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:
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).
A year-end performance review of Durig’s Portfolio Solutions, designed to help you earn income, covering some of the key benefits that each can provide. The following portfolios will be reviewed in this article:
- Fixed Income 2 (FX2) Managed Income Portfolio
- Dividend Aristocrats – High Dividends & Growth Over Time
- Income Aristocrats – Multi-Asset Income Portfolio
- Dogs of the Dow – High Blue Chip Dividends
- Dogs of the S&P 500 – Blue Chip Dividends
Fixed Income 2 (FX2) Managed Income Portfolio
Following the success of it’s Dogs of the Dow and Dogs of the S&P 500 Portfolios, we now take an in-depth look at the latest addition to our portfolio of investment solutions, the Income Aristocrats Portfolio. A remarkably well diversified portfolio, the income aristocrats effortlessly blends three different portfolio strategies (Fixed Income 2, Dogs of the S&P 500, and the Dividend Aristocrats) into an excellent vehicle for generating cash flow.
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).
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)
Durig takes an in-depth look at it’s newest addition to its portfolio of investment solutions, the Income Aristocrats. An extremely diversified portfolio, the income aristocrats seamlessly blends the Fixed Income 2, Dogs of the S&P 500, and the Dogs of the Dow strategies into an income generating machine.
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.
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).
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.
This week, Durig Capital reviews a traditional print-based marketing company that is undergoing a transformation. Quad Graphics (recently rebranded to just Quad) is in the midst of implementing its Quad Transformation 3.0 plan. This plan is helping to add core marketing expertise to the company’s service offerings. This has been accomplished mainly through acquisitions. The company’s most recent financial results show some of the progress on this plan.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
This week, Durig Capital takes a look at a 130-year old company, whose name is synonymous with direct selling. Avon Products is now a global manufacturer and distributor of a wide range of beauty products. The company’s recently posted its most recent quarterly results. Some of the highlights include:
A 62% increase in operating profit.
The company’s average order was up 6%.
- Operating margin was up 160 basis points over last year’s Q2.
This week, Durig Capital looks to the healthcare sector where a specialty pharmaceutical company has posted solid back-to-back quarters resulting in increased guidance for 2018. As a result of Mallinckrodt Pharmaceuticals’ performance in both Q1 and Q2, company management has raised 2018 guidance citing solid performance across its product lines. Some of the highlights from Mallinckrodt’s Q2 numbers include:
Q2 cash flows from operating activities grew by 17.6% over the same period last year.
Net sales increased 5.3% year-over-year.
Adjusted Gross Profit increased by 8.4%
Year-to-date debt reduction of $535.2 million
Interest coverage over 2x for the first six months of 2018.
This week, Durig Capital looks again at Parker Drilling, a company that provides contract drilling / drilling related services and rental tools to the oil industry. (Durig Capital reviewed Parker Drilling in June 2015). Having survived the unprecedented declines in oil prices over the past three years, Parker Drilling has emerged as a leaner, more competitive company. Its most recent quarterly results show a company that continues to perform.
Q2 adjusted EBITDA growth of 39% year over year.
Consecutive quarterly revenue growth of 8.1%.
Gross margin as a percentage of revenues increased to 22.8%, up from 16.5% in Q1.
Q2 interest coverage ratio of 2.4x.
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. It’s most recent quarterly results show a company registering wins from a multi-year planned strategic repositioning. Total operating income increased by 62.3% over the prior year period. In addition, Conn’s posted a record quarterly retail gross margin of 39.6%. The company’s credit segment had positive outcomes as well, generating its first positive operating income in four years as credit revenues grew over 8% year over year. Conn’s continues to grow, opening two new stores in its most recent quarter, with more scheduled for this fiscal year. The company’s 2022 bonds are in demand right now, with a yield-to-maturity of about 7.18%. This competitive yield as well as the opportunity for diversification into the retail sector, makes these bonds a smart addition for Durig Capital’s Fixed Income 2 (FX2) Managed Income Portfolio, the recent performance of which is shown below.