Diebold Nixdorf Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 9.5% YTM

In this bond review, Durig takes a look at a company which serves banks and retailers alike around the globe. Diebold Nixdorf (NYSE:DBD) has a full service suite of back office services, including software and hardware solutions for both banking and retail industries. With the release of its fourth quarter results, it appears as if the company is making progress towards its goals. A few highlights include:

DHX Media / Wildbrain Bonds, Short Term, High Yield, Fixed Income Investment, Yielding Over 9.5% YTM

This week, Durig’s weekly bond review takes another look at a Canadian company that focuses on children’s content and brands. You may not have heard of WildBrain (formerly DHX Media), but you may know some of its beloved characters, which includes the Peanuts gang, Teletubbies, Inspector Gadget and the Degrassi franchise. WildBrain released its first quarter results for fiscal year 2020 (three months ending September 30, 2019). The company’s wildly successful YouTube Channel, WildBrain Spark, has continued its outstanding growth from the past few quarters. Along with the great news on WildBrain Spark, there were other wins in the quarter as well (see bullets above).

Community Health Systems Bonds (CYH), 17% YTM providing High Yield, with Short Maturities

This week, Durig reviews one of the largest publicly traded hospital companies in the United States. Community Health Systems (NYSE:CYH) has spent the past few years paring down its portfolio of hospitals with an eye to retain those locations that are most profitable. The results of these divestitures are starting to be seen and the company has now put up two consecutive quarters of positive growth. In its most recent quarter results, one can see that same-store metrics tell a compelling story, especially in the competitive healthcare sector (see bullets above).

Diebold Nixdorf Bonds, Short Term, High Yield, Fixed Income Investment, Yielding Over 12% YTM

For this week’s bond review, Durig looks at an issuer that provides services to banks and retailers around the world. Diebold Nixdorf (NYSE:DBD) provides end-to-end services, software and hardware for the banking and retail industries. Diebold has spent all of 2019 implementing its DN Now program, designed to increase efficiencies, decrease costs, and improve margins. With the release of its third quarter results, it appears as if the company is making progress towards these goals (see bullets above).

Chemours Company Bonds, Short Term, High Yield, Fixed Income Investment, Yielding Over 7% YTM

For this week’s bond review, Durig looks at a chemical company created by a DuPont spinoff in 2015. Chemours Company (NYSE:CC) is a global leader in the manufacturing of fluoroproducts, chemical solutions, and titanium technologies. It is one of the leading global producers of titanium dioxide (used in paints, coatings, plastics, cosmetics and food), as well as the creator and producer of Opteon™, an award winning environmentally sustainable refrigerant. Highlights from the company’s second quarter results include: (see bullets above).

Albertsons Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 8% YTM

This week, Durig takes another look at the number two grocer in the United States. Albertsons has made a significant turnaround in the past few years after its purchase of Safeway stores in early 2015. With its most recent quarterly results, the company has now logged seven consecutive quarters of identical store sales growth. In addition, the company’s online grocery sales grew by 40% year-over-year, a massive win for this traditional brick and mortar retailer. (Other results from its Q2 results, see bullets above)

Chesapeake Energy Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 9.5% YTM

This week, Durig looks at an energy company that is making the transition from its historical focus on natural gas to be more focused on oil production. Chesapeake Energy (NYSE:CHK) has been making strides this year to transition towards a more oil focused production portfolio. Chesapeake has already increased oil in its production portfolio from 17% in 2018, to 24% as of the end of the second quarter.  The company estimates it will exit 2019 with oil representing 26% of its production. Oil is a higher margin product, so Chesapeake is already seeing the fruit of its decision (see bullet points above).

American Axle and Manufacturing Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 6.7% YTM

This week, Durig looks at the auto industry to focus on a manufacturer who supplies components to many of the industry’s leader auto makers. American Axle & Manufacturing (NYSE:AXL), a leading supplier of driveline technology, recently released its second quarter results.  The company registered solid free cash flow, net cash from operations and improving EBITDA and EBITDA margins (see bullets above).

Tenneco Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 7.85% YTM

This week, Durig Capital takes a look at an industrial designer, manufacturer and marketer of aftermarket parts for light vehicles, commercial trucks and other industrial uses.  Tenneco (NYSE:TEN) is on track and getting ready to create two market leading companies after its landmark acquisition of Federal-Mogul late last year. Its second quarter results tell the story of a company working diligently to grow its business, even among some industry slowdowns (see above).

Tenneco’s 2024 bonds have a yield-to-maturity of just about 7.85%. This is a fantastic yield, especially when investors can’t even get 2% from the current 30-year U.S. Treasury bond. In light of this and the company’s solid Q2 performance, these bonds are ideal for additional weighting in Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, the aggregated performance of which is shown below.

CSI Compressco Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 10.25% YTM

This week, Durig Capital takes a look at a company that provides compression services and equipment for the oil and gas industry. With the demand increasing for takeaway capacity from oil and gas fields around the country, CSI Compressco’s services become even more valuable and essential. The company had a fantastic second quarter, with record setting utilization, increased revenues and adjusted EBITDA.

 

  • Second quarter overall utilization came in at a record setting 89.1%.

  • Revenues increased by 36% over second quarter 2018.

  • Adjusted EBITDA increased 22% over first quarter and 41% year-over-year.

  • Outstanding interest coverage of 2.2x.

 

Community Health Systems Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 23% YTM

This week, Durig Capital looks at the healthcare sector to review one of the largest publicly traded hospital companies in the United States. Community Health Systems (NYSE:CYH) has spent the last few years rationalizing its portfolio of hospitals. The company is beginning to realize the effects of this strategy as evidenced by its same-store results for the second quarter (see above).

CoreCivic Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 6.7% YTM

This week, Durig Capital looks at a company that primarily provides private prison services for governmental agencies here in the United States. CoreCivic (NYSE:CXW) has also recently added two additional business segments to its portfolio – CoreCivic Community, which consists of residential reentry centers, and CoreCivic Properties, which is a portfolio of government-leased properties. The company recently posted a solid first quarter, registering increases in many of its financial metrics.

Geo Group Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 8% YTM

This week, Durig Capital looks at a company providing private prison services for governmental agencies both domestically and abroad. Geo Group, Inc. (NYSE:GEO) is one of only a handful of private prison service companies. With the election of President Trump, private prison companies have gotten a boost due to more stringent prosecutions as directed by our new attorney general, as well as Trump’s zero tolerance policies on immigration. The company’s first quarter 2019 results reflect this new political climate (above).

Geo Group is awaiting decisions from the Federal Bureau of Prisons on two procurements (CAR 18 and CAR 19) that total close to 12,000 beds. If these decisions come back in favor of Geo Group, the company would likely again increase its current guidance (as it just did with the release of its first quarter results). Geo Group’s 2023 bonds, couponed at 5.125%, are currently trading at a discount, giving them an enticing yield-to-maturity of over 9%. With the most recent increase in guidance and the possibility of more on the way, these short-term maturity bonds (maturing in only 44 months) are an ideal addition to Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, the aggregated performance of which is shown below.

Magnachip Semiconductor Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 7.25% YTM

This week, Durig Capital takes a second look at an issuer involved in the design and manufacture of semiconductors. Magnachip Semiconductor (NYSE:MX) has been around for over three decades and is currently the largest independent supplier of OLED display drivers to panel makers for smartphones. The company is riding the wave of transition from LED to OLED in the smartphone world. This has paid handsomely as its full year 2018 results can attest (above). In addition, the company’s first quarter also posted continued wins for its Standard Products division.

DHX Media, Convertible Bonds Mature September 2024 – Pick Up Over 12.5% YTM

(all price quotes are in Canadian Dollars, CAD)

This week, Durig Capital looks at a company that focuses on children’s content and brands. DHX Media (TSX: DHX; NASDAQ: DHXM) is the company behind such well-known names as Peanuts, Teletubbies, Inspector Gadget and the Degrassi franchise. With children spending more time viewing content not only through traditional television and cable, but also on various devices with online streaming capabilities, DHX is looking to optimize its proprietary children’s content through various channels. Having acquired the rights to the Peanuts brand a few years ago, the company is now starting to realize revenues from this iconic brand through licensing agreements with retailers like Lands’ End, Baskin Robbins, Tupperware, Levi’s and Macy’s just to name a few.

Pull Nearly 12% YTM with CSI Compressco, Bonds Mature August 2022

This week, Durig Capital takes a look at a company that provides compressions services and equipment for the oil and gas industry. CSI Compressco (CCLP) has had multiple successive quarters where the company has increased revenues and its latest quarter did not disappoint. Included with this increase were several other notable achievements.

With the continued demand for LNG and the current and planned LNG terminals in the U.S. and Canada, CSI Compressco looks to be perfectly positioned to take advantage of this demand. In light of the company’s solid performance in 2018, the company’s short-term bonds maturing 2022 are an ideal candidate for additional weighting in Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, shown below.

Earn Over 23.5% YTM with Community Health Systems, Bonds Mature February 2022

This week’s bond review focuses on one of the nation’s largest publicly traded hospital companies. Community Health Systems, Inc. (NYSE: CYH). CYH has spent the past few years divesting hospitals in an effort to reshape its portfolio towards urban and suburban markets. The company continues to make that shift and has now added urgent care centers in some of those markets to help drive additional patients to its hospitals. Its fourth quarter and full-year 2018 results look to be an indicator that the transformation is gaining a foothold.

Bring Home 9.0% YTM with Conn’s Inc., Bonds Maturing July 2022

This week’s bond review delves into the retail sector with a specialty retailer of durable consumer goods who also offers its customers financing on their purchases. Conn’s Inc., which is headquartered in Texas, has a market presence that stretches across the southern United States. Conn’s set some records in its most recent quarterly results (third quarter for its fiscal year 2019).

  • Record third quarter retail gross margin of 41.2%
  • Record quarterly credit segment revenues of $89.9 million.
  • For the first nine months of fiscal year 2019, the company registered its second highest nine month operating income ever
  • Excellent interest coverage of 2.4x.

Find Over 8.5% YTM with Owens & Minor, Bonds Mature September 2021

This week, Durig Capital looks to the healthcare industry, where a medical supply logistics provider has made some key acquisitions to broaden its revenue sources. Over the past 18 months, Owens & Minor has acquired Byram Healthcare, a direct to patient medical supply distributor, along with Halyard’s surgical and infection prevention (S&IP) business.  Combined, these two acquisitions are slated to add $1.45 billion in annual revenues for Owens & Minor. The company’s last reported quarterly results (third quarter 2018) show revenue growth coming through these most recent additions.

Find Nearly 9% YTM with Magnachip Semiconductor, Bonds Mature July 2021

This week, Durig Capital ventures to the technology sector to review an issuer involved in the design and manufacture of semiconductors. Magnachip Semiconductor (NYSE:MX) has been around for over 30 years and is the largest independent supplier of OLED display drivers to panel makers for smartphones. The company’s latest reported quarterly results (three months ending September 30, 2018) were excellent.

 

  • Adjusted EBITDA increased 13% year-over-year.

  • Gross profits were up 10.8% over the prior year period.

  • Operating income increased by 17.9% over Q3 2017.

  • Revenues were up 16.6% year-over-year and were at the highest levels since Q4 2012.

  • Interest coverage over 3x for the third quarter.

Load Up On Over 9% YTM from Teekay Corporation, Bonds Mature January 2020

This week, Durig Capital takes a look at a leading marine transportation company. Teekay Corporation provides marine transportation, storage, and vessel leasing for the oil and natural gas industry. The company’s third quarter saw increases in its subsidiaries revenues over second quarter. Here are some highlights from its third quarter results.

 

  • Teekay Tankers nearly doubled its quarterly revenues from the prior year period.

  • Teekay Corporation recorded adjusted cash flow from vessel operations of $19.8 million as compared to $1.2 million a year earlier.

  • Teekay LNG revenues increased to $123.3 million as compared to $104.3 million a year earlier.

Soak Up 8% YTM from SolarCity/Tesla, Bonds Mature 2020

This week, Durig Capital reviews a bond from an issuer that was snapped up a few years ago by one of the most enigmatic figures in corporate America. In late 2016, SolarCity was acquired by Elon Musk’s company, Tesla. The acquisition made sense- combine the maker of electric cars and energy storage with a company that produces solar panels that produce energy (seemingly to ultimately charge Tesla’s vehicles). Tesla has since integrated SolarCity’s products into the Tesla portfolio. Tesla’s most recent reported quarter (Q3 2018) was truly historical.

 

  • Free cash flow of $881 million.

  • Operating income of $417 million

  • Cash flow from operations of $1.4 billion.

  • Interest coverage in Q3 of 2.4x.

Find Over 16% YTM with Revlon, Bonds Mature February 2021

This week, Durig Capital takes a second look at an iconic cosmetic company that is continuing to refine its market strategy. Revlon, founded in 1932, has been identified with some of Hollywood’s biggest stars over the years. The company, under the direction of a new President and CEO, has recently posted some fantastic results for the third quarter including:

 

  • Adjusted operating income increased by 82% year-over-year.

  • A 35% increase in Adjusted EBITDA.

  • An increase in e-commerce sales of 23%.

  • Significant sales increases in China as well as North America.

Diversify with Griffon Corporation, Over 7% YTM, Bonds Mature March 2022

This week’s bond review looks at a diversified conglomerate that has been reshaping its portfolio of companies to grow and increase synergies. Griffon Corporation has spent the past few years strengthening its business segments, particularly its Home and Building Products segment, acquiring leading brands like ClosetMaid and CornellCookson. Griffon had a fantastic third quarter. Some of the highlights include:

 

  • A 44% increase in revenues year-over-year.

  • Home and Building Products sales increased 59% over third quarter 2017.

  • Business orders for the company’s Telephonics business were up 30% year-over-year.

  • The Defense Electronics segment has accumulated Contract backlog of $346 million.

Fly High with Triumph Group, Over 8.5% YTM, Bonds Mature August 2025

This week, Durig Capital looks to the skies as it reviews an issuer that is focused on the design and manufacture of aircraft parts and systems. Triumph Group has spent the past few years shedding non-core business assets, consolidating locations and streamlining its operations with an eye to cost reductions. Its latest quarterly results showcase its progress on this journey. Its fiscal year 2019 first quarter results included the following:

 

  • A 6.5% increase in net sales as compared to Q1 FY 2018

  • An increase of 126% in adjusted EBITDA as compared to the prior year period.

  • Interest coverage was an outstanding 2.3x for Q1

  • Triumph Group is projecting a 5% increase in net sales in FY 2019.

  • Backlog increased by 5% over the previous year period.

Fill Up with Albertsons Bonds, Over 9.5% YTM, June 2026

Diversification is the word this week as Durig Capital takes a second look at the number two grocer in the United States. Albertsons recently posted its first quarter results for fiscal year 2018. The company showcased some impressive financials including the following:

 

  • Adjusted EBITDA of $815.8 million, an increase of 5.7% year-over-year.

  • 39% increase in net cash provided by operating activities.

  • 108% increase in e-commerce sales.

  • Interest coverage of nearly 3x.

Drive Over 8.75% Yield-to-Maturity with CSI Compressco, Bonds Mature August 2022

This week’s bond issuer is a company entrenched in production and transportation of natural gas. CSI Compressco’s (CCLP) first and second quarters have been outstanding, both recording consecutive increases in revenues. The oil and gas industry’s activity level has been steadily increasing over the past 18 months and CCLP has started to see the effects of this on all three of its business segments – Compression Services, Aftermarket Services, and Equipment Sales. Its second quarter results gives investors reason to look twice at this natural gas services company.

 

  • Q2 revenues increased 33% year-over-year, and 17% over Q1 2018.

  • Adjusted EBITDA increased 21% over Q1 and 19% year-over-year.

  • Compressions Services increased gross margin by 460 basis points.

  • At the conclusion of Q2, new equipment sales had generated a backlog of $102 million, revenue to be recognized later this year and the first half of 2019.