Tuesday 14 August 2018 by FIIG Research Company updates

Company updates - Avon, Bendigo, CenturyLink, Dean Foods, Hertz, IAMGOLD, Mallinckrodt and new factsheet

This week, Avon, Bendigo, CenturyLink, Dean Foods, Hertz, IAMGOLD, Mallinckrodt, new factsheet

Avon 2Q18 results – overall broadly stable outlook

Avon reported its 2Q results on 2 August 2018. Key points:

  • Quarterly total revenue decreased 3% to USD1.4bn compared to 2Q17 due to representative declines and an approximate 1% unfavourable impact from a Brazil truckers' strike which impacted the company’s product distribution.

  • Improved margins led to slightly higher adjusted EBITDA of USD108m (2Q17: USD106m), however increased working capital and taxes increased net debt from USD1.016bn at FYE17 to USD1.199bn. Net debt to EBITDA increased to 3.3x from 3.0x at FYE17.

  • Liquidity remains sound totalling USD920m including USD444m in cash and USD476m in undrawn credit lines.

View the full report here.

Bendigo annual results – on track to meet APRA’s 2020 targets

Bendigo and Adelaide Bank Ltd. released its FY18 results on 13 August 2018. Key points:

  • NPAT of AUD434.5m, up around 1.0% on pcp. Earnings benefited from an uplift in:

    • Credit growth up 4.2%

    • Margins, up 14bps, repricing on both deposits and loans.The margin for 2H18 margin was flat, the outlook for FY19 similar.  

  • Impaired loans, including loans 90 days past due, were up 8bps to 0.54%. Arrears within the residential mortgage book, which makes up more than 70% of BEN’s lending book, were flat at 0.50%. Credit losses unchanged at 12bps. Credit quality sound, overall.

  • Growth in capital was solid, with Common Equity Tier 1 (CET1) up 35bps to 8.62%.  Total capital was 12.85%. BEN’s CET1 remains at the lower end of peers, but is likely to be well placed to meet APRA’s ‘unquestionably strong’ requirement by 1 January, 2020. 

  • Credit fundamentals for the bank arrears performance, capital strength, and funding mix remain sound.

View the full report here.

Century Link annual results –management executes on acquisition integration

Century Link released its FY18 results on 14 August 2018. Key points:

  • Total pro forma revenue was slightly weaker at USD5.9bn (2Q17: USD6.0bn), however due to improved margins and realised synergies, adjusted EBITDA increased to USD2.3bn from USD2.2bn. EBITDA margins increased to 38.5%, up from 35.7%.

  • CenturyLink’s new management team is demonstrating solid execution since the Level 3 merger settled on 1 November 2017, with merger synergies way ahead of schedule.

View the full report here.

Dean Foods 2Q18 results – Facing margin pressure

Dean Foods reported its 2Q results on 8 August 2018. Key points:

  • Total revenues were USD1.95bn compared to USD1.92bn. Adjusted EBITDA was USD70m, compared to USD86m in the same period last year.

  • Dean Food continues to face cost pressure from rising freight, fuel, and resin costs, resulting in a 210bps decrease in gross margins. The product mix from retailers moving towards private label from its higher margin branded product also impacted margins.

  • Dean Food’s credit metrics remain sound. Net leverage was 2.67x, which is flat sequentially but up from 2.3x in 2Q17.

View the full report here.

Hertz 2Q18 results

Hertz released its 2Q results on 7 August 2018.  Key points:

  • Total revenues were USD2.4bn, a 7% increase versus the second quarter 2017. Adjusted EBITDA for the second quarter 2018 was USD93m, compared to USD35m in the same period last year.

  • The key for Hertz remains the stabilisation of its business and improved efficiency to enable it to compete in what is a largely commoditised market.

  • Operating metrics show the stabilisation in pricing and slightly improved utilisation rates in Hertz’s core US market. However we note that the prior comparative years were impacted by significant fleet management problems.

View the full report here.

IAMGOLD 2Q18 results – liquidity remains very strong

On 8 August 2018, IAMGOLD reported its quarterly results. The results were pretty solid, with cash balances remaining strong and a good outlook for the rest of the year.

Read the full report here.

Mallinckrodt 2Q18 results – headwinds remain

On 7 August 2018, Mallinckrodt reported its quarterly results. Key points were:

  • Sales up5.3% to USD631.7m. LTM Adjusted EBITDA was USD1.28bn, down 12% year on year.

  • The results reflected a smaller decline in sales of the company’s primary drug, Acthar than previously expected. The decline was offset by strength in Mallinckrodt’s other drug offerings Ofirmev, Therakos, and Inomax, up 13.1%, 8.7% and 4.4%, respectively.

  • Net debt to EBITDA increased to 5.2x compared to 4.1x in the pcp but improved from 5.4x in 1Q18.

Read the full report here.

New Factsheets

Here is a list of all new Factsheets available to wholesale investors only:

  • Nufarm Australia & Nufarm USD +5.75% Apr 2026 senior unsecured notes rated BB- by S&P and B1 by Moody’s. View Factsheet.

Please note yields are accurate as of 14 August 2018, subject to change. S&P ratings are shown.

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