Archive for February, 2022

• Trex Earns 55 Cents per Share for Q4
  Eddy Elfenbein, February 28th, 2022 at 4:18 pm

  After the bell, Trex (TREX) reported Q4 earnings of 55 cents per share. That was two cents more than expectations. Sales rose 33% to $304 million. Previously, Trex said it forecasted Q4 revenue of $295 million to $305 million.

  For the whole year, sales increased 36% to $1.2 billion. That’s a company record.

  “We closed 2021 on a very strong note with all-time record sales of $1.2 billion for the full year driven by continued robust demand in the outdoor living category coupled with our expanded manufacturing capacity to service our Trex Residential distributors and dealers,” said Bryan Fairbanks, President and CEO. “With strong growth across our product lines and channel partners, Trex continues to benefit from strong-trending consumer interest in our environmentally friendly, low maintenance product portfolio that transforms and enhances the outdoor living experience. Consumer interest in and preference for sustainable outdoor living products is accelerating industrywide annual market share gains to approximately 200 basis points. As the market leader, Trex continues to capitalize on strong remodeling activity and wood conversion to capture incremental market share from the strength of our products and brand.

  (…)

  “While we continue to manage through operating headwinds including higher raw material costs and higher transportation costs, we are pleased with the strong fourth quarter results, as record revenue and operating leverage drove adjusted net income and adjusted EBITDA growth of 47% and 44%, respectively.”

  For Q1, Trex expects sales to range between $320 and $330 million. The midpoint represents growth of 32%.

  For the full year 2022, we expect double-digit revenue growth rates with a return to a more normalized seasonal cadence similar to pre-pandemic patterns. We anticipate full-year 2022 incremental EBITDA margin of 30% to 35%, which includes additional investments in marketing and branding now that we have ramped up our new capacity and market inventories have improved. Our capital expenditure guidance for 2022 is $200 million to $220 million.

• The Ruble Collapses
  Eddy Elfenbein, February 28th, 2022 at 12:08 pm

  The stock market is digesting the dramatic news out of Ukraine. To be blunt, the bulk of the financial world has shut Russia out of the global financial system.

  The ruble has collapsed. The Russian Stock Exchange isn’t open, but the Russia ETF has also plunged. It’s a complete disaster for anything that is even closely related to Russia.

  

  

  There will be a lot of unusual side effects. The price of wheat is up, as is oil. Some precious metals like palladium are up.

  For the most part, our stock market is behaving well. The indexes opened lower this morning, but we’ve seen some buyers come out. As I write this, the Nasdaq and Russell 2000 are both positive.

  On our Buy List, Science Applications International (SAIC) is getting a nice 3% lift. Trex (TREX) is due to report after the close. This is a stock that’s gotten trashed this year, although it’s bounced in the last few days. Perhaps traders are positioning themselves for an earnings beat. The consensus is for 53 cents per share.

• Morning News: February 28, 2022
  Eddy Elfenbein, February 28th, 2022 at 7:04 am

  China’s Stimulus Fails to Jolt Construction in Blow to Economy

  Why the Chinese Internet Is Cheering Russia’s Invasion

  Liquidity Vanishes Across Russia Assets With Ruble Plunging

  Western Firms Head For The Exit In Russia As Sanctions Tighten

  Shares in Russian Energy Giants, Putin’s Safety Net, Tumble

  Russia Erects Financial Defenses to Shield Economy From Curbs

  Car Parts, Chips, Sunflower Oil: War in Ukraine Threatens New Shortages

  Oil Prices Climb As Ukraine Crisis Deepens

  Goldman Says Demand Destruction Only Thing That Can Restrain Oil

  The ‘PhD.’ Monetary Standard Has Been An Abject Failure. Let’s Return Money To the Marketplace.

  Wall Street’s Risky ‘Razor Blade’ Trade Is Making a Comeback

  Corporations Raise Prices as Consumers Spend ‘With a Vengeance’

  Tech Giants Turn to a Classic Recruitment Tool: Cash

  Berkshire Hathaway’s Reduced Buybacks May Overshadow Powerful Earnings Gains

  Barclays Pays Out Millions for Failing to Vet Collapsed FX Firm

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• Morning News: February 25, 2022
  Eddy Elfenbein, February 25th, 2022 at 7:02 am

  Why Didn’t the U.S. Cut Off Russia from SWIFT? It’s Complicated

  Why the Toughest Sanctions on Russia Are the Hardest for Europe to Wield

  Russia Sanctions Mean $22 Billion of Debt May Need New Lenders

  Russia’s Economic Defences Likely To Crumble Over Time Under Sanctions Onslaught

  Pozsar Says $300 Billion Russia Cash Pile Can Roil Money Markets

  Putin Huddles With Tycoons and Promises Banks Bulk of State Aid

  Bitcoin Donations To The Ukrainian Military Are Soaring As Russia Invades

  ‘The Sky’s the Limit’: Food Inflation to Worsen on Ukraine

  A Key Inflation Gauge Is Still Rising, and War Could Make It Worse

  Fed Officials Signal March Rate Hike on Track Despite Ukraine

  Big Oil CEO Responds To Biden: We Would Never ‘Take Advantage Of’ War In Ukraine

  Airline Industry Shifts Attention To Russia Risks After Ukraine Airspace Closed

  Justice Dept. Sues to Block $13 Billion Deal by UnitedHealth Group

  Beyond Meat Shares Tumble After Reporting Wider-Than-Expected Loss, Shrinking Revenue

  1MDB Loot Wasn’t Enough, So Ex-Goldman Banker Stole Even More

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• Morning News: February 24, 2022
  Eddy Elfenbein, February 24th, 2022 at 7:06 am

  Gold Jumps To Highest Level In More Than A Year As Russia Invades Ukraine

  Russian Stock Market Rout Wipes Out $250 Billion in Value

  EU Unlikely To Cut Russia Off Swift For Now, Sources Say

  U.S. Banks Tackle Russia Sanctions Fine Print, Worry Over Escalating Restrictions

  Russia Could Use Cryptocurrency to Blunt the Force of U.S. Sanctions

  Russia Is Sowing Conflict in Ukraine. What Does That Mean for the U.S. Economy?

  More Trouble for a Troubled Market

  Nasdaq 100 Futures Point to First Bear Market Since March 2020

  Oil Prices Soar And Worries Mount About Future Energy Supplies

  U.S. Presents ‘Buy American’ Plan to Ease Supply Chain Squeeze

  Renting a Car Is Still Going to Be Hard This Summer

  Why Offices Are Still Empty

  Tesla Plans New Shanghai Plant To More Than Double China Capacity

  The $200 Billion Club Loses Last Member as Elon Musk’s Wealth Tumbles

  Ex-Goldman Banker’s Trial to Pause on U.S. Documents Blunder

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• Thermo and Silgan Raise Dividends
  Eddy Elfenbein, February 23rd, 2022 at 6:04 pm

  Silgan Holdings (SLGN) raised its quarterly dividend from 14 to 16 cents per share. The dividend is payable on March 31 to the holders of record on March 17. This is an increase of 14.3%. Silgan has increased its dividend every year since 2004.

  Thermo Fisher Scientific (TMO) is raising its quarterly dividend by 15% to 30 cents per share.

• Heico Earns 63 Cents per Share
  Eddy Elfenbein, February 23rd, 2022 at 4:29 pm

  After the bell, Heico (HEI) reported fiscal Q1 earnings of 63 cents per share. That’s up from 51 cents per share one year before. Wall Street had been expecting 61 cents per share. Net sales rose by 17% to $490 million and operating income increased by 23%.

  Heico noted that while Covid has been impacting its business, that impact has been gradually decling over time. Heico has now seen “six consecutive quarters of sequential growth in net sales and operating income at the Flight Support Group.”

  Heico’s consolidated operating margin improved to 20.2% in the first quarter of fiscal 2022, up from 19.2% in the first quarter of fiscal 2021. EBITDA increased 18% to $122.3 million in the first quarter of fiscal 2022, up from $104.0 million in the first quarter of fiscal 2021.

  Laurans A. Mendelson, HEICO’s Chairman and CEO, commented on the Company’s first quarter results stating, “We are very pleased to report continued strong trends in quarterly consolidated financial results with quarterly consolidated increases of 23% and 17% in operating income and net sales, respectively. These results reflect 13% organic growth in our net sales principally arising from a continued rebound in demand for our commercial aerospace products and services.

  Our total debt to shareholders’ equity ratio improved to 10.1% as of January 31, 2022, down from 10.3% as of October 31, 2021. Our net debt (total debt less cash and cash equivalents) of $112.3 million as of January 31, 2022 to shareholders’ equity ratio improved to 4.8% as of January 31, 2022, down from 5.6% as of October 31, 2021.

  Our net debt to EBITDA ratio improved to .22x as of January 31, 2022, down from .26x as of October 31, 2021. We have no significant debt maturities until fiscal 2024 and plan to utilize our financial strength and flexibility to aggressively pursue high quality acquisitions of various sizes to accelerate growth and maximize shareholder returns.

• Down Four Days in a Row
  Eddy Elfenbein, February 23rd, 2022 at 2:24 pm

  Yesterday, the stock market officially closed in correction territory, meaning down more than 10%, and it’s down again today. We’re very close to yesterday’s low. This could be our fourth down day in a row.

  

  This morning, TJX bombed its earnings report. The retailer earned 78 cents per share versus estimates of 91 cents per share. The stock is down about 5% to a new 52-week low.

  Thanks to the TJX report, shares of Ross Stores (ROST) are down as well. As usual, Wall Street assumes that if one company is having difficulties, then its competitors must be as well. Oddly enough, Ross is currently down more than TJX.

  There’s no big economic news today, but tomorrow we’ll get jobless claims and a revision to the GDP report.

• Morning News: February 23, 2022
  Eddy Elfenbein, February 23rd, 2022 at 7:02 am

  The Russia-Ukraine Crisis Is Shaking Markets and Portfolios

  Europe’s Banks Brace For Russia Fallout While U.S. Banks See Limited Pain

  Putin Insulated Russia’s Economy. Will Biden’s Sanctions Hold Him Back in Ukraine?

  Western Sanctions On Banks Only Scratch Surface Of Fortress Russia

  As Sanctions Start, Russia’s Trade Flow Shifting Towards China

  Climate Fears on Back Burner as Fuel Costs Soar and Russia Crisis Deepens

  Gold Fights Off Rising Rates, Bitcoin to Be Haven in Tough Times

  Omicron Ripping Through Cargo Ships May Exacerbate Shipping Woes

  The Global Glut of Clothing Is an Environmental Crisis

  IMF Urges BOE To Shrink Balance Sheet by £650 Billion

  Some Companies Ditch Annual Raises and Review Worker Pay More Often

  Goldman Sachs Wants Its Bonuses Back as Punishment for Jumping Ship

  Why This Economic Boom Can’t Lift America’s Spirits

  Virgin Hyperloop Lays Off Half Its Staff, Abandons Mass Transit Plan

  Macy’s Opts Against Separation of E-Commerce Business

  Getting Hitched? Good Luck Finding Food, Photographers and Even Venues

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• Cramer with Carrier’s CEO
  Eddy Elfenbein, February 22nd, 2022 at 8:31 pm