Archive for May, 2020

• Morning News: May 7, 2020
  Eddy Elfenbein, May 7th, 2020 at 7:08 am

  The Glut Drowning the Oil Market

  E.U. Is Facing Its Worst Recession Ever.

  Bank of England Projects Worst UK Economic Slump Since 1706

  China Says Exports Rose 3.5% in April, Crushing Expectations for a Decline of 15.7%

  Coronavirus Casts Deep Chill Over US-China Relations

  U.S. Unemployment Rolls Seen Swelling as Coronavirus Restrictions Bite

  Job Losses By Size of Company – Who Lost the Jobs

  Disney’s Still Shining Bright

  Will Gilead Price Its Coronavirus Drug For Public Good Or For Profit?

  Never Been More Bullish Even As Warren Buffett Dumps Airlines

  Sinclair Broadcast Group To Pay Record-Setting $48 Million FCC Fine

  If Norwegian Cruise Line Goes Down, Carnival and Royal Caribbean Will Pay The Price

  Software Company Sues U.S. to Avoid Repaying $750,000 PPP Loan

  Ben Carlson: What Happens When Distressed Markets Don’t Give You Distressed Prices?

  Michael Batnick: Animal Spirits: Whatever It Takes Squared & Off the Charts

  Joshua Brown: And Now…We Nest!

  Be sure to follow me on Twitter.

• Ansys Earned 83 Cents per Share
  Eddy Elfenbein, May 6th, 2020 at 4:46 pm

  Ansys (ANSS) reported Q1 earnings of 83 cents per share on revenue of $308.9 million.

  For Q2, Ansys expects earnings between $1.01 and $1.33 per share. For all of 2020, they see earnings between $5.61 and $6.23 per share. Wall Street had been expecting $1.43 for Q2 and $6.26 for the whole year.

  Ajei Gopal, Ansys President & CEO, stated, “I am very proud that the Ansys team has come together, despite working remotely, to close deals and to continue providing outstanding support to our customers. That effort, in the face of uncertain global economic conditions, has led to Ansys delivering financial results near the midpoint of our guidance. We have also continued to drive innovation across our multiphysics portfolio through organic product development seen in Ansys 2020 Release 1 as well as through acquisitions.

  Despite the market uncertainties, we believe that our strategy of making simulation pervasive across the product lifecycle remains more relevant than ever. That strategy accelerates customers’ key research and development initiatives – which are often less impacted by economic slowdowns – including emerging areas like electrification, autonomy, 5G, and the industrial internet of things. These companies understand the need for continued investment to maintain, or even build upon, their competitive advantage. So we will continue to focus on executing this strategy while prudently investing in growth opportunities that put us in a stronger position for the long term.”

• Danaher Earns $1.05 per Share
  Eddy Elfenbein, May 6th, 2020 at 4:29 pm

  Danaher (DHR) reported Q1 earnings of $1.05 per share. That beat by four cents per share.

  For the first quarter 2020, net earnings were $595.1 million, or $0.81 per diluted common share. Non-GAAP adjusted diluted net earnings per common share were $1.05.

  Revenues increased 3.0% year-over-year to $4.3 billion, with non-GAAP core revenue growth of 4.5%.

  Starting with the second quarter of 2020, the Company intends to present core revenue growth including Cytiva. For the second quarter 2020 the Company anticipates that non-GAAP core revenue growth including Cytiva will be in the range of approximately flat to down 10%.

  Thomas P. Joyce, Jr., President and Chief Executive Officer, stated, “We are pleased with our first quarter performance during such an unprecedented time. We delivered 4.5% core revenue growth driven by positive results in each of our three reporting segments, with particular strength in our Cepheid, Radiometer, Pall, and ChemTreat businesses. We were also excited to close our acquisition of the GE Biopharma business, now called Cytiva, on March 31.”

  Joyce continued, “We are incredibly proud of our team’s response to the challenges presented by the COVID-19 pandemic. We are providing much-needed diagnostic testing capabilities today and supporting our customers’ pursuit of new treatments and vaccines for the future. Looking ahead, we feel well-positioned to navigate through this uncertain environment. We believe that the combination of our strong portfolio, exceptional team, and disciplined execution driven by the Danaher Business System will continue to differentiate Danaher in 2020 and beyond.”

  The shares are down about 10% after hours.

• 20 Million Jobs Lost
  Eddy Elfenbein, May 6th, 2020 at 10:38 am

  The first Friday of each month is typically when the jobs report comes out. This month, it will actually be the second Friday since the first Friday was May 1.

  There are two key events ahead of the jobs report. On Wednesday, ADP, the private payroll company, releases its report. Of course, this is unofficial, but it gives some PR to the company.

  This morning, ADP said the U.S. economy lost 20,236,000 private sector jobs last month. That’s 24 times the previous record. In other words, we nearly averaged the previous monthly record each day.

  The second key event is the jobless claims report which comes out each Thursday. I’m expecting more bad news.

  Despite its poor earnings report, shares of Disney (DIS) are higher today. I suppose expectations were for less than expectations.

• Morning News: May 6, 2020
  Eddy Elfenbein, May 6th, 2020 at 7:03 am

  Deep Recession Is Projected for Europe, As Markets Waver

  Coronavirus Downturn Threatens to Break Up the Euro, EU Warns

  Trump Pivots to ‘Phase Two,’ Risking More Death to Save Economy

  Fed Policymakers See Slow, Uneven U.S. Recovery After Coronavirus Downturn

  Layoffs Start Turning From Temporary to Permanent Across America

  After A Terrible First Quarter, Executives Offer Some Hope

  U.S. Airlines Burn Through $10 Billion a Month as Traffic Plummets

  Disney Takes $1.4 Billion Coronavirus Hit, Sets Date to Reopen Shanghai Park

  A Wendy’s With No Burgers as Meat Production Is Hit

  Samsung Heir Apologizes for Corruption and Union-Busting Scandals

  Nick Maggiulli: Why You Should Invest in Stocks

  Ben Carlson: Going Down a Rabbit Hole of Companies Impacted by This Crisis

  Michael Batnick: More Is Less

  Jeff Carter: Misallocation of Labor

  Joshua Brown: Unlimited Economic Stimulus & I Did the Barron’s Financial Advisor Podcast

  Be sure to follow me on Twitter.

• RPM Expects Q4 Sales to be in the Range of Previous Guidance
  Eddy Elfenbein, May 5th, 2020 at 5:28 pm

  After the bell, RPM International (RPM) released a statement saying that sales for their fiscal Q4, which ends at the end of this month, should be within the range they previously gave us.

  This is from the press release:

  RPM International Inc. today announced that it expects its sales for its fiscal fourth quarter ending May 31, 2020 to be within the range of its guidance the company provided on April 8, 2020.

  At that time, the company said that it anticipated sales for the fiscal fourth quarter to be down 10% to 15%. The company noted today that the positive momentum of consumer take away with the start of the spring season should result in sales for its Consumer Group being flat to slightly up, while the company’s more internationally exposed Construction Products and Performance Coatings Groups expect double-digit sales declines in the fourth quarter principally due to the impact of the COVID-19 outbreak which resulted in jurisdictional shutdowns, factory closures and workers remaining offsite due to stay-at-home orders. The company’s Specialty Products Group will also see a decline in sales partially offset by incremental demand for its cleaning and sanitizing products.

  “RPM’s top priorities include protecting the health and well-being of our associates and their family members, supporting our local communities to control the spread of the virus, and maintaining the continuity and success of our business operations,” said Frank C. Sullivan, RPM chairman and chief executive officer. “While the COVID-19 outbreak continues globally, our supply chain and business operations remain strong, our March operating results are solid, and we continue to meet the changing needs of our customers in a timely manner during this unprecedented period,” stated Sullivan. “I want to thank all of our associates for their hard work and dedication as they provide superior service to our customers as we navigate through these challenging times together.”

  The Q4 report will probably come out in mid-July. The shares are up 55% from their March low.

• Disney Earns 60 Cents per Share
  Eddy Elfenbein, May 5th, 2020 at 4:10 pm

  Disney (DIS) reported Q1 earnings of 60 cents per share. That was well below expectations of 88 cents per share. The company will also forego its semi-annual dividend payments.

  The Walt Disney Company today reported earnings for its second fiscal quarter ended March 28, 2020. Diluted earnings per share (EPS) from continuing operations for the quarter decreased 93% to $0.26 from $3.53 in the prior-year quarter. Excluding certain items affecting comparability(1), diluted EPS for the quarter decreased 63% to $0.60 from $1.61 in the prior-year quarter. EPS from continuing operations for the six months ended March 28, 2020 decreased 73% to $1.44 from $5.42 in the prior-year period. Excluding certain items affecting comparability, EPS for the six months decreased 38% to $2.14 from $3.45 in the prior-year period. Results in the quarter and six months ended March 28, 2020 were adversely impacted by the novel coronavirus (“COVID-19”) pandemic.

  Disney estimates a revenue loss of $1 billion at its parks and a total hit of $1.4 billion. Disney’s last dividend was for 88 cents per share.

• FactSet Raises Dividend
  Eddy Elfenbein, May 5th, 2020 at 10:06 am

  Good news from FactSet (FDS). The company has increased its quarterly dividend from 72 to 77 cents per share. This is the 15th consecutive year the company has raised its dividend.

  The dividend will be paid on June 18 to shareholders of record on May 29.

• Morning News: May 5, 2020
  Eddy Elfenbein, May 5th, 2020 at 7:11 am

  German Court Says the European Central Bank Now Needs to Prove Its Bond Buying is Needed

  Oil Spurt Lifts Stocks Out Of Three-Day Losing Streak

  Wall Street’s Elite Bond Club Is Cracking at the Worst Possible Time

  Alphabet’s Verily Struggles to Live Up to Trump’s Hype on Covid Testing

  U.S. Death Toll Could Double as More States Reopen

  Facebook’s Oculus Developing Smaller, Lighter Quest VR Headset

  Victoria’s Secret Sale to Private Equity Firm Falls Apart

  This Drug May Cause Birth Defects. Japan’s Pushing It for Coronavirus.

  Microsoft to Invest $1 Billion in Polish Cloud Project

  Hugo Boss Expects 50% Sales Drop Next Quarter as Crisis Impact Worsens

  The Twitter Response to J.Crew Filing For Bankruptcy Has Been Savage — But It Has A Point

  Roger Nusbaum: Did The World In Fact Change?

  Jeff Miller: Are You Ready for Some High-Stakes Gambling?

  Howard Lindzon: Soul In The Game and Who Are You Trying To Beat?

  Joshua Brown: This Version of Warren Buffett

  Be sure to follow me on Twitter.

• Trex Earned 73 Cents per Share
  Eddy Elfenbein, May 4th, 2020 at 4:51 pm

  Trex (TREX) just reported Q1 earnings of 73 cents per share. That easily beat Wall Street’s forecast of 61 cents per share. Quarterly sales rose 12% to $200 million. Gross margin rose 620 basis points to 44.8%. For last year’s Q1, Trex made 54 cents per share.

  “First quarter 2020 results reflected continued robust demand for Trex residential decking and railing products. We reported strong year-over-year and sequential increases in gross margin due to continuing production improvements and the non-recurrence of prior year new product startup expenses. Additionally, as Trex Residential’s gross margin returned to more normalized levels, Trex Commercial’s gross margin improved considerably, due primarily to the roll-off of prior year lower margin contracts, favorable mix and improved execution.

  “Production efficiencies, stable raw material costs and spending controls drove strong operating leverage, resulting in EBITDA growth of 39% and a 35% increase in earnings per diluted share.

  “We took immediate measures early in March to respond to the COVID-19 health crisis and prioritize the safety and well-being of our people and the communities in which we operate. Thanks to the efforts of all our employees, we immediately implemented strict sanitary and physical distancing procedures that adhered to or exceeded CDC guidelines. We also implemented emergency response plans at each manufacturing location and have been able to continue production in a safe and effective manner,” said Bryan Fairbanks, President and Chief Executive Officer.

  Trex said it expects Q2 sales between $180 million and $190 million, although the company withdrew its full-year guidance. They’ve also stopped share repurchases.

  At this time, we have no significant sourcing issues and maintain inventories of materials sourced from diversified geographies and vendors, allowing us to better tolerate short-term supply chain disruptions, should they occur. Production and sales volumes for April were in-line with our internal plans, but for May we are experiencing lower demand from areas where construction has been deemed non-essential and channel partners are closed.

  The shares rose 8.73% today to close at $99.91. That’s a two-month high.