Arch Coal (ARCH) 18Q1 Update

2018 First Quarter Results. On April 26, Arch Coal reported disappointing 2018 first quarter results. Adjusted EPS for the quarter was $2.95, up from $2.82 last year, but behind the consensus forecast of $4.22.  Revenues declined 4.3% to $575.3 million, $20.4 million below consensus. Total tons sold declined 7.8% to 23.7 million. All three of Arch’s business segments – the Powder River Basin, Metallurgical and Other Thermal suffered volume declines. Continue reading

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An Update on Senior Housing Properties Trust (SNH)

Pressure from Declining Occupancy; But SNH Has Sufficient Financial Flexibility to Cope for Next Two Years or More. Continue reading

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Consolidated Water 18Q1 Update

CWCO reported first quarter net earnings attributable to stockholders $2.1 million or $0.14 cents per diluted share.  That compares with 17Q1 net income of $2.6 million or $0.18 per diluted share.  Revenues declined 2.2% to $15.7 million. Continue reading

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18Q1 Housing Update

  • The rate of growth in housing production decelerated modestly in 18Q1, but growth in new home sales remained solid.
  • In 18Q1 conference calls, builders said that the housing market remains strong, with gains in jobs and wages and limited inventories more than offsetting the negative impact of rising prices and mortgage rates.
  • Average unit deliveries for nine publicly-traded builders increased 9.9% and net new orders 12.9% in 18Q1, helped in part by acquisitions.
  • Homebuilding stocks fell sharply after peaking in January. Year-to-date, (thru 5/4), they are down 8.7% on average.
  • Despite a sharp run-up in since February 2016, the average builder’s shares are valued at 10.3 times anticipated 2018 earnings and 9.2 times projected 2019 earnings.
  • Assuming no change in forward multiples, homebuilder shares can outperform the broader market if the builders can achieve forward earnings targets.

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General Electric First Quarter Results

  • GAAP loss of $1.18 billion or $0.14 per share vs. a 17Q1 loss of $0.12 billion or $0.01 per share.
  • This quarter’s loss included a $1.55 billion ($0.17 per share) charge representing the estimated cost of settling potential FIRREA charges with the U.S. Dept. of Justice.
  • GE’s 18Q1 adjusted industrial free cash flow was negative $1.68 billion, better than 17Q1’s negative $2.75 billion.
  • Consolidated revenues increased 7% to $28.7 billion, due to the acquisition of Baker Hughes. Industrial organic revenues declined 4% to $23.8 billion.
  • Segment profit fell 11% to $2.46 billion, due to declines at Oil & Gas, Power and GE Capital. However, after-tax earnings from continuing operations improved from $0.12 billion to $0.37 billion, due to lower corporate items and eliminations.
  • CEO John Flannery said that GE made a step forward in executing on its 2018 plan, with signs of progress in its performance. The company is on track to exceed its 2018 cost reduction goal of $2 billion and is proceeding with its planned $20 billion of dispositions for 2018 and 2019.
  • Under Mr. Flannery, GE may transition away from the conglomerate model toward becoming a federation of publicly-traded companies.

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Update on General Electric (GE)

On Friday (4/13), General Electric (GE) filed an 8-K that quantified the impact of adopting new accounting standards (and certain voluntary changes in accounting policies) on its previously reported results for 2016 and 2017.  In total, these changes reduce previously reported 2017 GAAP earnings by $2.79 billion or $0.32 per share and 2016 GAAP earnings by $1.23 billion or $0.15 per share.  The changes also reduce year-end 2017 assets by $8.7 billion and shareholders’ equity by $8.5 billion or $0.98 per share. Continue reading

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BXG 2017 Fourth Quarter Update

On March 6, Bluegreen Vacations (BXG) reported 2017 fourth quarter net earnings attributable to shareholders of $66.5 million or $0.93 per diluted share, compared with $25.6 million or $0.36 per share in the prior year quarter. Continue reading

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A Possible Early Sign of a Market Rebound

Last week, stocks fell sharply. The S&P 500 ended the week down 5.16% in price. The Lark Research Homebuilder Stock Price Index fell 6.02%, underperforming the broader market. Continue reading

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Up Big Since the IPO, Bluegreen Shares Still Have Upside Potential

Bluegreen Vacations (BXG) completed its IPO in November 2017. The company had been wholly-owned by BBX Capital (BBX). In the IPO, Bluegreen offered a total of 7.47 million shares (including, with the overallotment option, 3.74 million shares owned by BBX Capital) at a price of $14 share. Net of underwriting discounts, commissions and other expenses, the offering raised an estimated $95.8 million, of which $47.2 million was received by Bluegreen, the rest by BBX. On a pro forma basis (as of Sept. 30, 2017), the offering raised Bluegreen’s cash position to $171 million and its equity book value to $315.7 million. Bluegreen intends to use the proceeds for general corporate purposes, including increasing working capital, making acquisitions and developing new properties. Continue reading

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GE Preannounces Insurance-Related and Other Charges

GE announced this morning that it will take an after-tax charge of $6.2 billion in the 2017 fourth quarter against the value of GE Capital’s run-off insurance portfolio, North American Life & Health (NALH).  In addition, GE Capital will make $15 billion of statutory reserve contributions over the next seven years, including $3 billion in February and $2 billion annually from 2019 to 2024. Continue reading

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