Archive for November, 2020

• Earnings from Middleby and Becton, Dickinson
  Eddy Elfenbein, November 5th, 2020 at 9:14 am

  Middleby (MIDD) reported earnings of $1.34 per share. Wall Street had been expecting $1.04 per share.

  The Middleby Corporation (NASDAQ: MIDD), a leading worldwide manufacturer of equipment for the commercial foodservice, food processing, and residential kitchen industries, today reported net earnings for the 2020 third quarter of $60.5 million or $1.10 diluted earnings per share on net sales of $634.5 million. Adjusted net earnings were $73.9 million or $1.34 adjusted diluted earnings per share. A full reconciliation between GAAP and non-GAAP measures are provided at the end of this press release.

  “While the COVID-19 pandemic continues to have a major impact on our business, the quick and decisive actions we took earlier this year have strengthened our business and are reflected in the strong financial performance in the third quarter. We delivered record cash flows, improved profitability, and enhanced our capital structure for the long-term. While we have implemented the necessary adjustments for uncertain business conditions, we continue to invest in strategic technology and sales initiatives. Most importantly, we remain dedicated to supporting our customers, while keeping the safety and protection of our employees as our top priority,” said Tim FitzGerald, CEO of The Middleby Corporation.

  Becton, Dickinson (BDX), a leading global medical technology company, today reported quarterly revenues of $4.784 billion for the fourth fiscal quarter ended September 30, 2020. This represents an increase of 4.4% over the prior-year period on both a reported and currency-neutral basis.

  “I’m extremely proud of the team for their execution this quarter, as we delivered sequential improvement across each of our segments and successfully launched our Veritor SARS-CoV-2 assay. Collectively, we drove mid-single-digit revenue growth, building on the strength of our COVID-19 diagnostics revenues to overcome headwinds from both COVID-19 and Alaris,” said Tom Polen, CEO and president of BD. “Looking to fiscal 2021, BD remains focused on partnering with governments, health care systems, and health care professionals to navigate the COVID-19 pandemic, ensure access to rapid diagnostics and enable care for patients around the world. We are aligned on our priorities and steadfast in our commitments, including completing our Alaris 510(k) submission, investing in innovation and strategic growth initiatives, simplifying our processes and empowering our organization.”

  Fiscal Fourth Quarter 2020 Operating Results

  As reported, diluted earnings per share for the fiscal fourth quarter were $0.36, compared with $0.45 in the prior-year period, which represents a decrease of 20.0%. Adjusted diluted earnings per share were $2.79, compared with $3.31 in the prior-year period, which represents a decrease of 15.7%, or 15.1% on a currency-neutral basis.

• Morning News: November 5, 2020
  Eddy Elfenbein, November 5th, 2020 at 7:03 am

  Stock Futures Jump As Potential Washington Gridlock Signals Less Regulatory Risk

  As ‘Blue Wave’ Chances Crash, Wall St. Warms to Divided Government

  Federal Reserve Meets Amid Major Uncertainties

  No Matter Who Wins The Election, America Will Still Be In A Jobs Crisis

  Election Uncertainty Taking Toll On Online Shopping

  How Billionaire Jack Ma Fell to Earth And Took Ant’s Mega IPO With Him

  Apple Faces Shortages in Power Chips for iPhone 12

  Airbnb to Make IPO Filing Next Week, Braving COVID-19 Surge

  A Small City Comeback, Interrupted

  How VW’s Diesel Settlement Is Changing Fleets, From Schools to Seaports

  ArcelorMittal Beats Profit Expectations After Lockdown Low

  Ben Carlson: Trading the Election

  Michael Batnick: Even If We Knew

  Howard Lindzon: Uber, Lyft, Weed Win Big….Over in China The Government Reminds Everyone Who Is In Charge

  Joshua Brown: Status Quo & President Biden’s Non-Acceptance Acceptance Speech

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• Ansys Earns $1.36 per Share
  Eddy Elfenbein, November 4th, 2020 at 4:31 pm

  After the close, Ansys (ANSS) reported Q3 earnings of $1.36 per share.

  Here are some highlights:

  GAAP revenue of $367.0 million and non-GAAP revenue of $369.1 million

  GAAP diluted earnings per share of $0.87 and non-GAAP diluted earnings per share of $1.36

  GAAP operating profit margin of 24.5% and non-GAAP operating profit margin of 39.8%

  Operating cash flows of $94.5 million

  Deferred revenue and backlog of $879.9 million at September 30, 2020

  ANSYS today reported third quarter 2020 GAAP and non-GAAP revenue growth of 7% in reported currency, or 5% in constant currency, when compared to the third quarter of 2019. For the third quarter of 2020, the Company reported earnings per share of $0.87 and $1.36 on a GAAP and non-GAAP basis, respectively, compared to $1.04 and $1.42 on a GAAP and non-GAAP basis, respectively, for the third quarter of 2019.

  “Ansys delivered a strong third quarter in which we overachieved on both earnings and operating margin. While all of our major geographies showed growth, Asia-Pacific was particularly strong, with Japan and South Korea growing by double digits. We also saw double-digit growth in revenue coming from our indirect channel. With corporate initiatives around eco-friendly aircraft engines, Space 2.0 and national defense, we saw robust spending in the aerospace and defense sector during the quarter. We also recently signed a definitive agreement to acquire Analytical Graphics, Inc. (AGI), a leader in mission simulation and analysis, which will strengthen our simulation leadership within the key aerospace and defense sector. Finally, during Q3, our ESG initiatives focused on environmental sustainability, including our own carbon footprint as well as the efficiencies that our solutions are enabling for our customers,” said Ajei Gopal, Ansys president and CEO.

  Maria Shields, Ansys CFO, stated, “Our solid Q3 financial performance reflects the strength of our core business and the continued dedication and focused execution of the Ansys employees and our partner ecosystem. Despite the challenging circumstances created by the prolonged pandemic, we delivered strong revenue performance, which drove earnings and operating margins. We reported a record third quarter balance of deferred revenue and backlog of $880 million, an increase of 35% over the third quarter of 2019. Additional financial highlights reflecting the resiliency of our business model included ACV growth, which continues to be comprised of a high level of recurring sources at 78% for the quarter and 81% for the first nine months of the year. The combination of our high level of recurring revenue sources, strong financial position and operating discipline positions us well to continue to prudently invest in the business for the long-term. This includes the pending acquisition of AGI, which demonstrates the continued execution of our growth strategy.”

  Management’s 2020 Financial Outlook

  The Company’s fourth quarter and fiscal year 2020 revenue and diluted earnings per share guidance is provided below. The Company is also providing its fiscal year 2020 guidance for ACV and operating cash flows. The revenue and diluted earnings per share guidance is provided on both a GAAP and non-GAAP basis. Non-GAAP financial measures exclude the income statement effects of acquisition adjustments to deferred revenue, stock-based compensation, amortization of acquired intangible assets and acquisition-related transaction expenses.

  The financial guidance below reflects the Company’s current estimates of the adverse impacts of the global pandemic. This guidance is based on certain assumptions made by the Company and the Company’s evaluation of factual information it has determined to be relevant. Additional details related to the Company’s financial guidance, including assumptions and economic impacts of COVID-19, are detailed in its prepared remarks document.

  The financial guidance below is not adjusted for the impacts of the Company’s recently announced agreement to acquire AGI. The acquisition closing date is unknown as it is subject to the receipt of regulatory clearance and the satisfaction of customary closing conditions. The transaction is not expected to have a meaningful impact on the Company’s 2020 results.

  For Q3, Ansys expects revenues between $542.3 million and $582.3 million, and earnings between $2.36 and $2.67 per share.

  For all of 2020, Ansys expects revenues between $1,610.0 million and $1,650.0 million, and earnings between $6.09 and $6.40 per share.

• The Day After
  Eddy Elfenbein, November 4th, 2020 at 9:37 am

  I’ll confess that I didn’t stay up too late to watch the returns. I’m not much for political prognostications. Instead, I like to focus on markets.

  For whatever reason, the major tech stocks opened significantly higher this morning. Google, Amazon and Microsoft are all up about 4% while Facebook is up 5.5%. In contrast, the Dow is up just 0.5%. The Russell 2000 Index of small-cap stocks is down.

  Both Uber and Lyft are up about 15% after California voted to classify app-based drivers as independent contractors.

  This morning’s ADP payroll report showed an increase in private payrolls of 365,000. That’s for the month of October. Wall Street had been expecting an increase of 650,000. The big news comes on Friday when the government releases the official numbers.

  Ansys (ANSS) reports after the close.

• Morning News: November 4, 2020
  Eddy Elfenbein, November 4th, 2020 at 7:03 am

  Two Bad Election Scenarios Come Back to Haunt Global Markets

  Finance Executives Fret As U.S. Presidential Vote Too Close to Call

  What Investors Can Expect Once Election 2020 Is Over

  U.S. Banks See Several Allies Returned to Key Congressional Seats

  China Halts Ant Group’s Blockbuster I.P.O.

  What’s Next For Ant After China Suspends $37 Billion Listing?

  Uber and Lyft Drivers in California Will Remain Independent

  BMW Spoils Auto Earnings Optimism With Warning of Virus Risk

  Comcast, Walmart in Talks to Develop and Distribute Smart TVs

  Bearish Near-Term Weather Outlook Is Capping Natural Gas Upside

  If Restaurants Go, What Happens to Cities?

  SEC Awards $28 Million to Whistleblower In Latest Blockbuster Payment

  Ben Carlson: Some Business & Leadership Lessons From Past Presidents

  Michael Batnick: Animal Spirits: Trading the Election

  Joshua Brown: The Biden Fantasy

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• Stocks Jump on Election Day
  Eddy Elfenbein, November 3rd, 2020 at 12:37 pm

  It’s Election Day here in America. Of course, it may take a long time until we know who actually won. Turnout is off the charts. We may have more than 150 million ballots cast before we’re done.

  I’ll skip any political prognosticating, but Wall Street seems to be in a happy mood today. The Dow has been up close to 700 points. Tech, financials and industrials are doing particularly well today.

  Shares of Trex (TREX) are flat today despite yesterday’s impressive earnings report. No Buy List earnings today, but Ansys reports tomorrow.

  The Fed begins its two-day meeting tomorrow. There will be one more meeting later this year.

• Morning News: November 3, 2020
  Eddy Elfenbein, November 3rd, 2020 at 7:03 am

  Progressive or Moderate? How A Biden Cabinet Could Impact U.S. Stocks

  What Stock Market Investors Should and Shouldn’t Do on Election Night

  What Social Networks Have Learned Since the 2016 Election

  Billionaire Has No Regrets About Pulling His Money Out of Banks

  The Tiger 21 Club of Multimillionaire Investors Are Election-Proofing Their Assets

  Tired Of Trump, Deutsche Bank Reportedly Wants Out But Sees No Good Options

  When the Virus Came for the American Dream

  A Small Target in a Big Case

  Walmart Reportedly Ends Contract With Inventory Robotics Startup Bossa Nova

  The Capital of Sprawl Gets a Radically Car-Free Neighborhood

  China Tells Ant to Expect Scrutiny of Credit Business Ahead of Record Listing

  World’s Best-Performing Airline Stock Is Bankrupt Indian Carrier

  Nick Maggiulli: What Does the Stock Market Do Around Election Day?

  Ben Carlson: When the Siren Song of Market Timing is the Loudest

  Joshua Brown: The Stock Market Doesn’t Care Who Wins & The GDP Chart So Extreme It Renders All Future GDP Charts Useless & Why Gold Is About to Explode Higher

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• Trex Earns 41 Cents per Share
  Eddy Elfenbein, November 2nd, 2020 at 4:06 pm

  TREX COMPANY REPORTS THIRD QUARTER 2020 RESULTS

  —20% Residential Sales Growth Reflects Brand Leadership Amid Strong Secular Demand—

  —Fourth Quarter Consolidated Sales Expected at $210 Million – $220 Million, Up 30% Year-on-Year at the Mid-Point—

  —Strong Double-Digit Sales Growth Expected for Full Year 2021—

  —Company Reinstates Share Buyback Program—

  Third Quarter Highlights

  – Consolidated net sales increased 19% to $232 million

  – Consolidated gross margin of 36.7%; excluding the warranty reserve charge, consolidated gross margin of 39.5%

  – Consolidated diluted earnings per share of $0.37; excluding the warranty charge, diluted earnings per share of $0.41

  – Consolidated EBITDA margin of 26.6%; excluding the warranty charge, consolidated EBITDA margin of 29.4%

  Trex (TREX), the world’s number-one brand of composite decking and railing and leader in high-performance, low-maintenance outdoor living products, and a leading national provider of custom-engineered railing and staging systems, today reported financial results for the third quarter ended September 30, 2020.

  Third Quarter 2020 Results

  Consolidated net sales for the 2020 third quarter were $232 million, 19% ahead of the 2019 third quarter. Trex Residential Products net sales increased 20% to $218 million with Trex Commercial Products contributing $13 million to net sales. Consolidated gross margin was 36.7%, compared to 42.4% in the year-ago quarter. Gross margin for Trex Residential Products and Trex Commercial Products was 37.4% and 24.4%, respectively. SG&A was $28 million, or 12.1% of net sales, compared to $27.4 million, or 14.1% of net sales, in the prior period. Net income for the 2020 third quarter was $43 million, or $0.37 per diluted share, representing increases of 2% and 3%, respectively, from net income of $42 million, or $0.36 per diluted share, in the 2019 third quarter. EBITDA increased 5% to $61.5 million and EBITDA margin was 26.6%.

  During the 2020 third quarter, the Company recognized a charge of $6.5 million to the Trex Residential warranty reserve related to the legacy surface flaking issue that affected a portion of the products manufactured at the Nevada plant prior to 2007. Excluding the warranty charge, consolidated gross margin was 39.5%. Net income was $48 million, or $0.41 per diluted share, up 13% and 14%, respectively, and EBITDA increased 16% to $68 million and EBITDA margin was 29.4%.

  “Trex brand leadership continues to position us at the forefront of strong secular trends for the composite decking and railing industry. Demand for Trex products continues to outpace supply reflecting consumer preferences for the superior aesthetics and high performance of our products and continued strength in the repair and remodel sector. Together with the compelling value proposition of our Enhance product line, these attributes are enabling Trex to accelerate conversion from the dominant wood decking market.

  “Third quarter profitability, exclusive of the warranty charge, demonstrated the successful execution of our low-cost, highly-efficient operating model, which more than offset the anticipated increased labor and depreciation costs related to capacity expansion and COVID-19 management.” noted Bryan H. Fairbanks, President and Chief Executive Officer.

  Outlook

  “For the 2020 fourth quarter, we expect consolidated net sales of approximately $210 million to $220 million, representing 30% growth at the midpoint of the range. For full year 2020, we expect incremental gross margin to be at the low end of the 45% to 50% range, excluding the warranty charge, and reflecting COVID-19 related expenses, inflation and logistics costs associated with startup expenses as we approach our Virginia facility coming online. We expect SG&A as a percentage of net sales to improve by approximately 150 basis points for the full year compared to the prior year, driven by reduced brand spend and lower travel and entertainment costs.

  “Based on current visibility, we expect 2021 to deliver another year of strong double-digit sales growth. Recently announced price increases on certain products that will go into effect at the beginning of the new year, combined with disciplined cost management and continuous improvement efforts, are expected to more than offset increased costs related to the new capacity ramp-up and expected inflation for raw materials. As a result of our improved visibility and a more stable economic backdrop, the Trex Board of Directors has reinstated our share buyback program,” Mr. Fairbanks concluded.

• Best ISM in Two Years
  Eddy Elfenbein, November 2nd, 2020 at 10:04 am

  It’s November and Election Day is tomorrow. Of course, people have already been voting and it looks like turnout will be heavy.

  The stock market ended last week on a down note, and the indexes have been soggy ever since the recent high on October 12.

  At one point, it looked like the S&P 500 was going to close below the lows from late September, but a late-day rally on Friday helped us avoid that. Twitter, by the way, was down 21% on Friday.

  The stock market is having a good morning today. This morning’s ISM Manufacturing report was 59.3. That’s pretty good. It was the highest number in over two years. The S&P 500 is up about 1.5%.

  This will be a busy week. Of course, there’s the election. There are also tons more earnings, plus a jobs report plus a Fed meeting.

• Morning News: November 2, 2020
  Eddy Elfenbein, November 2nd, 2020 at 7:03 am

  Virus, Political Risk, Rising As Fed Takes Stock of Post-Election Landscape

  Trump Changed How The U.S. Trades – Not Necessarily As Intended

  They’ve Been Writing America’s Obituary Since Before It Was America

  It’s the End of an Era for the Media, No Matter Who Wins the Election

  The Quiet Architect of Biden’s Plan to Rescue the Economy

  The Economy Is Down. Why Are Home Prices Up?

  U.S. Businesses Are Fighting Insurers in the Biggest Legal Battle of the Pandemic

  A Goldman Sachs Partner’s Odyssey From Karachi to Wooing America

  Stonepeak Infrastructure to Buy Cable Provider Astound Broadband

  Friendly’s Restaurant Files for Bankruptcy, Expect Many More

  From Reagan to Trump: Here’s How Stocks Performed Under Each President

  Joshua Brown: A History Lesson For 2020’s New Traders

  Jeff Miller: Weighing the Week Ahead: Do Not Be Seduced by Analogies

  Ben Carlson: What’s the Catch? & Presidential Terms & Market Cycles

  Michael Batnick: Who Cares?, Animal Spirits: The Highlights & Portfolio Tweaks Before The Election

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