Another busy week of earnings. Here are a few quotes that stood out to me during this week’s conference calls – major topic; rising prices and costs just about everywhere:
Price Increases and Rising Costs:
Watts water technologies – WTS:
“Regarding commodities, we’ve addressed the latest spike in copper by announcing a mid-single digit price increase in the Americas, that goes into effect in Q4. We’ve seen a number of our competitors who are also dealing with higher input costs announced price increases as well.”
American Homes 4 Rent – AMH:
“we maintained strong average occupancy of 95% for the quarter, ongoing rental rates by 4.7% and 3.5% on new and renewal leases, respectively. That’s translated into an overall blended rental rate increase of 4.0%.”
Genco Shipping – GNK:
“After beginning the quarter at under 900 points, the BDI rose to over 1,500 by the end of September, representing the first time crossing this threshold since March of 2014.”
Southwest Airlines – LUV:
“Excluding fuel, profit sharing and special items, our third quarter unit cost increased 3.3% year-over-year”
American Airlines – AAL:
“Total GAAP operating expenses for the third quarter were $9.6 billion, up 5.3% versus the same period last year. This increase was due primarily to a 13.3% increase in consolidated fuel expense and higher salaries and benefits”
Global Ship Lease – GSL:
“The estimated scrap value of the fleet… is $151 million. The broker assessed charter free value in gray is $263 million, which incidentally is up 13% on the equivalent value in June, just 3 months previously, which demonstrates how the market has improved. “
Packaging Corp of America – PKG:
“In our Paper segment, we’ve started implementing our recently announced price increases, but expect seasonally lower volumes and a less rich sales mix. While recycled fiber prices should move lower, higher wood and energy costs, along with higher prices for certain key chemicals and higher freight costs are also expected.”
Eagle Bulk Shipping – EGLE:
“For the third quarter, the gross BSI averaged approximately $9,200 per day. This is up 7% quarter-on-quarter and 30% year-on-year. And as compared to the historical low reached during the first quarter of 2016, the BSI is up an impressive 142%”
Next topic, Shipping Industry is Strengthening After Years of Hard Times:
Global Ship Lease – GSL:
“the charter market has strengthened in recent months after a sustained low for most of the last several years. “
“a little over 70% of global containerized trade volumes were carried on the non-main lane, intermediate and inter-regional trades, of which the largest is Intra-Asia. As we should demonstrate later, these are the trades served primarily by midsize and smaller ships. They’re also the trades that have tended to show a robust growth. “
“We believe industry dynamics are most attractive from midsize and smaller ships”
Genco Shipping – GNK:
“During the third quarter, the drybulk market continue to come into balance, further strengthening as the quarter progressed. Demand for seaborne iron ore, coal and minor bulk cargoes remained firm”
“we have expanded our commercial footprint by establishing a Singapore office. We are excited by the prospect of having an active profile in the Far East market, which will allow Genco to better focus on the employment of our Capesize vessels and backhaul trades on the minor bulk fleet.”
Not much new supply in terms of ships is coming to market anytime soon:
“On the newbuilding front, 172 newbuildings have been contracted to date. Despite these orders, the order book as a percentage of the fleet is still manageable at 8.2%, close to a 15-year low.”
Lastly, random – but I thought this was interesting:
“With regard to India, coal power plant stockpiles have fallen to three-year lows, representing less than a week of demand. Coal India has not seen large growth rates in domestic production to cover the shortage, which should help support coal shipments in the near-term as supply remains tight.”
Also of Note: Genco notes an “Atlantic premium”, prices are higher for Atlantic routes vs. Pacific:
“our decision to reallocate freight exposure through a more balanced Atlantic versus Pacific split has enabled Genco to capture earnings premiums offered by the Atlantic market, as the drybulk industry continues to recover.”
Eagle Bulk Shipping – EGLE:
“As of today, approximately 64% of our available base for the fourth quarter are fixed at a TCE of $10,176 per day, representing an increase of 18% quarter-on-quarter.”
“a major contributor to increase in grain trade has been China’s continued increased demand for soybeans, which is expected to total approximately 95 million metric tons for 2017, an increase of over 13%.”
“Russia’s wheat exports are expected to increase by 16% to 32 million metric tons.”
On Energy – Clean Energy Growing
Alliant Energy – LNT:
“Our updated capital expenditure plan includes 1,200 megawatts of wind energy.”
“Approximately one half of our $11.9 billion, 10-year capital plan is for enhancing our electric and gas distribution systems…”
Capstone Turbine – CPST:
“We shipped 11.3 megawatts during the second quarter of fiscal 2018 compared with 8.2 megawatts in last year’s second quarter, an increase of 3.1 megawatts or 38%.”
Bond Issuance Remains Very Strong
Moody’s – MCO
Foreign bond issuance is skyrocketing:
“U.S. revenue of $588 million was up 8%, non-U.S. revenue of $475 million was up 28% and represented 45% of Moody’s total revenue.”
Leveraged Loans:
“Leveraged loans, this is the start of the show, $550 billion so far this year, up 40% is expected for the full year 2017. Leveraged loan market conditions are very strong with the benign outlook on the prospect for rising rates, heavy refinancing and re-pricing activity as issuers capitalize on strong investor demand and CLO [Collateralized Loan Obligation] issuance is at $90 billion, which is up 80% year-to-date. “
Last But Not Least -Without Comment
Rangold – GOLD:
“The short term as a net afflicts not only the miners, but also the market and the stakeholders has led to a situation where value has not been created but destroyed by our gold mining industry.”
What did I miss? Comment below:
