled its 2Q17 earnings call on 8 August 2017. A leading independent third party research provider has stated that it is not clear whether Hertz will give more details ahead of its earnings call or even during its earnings call.

Since Hertz’s announcement on 28 July 2017, the stock price on its parent company Hertz Global has dropped 21% to USD13.67/share.

Hertz’s USD 7.625% 1 June 2022 senior second priority secured bond price fell 2% to 99.170 since the announcement last Friday.

The link to Hertz’s announcement is available here.External link - opens in a new window

Moody’s changes Transocean’s outlook to negative 

"The negative outlook reflects our concern that recovery of the offshore drilling market won't begin in earnest until at least 2019, which would lead to further deterioration in Transocean's cash flow and credit metrics…   …While Transocean enjoys excellent liquidity, its $3 billion unsecured revolving credit facility matures mid-2019, raising concerns about the size and structure of the company's revolver upon renegotiation.”

Moody’s full statement is available here.External link - opens in a new window

 

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