Long Term Debt – HHQH http://hhqh.net/ Sat, 06 Aug 2022 04:52:00 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://hhqh.net/wp-content/uploads/2021/07/icon-2-150x150.png Long Term Debt – HHQH http://hhqh.net/ 32 32 Suburban Propane Third Quarter Earnings: Stable Quarter, Buy https://hhqh.net/suburban-propane-third-quarter-earnings-stable-quarter-buy/ Sat, 06 Aug 2022 04:52:00 +0000 https://hhqh.net/suburban-propane-third-quarter-earnings-stable-quarter-buy/ grbender/iStock via Getty Images Not long ago I was writing an article on Suburban Propane Partners LP (NYSE: SPH), commenting that it was a great place to ride out market volatility. I want to revise the thesis, because the company recently released FYQ3/2022 results. Suburban has seen year-over-year growth in revenue and operating income, while […]]]>

grbender/iStock via Getty Images

Not long ago I was writing an article on Suburban Propane Partners LP (NYSE: SPH), commenting that it was a great place to ride out market volatility. I want to revise the thesis, because the company recently released FYQ3/2022 results.

Suburban has seen year-over-year growth in revenue and operating income, while paying down debt. Despite the volatility in commodity prices, gross margin in dollars actually increased year over year. More importantly, the company was able to repay $43 million in debt and maintained its quarterly distribution of $0.325. I’m comfortable sticking to my thesis that investors are buying shares of Suburban Propane to ride out market volatility.

Decent quarter despite commodity volatility

Quarterly results were fairly quiet, with Suburban reporting revenue of $300 million, 26% higher than the same quarter last year. Gross margin was 53%, down from 65% a year ago, although dollar gross margin increased from $155 million to $159 million.

In the seasonal quarter, the operating margin was 4.9%, a slight improvement from 3.3% in FY3/2021. Year-to-date, the operating margin is 19.3%, slightly lower than 19.7% last year, but operating income increased 14.6% year-on-year. Adjusted EBITDA, as reported by the company, improved 25.3% year-on-year to $29.2 million.

Commenting on volumes and pricing, management noted that:

Retail propane gallons sold in the third quarter of Fiscal 2022, or 75.5 million gallons, decreased 1.6% from the prior year, primarily due to the negative impact of historically high commodity prices on customer buying habits and demand, partially offset by cooler spring temperatures which contributed to higher heat-related demand in some markets.

However, average propane prices were up 44% year-over-year, which more than offset lower volumes.

It was heartening to see that despite a year-over-year price spike, volume was only slightly down. In addition, gross margin $ was maintained, demonstrating management’s ability to manage commodity price volatility.

Paying down debt reduces leverage

One of the key risks I highlighted in my previous article was Suburban’s high leverage, with $1.1 billion in long-term debt. To management’s credit, they appear to be actively reducing debt, having repaid $43 million in the third quarter. Due to debt repayment and increased EBITDA, Suburban’s Consolidated Leverage Ratio (“CLR”) ended the quarter at 3.64x, a significant improvement from 3.87x in the prior quarter. . Note that the key covenant for Suburban is CLR < 5.75x, so it seems well covered at the moment.

Dividend maintained

Suburban also maintained its quarterly distribution at $0.325 per unit, or $1.30 annualized. With a YTD tax CFO of $171 million or $2.70 per share, this distribution also looks well covered. Note, however, that the CFO year-to-date is down 5.4% YoY, so it’s worth watching.

More details on strategic opportunities

Finally, Suburban provided commentary on the nascent renewable energy platform in the commentary and on the earnings call.

In May, we announced a collaboration agreement with Iwatani Corporation of America, a wholly owned subsidiary of Iwatani Corporation to [indiscernible] largest propane distributor and only fully integrated hydrogen supplier. We will work together to help accelerate the adoption of propane plus RDMA, both here in the United States and in Japan, and to explore opportunities to advance investments in hydrogen infrastructure in the United States.

In June, we announced a new investment through our suburban renewables platform with an agreement reached with [AderonDac Farms, a family-owned dairy farm in upstate New York to construct, own and operate an [indiscernible] digestion system for the production of renewable natural gas from dairy cow manure. These strategic initiatives follow our $30 million investment for a 25% stake in Independence Hydrogen, which was announced late in the second quarter. Independent Hydrogen continues to make great strides in executing its business towards creating a hydrogen ecosystem.

While the news of the collaboration with Iwatani Corporation (OTCPK:IWTNF) was already known, the renewable natural gas agreement with Adirondack Farms is new and interesting.

Fledgling RNG business

Renewable natural gas (“GNR”) is pipeline-grade natural gas that is made from the breakdown of biomaterials such as landfills, livestock, and waste treatment plants. It was all the rage a few years ago as an alternative fuel, and many governments have warrants that a certain percentage of their natural gas consumption must come from renewable sources. In the Canadian province of Quebec it is 5% by 2025/26 and 10% by 2030, while in California it is 12.8% for RNG biogas by 2030.

While there is certainly a lot of hype in the literature surrounding RNG, its promise of reducing greenhouse gases without having to replace existing natural gas infrastructure is enticing. A 2018 presentation by SoCal Gas, based on a 2016 study by the Department of Energy, estimates that the United States has enough biomass to produce 1 Tcf of RNG (Figure 1). So it’s potentially a huge opportunity.

RNG Opportunity

Figure 1 – RNG Supply (Southern California Gas Company)

While the early days, investors should pay attention to see how this renewable energy business develops in the coming quarters/years.

Conclusion

In summary, Suburban certainly delivered my stability thesis over the past quarter. While propane prices were volatile, Suburban was able to manage its margins and saw a year-over-year increase in revenue and operating profit. More importantly, the company was able to repay $43 million in debt and maintained its quarterly distribution of $0.325. I am comfortable recommending that investors buy shares of Suburban Propane as a hedge against market volatility.

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American Power Announces Unaudited Third Quarter Fiscal 2022 Results, Quarterly Revenue of $1.1 Million vs. $1.3 Million Last Year – Year-to-Date Revenue up 51% to $2.9 million over the prior year https://hhqh.net/american-power-announces-unaudited-third-quarter-fiscal-2022-results-quarterly-revenue-of-1-1-million-vs-1-3-million-last-year-year-to-date-revenue-up-51-to-2-9-million-over-the-prior-year/ Tue, 02 Aug 2022 13:12:34 +0000 https://hhqh.net/american-power-announces-unaudited-third-quarter-fiscal-2022-results-quarterly-revenue-of-1-1-million-vs-1-3-million-last-year-year-to-date-revenue-up-51-to-2-9-million-over-the-prior-year/ American Power Group Announces Unaudited Third Quarter Fiscal 2022 Results, Quarterly Revenue of $1.1 Million vs. $1.3 Million Last Year – Year-to-date year, revenue increased 51% to $2.9 million over the prior yearPress release | 02/08/2022 ALGONA, IA / ACCESSWIRE / August 2, 2022 / American Power Group Corporation (“APG”) (OTC PINK:APGI) announced unaudited results […]]]>

American Power Group Announces Unaudited Third Quarter Fiscal 2022 Results, Quarterly Revenue of $1.1 Million vs. $1.3 Million Last Year – Year-to-date year, revenue increased 51% to $2.9 million over the prior yearPress release | 02/08/2022

ALGONA, IA / ACCESSWIRE / August 2, 2022 / American Power Group Corporation (“APG”) (OTC PINK:APGI) announced unaudited results for the three and nine months ended June 30, 2022.

Chuck Coppa, CEO/CFO of APG, said: “Unaudited net revenues for the three and nine months ended June 30, 2022 were approximately $1,082,000 and $2,921,000, respectively, compared to approximately $1,082,000. $346,000 and $1,937,000, respectively, for the three and nine months ended June 30, 2021. Our penetration of the oil/gas fracturing market over the past few years has been the primary revenue driver with over 260 engines converted during this period. The increase in year-to-date revenue is primarily attributable to the shipment of $2.1 million in follow-on orders from our master reseller/installer during the fiscal year. 2022. We currently have over $3 million in fixed conversion quotes in progress split across many of our dealers/installers.”

Mr. Coppa added, “Our unaudited net income after income taxes was approximately $105,000 and $453,000, respectively, for the three and nine months ended June 30, 2022, compared to net income after taxes of approximately $249,000 for the quarter ended June 30. , 2021 and a net loss after tax of $339,000 for the nine months ended June 30, 2021. Results for the three and nine months ended June 30, 2022 include approximately $150,000 of stock option amortization expense non-cash shares.

During the nine months ended June 30, 2022 and 2021, we recorded other income of approximately $158,000 and $154,000, respectively, associated with the write-off of our Paycheck Protection Program loans. Small Business Administration. Our continued efforts to reduce fixed operating costs as well as the reduction of long-term debt have had a positive impact on our bottom line with our year-to-date interest expense down 55% to approximately $135,000 compared to $303,000 for the previous period since the beginning of the year. .”

Mr. Coppa concluded: “We continue our efforts to strengthen our balance sheet and have reduced our overall corporate debt over the past 18 months by approximately $6.8 million, including $1.8 million of bank debt. term and conversion of approximately $5 million of convertible debt and accrued interest, in total. The convertible debt and associated interest was converted at $0.25 per share, with approximately $2 million of the total total converted on June 30, 2022.”

About American Power Group Corporation (www.americanpowergroupinc.com)

American Power Group’s subsidiary, American Power Group Inc. (“APG”), provides cost-effective alternative fuel solutions for diesel engines to significantly reduce methane criteria pollutants and help accelerate a low-energy future. carbon emission. APG’s Dual Fuel conversion technology is a unique, patented hardware and software solution that enables heavy-duty diesel engines to safely replace up to 65% of diesel fuel with natural gas. Engines equipped with APG’s Dual Fuel technology can use renewable natural gas (RNG), compressed natural gas (CNG), liquefied natural gas (LNG), flared methane and wellhead gas conditioning, which reduces costs, reduces carbon emissions and improves emissions criteria. Additionally, APG’s Dual Fuel conversion technology remains fully compatible with eligible biodiesel and renewable diesel fuels, further reducing a diesel engine’s carbon footprint and providing users with proven, regulation-compliant technology to achieve their environmental, social and corporate governance (“ESG”) objectives.

Caution Regarding Forward-Looking Statements and Opinions

The matters described herein contain forward-looking statements and opinions, including, but not limited to, statements relating to outstanding bi-fuel conversion quotes for more than $3 million and our ability to turn those quotes into orders. real. These forward-looking statements and opinions are neither promises nor guarantees, but involve risks and uncertainties that may individually or mutually impact the matters herein, and cause actual results, events and performance to differ materially from these forward-looking statements and impact matters herein, and cause actual results, events and performance to differ materially from such forward-looking statements and opinions. These risk factors include, but are not limited to, that we may not be able to convert quotes over $3 million into actual orders; the fact that our bi-fuel conversion business has lost money in prior years and the risk that we may need additional financing to grow our business; our reliance on third parties to manufacture, distribute and install our products; difficulties or delays in the development or introduction of new products and their maintenance in the market; lack of product demand and market acceptance of current or future products; adverse events or economic conditions; pricing and other competitive pressures; dependence on government emissions regulations, including whether EPA approval will be obtained for future products and additional applications; the risk that we may not be able to protect our intellectual property rights; factors affecting the Company’s future revenues and the resulting ability to utilize its NOLs; the fact that our shares are thinly traded and the price of our shares may be volatile; and the fact that the exercise of stock options and warrants will result in dilution for our shareholders. Readers are cautioned not to place undue reliance on these forward-looking statements and opinions, which speak only as of the date hereof. Except as required by law, the Company undertakes no obligation to publish the result of any revisions to these forward-looking statements and opinions that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unforeseen events.

Contact with Investor Relations:

Chuck Coppa, CEO/CFO
American Power Group Corporation
781-224-2411
ccoppa@apgdualfuel.com

THE SOURCE: American Power Group Corporation

See the source version on accesswire.com:
https://www.accesswire.com/710471/American-Power-Group-Announces-Unaudited-Results-For-Q3-Fiscal-2022-Quarterly-Revenue-Of-11-Million-as-Compared-to-13- Million-Last-Year–Year-To-date-Revenues-Up-51-Percent-To-29-Million-As-Compared-To-The-Prior-Year

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Minnesota earns Moody’s AAA rating for first time in nearly 20 years – Detroit Lakes Tribune https://hhqh.net/minnesota-earns-moodys-aaa-rating-for-first-time-in-nearly-20-years-detroit-lakes-tribune/ Sun, 31 Jul 2022 18:34:00 +0000 https://hhqh.net/minnesota-earns-moodys-aaa-rating-for-first-time-in-nearly-20-years-detroit-lakes-tribune/ ST. PAUL – For the first time since 2003, Moody’s has rated Minnesota as AAA, the highest rating achievable. In a separate statement, Standard & Poor’s (S&P) also confirmed its AAA rating for Minnesota. Moody’s raised Minnesota’s rating from Aa1 to AAA. This corresponds to the rating established and maintained by Standard & Poor’s. Fitch […]]]>

ST. PAUL – For the first time since 2003, Moody’s has rated Minnesota as AAA, the highest rating achievable. In a separate statement, Standard & Poor’s (S&P) also confirmed its AAA rating for Minnesota.

Moody’s raised Minnesota’s rating from Aa1 to AAA. This corresponds to the rating established and maintained by Standard & Poor’s. Fitch recently rated Minnesota AAA in 2021 and will release its current rating soon.

“Minnesota is in a strong financial position,” Governor Tim Walz said in a press release. “To be outperformed by Moody’s is an incredible achievement at any time and particularly in the wake of a historic pandemic that has created uncertainty in the global market. Prudent fiscal management, a diversified economy, record unemployment and strong financial reserves place us on the threshold of what relatively few states have, AAA bond ratings in all areas.

Moody’s attributed its upgrade to “a track record of prudent governance that has resulted in growth in financial reserves and strong management of long-term liabilities, such as improved pension contributions, which will maintain leverage and Minnesota’s fixed cost charges among the lowest of any US state.”

The rating is also supported by “strong and long-standing economic fundamentals, including above-average incomes, a diverse industrial composition, high levels of labor force participation and low unemployment rates.”

“We all passed a stress test and we did well,” Minnesota Management and Budget Commissioner Jim Schowalter said. “Sound fiscal practices, smart financial investments, and moderate debt levels have helped put Minnesota on a solid footing to weather any national economic headwinds that come our way. Better overall bond ratings will help keep the cost of borrowing for future Minnesota investments as low as possible at a time of rising interest rates.

In affirming Minnesota’s AAA rating, Standard & Poor’s cited the state’s deep and diverse economy, history of strong financial results, moderate debt levels, and ability to grow revenues and reduce or defer spending to maintain a balanced state budget.

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2 reasons why Verano is ready for the legalization of cannabis in the United States https://hhqh.net/2-reasons-why-verano-is-ready-for-the-legalization-of-cannabis-in-the-united-states/ Fri, 29 Jul 2022 21:02:00 +0000 https://hhqh.net/2-reasons-why-verano-is-ready-for-the-legalization-of-cannabis-in-the-united-states/ Veraano Holdings (VRNO.F -4.82%), one of the largest cannabis operators in the United States, appears to be poised to take advantage of federal legalization of cannabis for adult use, based on a few key measures. But don’t get too excited – federal cannabis policy changes still may not be a sure thing. Here are two […]]]>

Veraano Holdings (VRNO.F -4.82%), one of the largest cannabis operators in the United States, appears to be poised to take advantage of federal legalization of cannabis for adult use, based on a few key measures. But don’t get too excited – federal cannabis policy changes still may not be a sure thing. Here are two reasons why Verano could benefit if and when Uncle Sam makes peace with the cannabis plant.

1. Verano has 107 dispensaries nationwide

Verano has grown strongly in the nation’s third-largest medical cannabis market, medical-only Florida ($1.2 billion a year). It now has 53 stores in the Sunshine State, nearly half of its 107 dispensaries nationwide. When Florida becomes legal, these will move directly to adult-only locations.

Its other 54 vertically integrated outlets are located in 12 other states, including the following adult cannabis powerhouses:

  • Michigan ($3.1 billion per year)
  • New Jersey ($2 billion per year)
  • Illinois ($1.5 billion per year)
  • New York ($2.5 billion per year)
  • Massachusetts ($1.5 billion per year)

It also has projects in Connecticut (legal use of cannabis by adults, pending regulation); Ohio (medical, but pending adult passage); Pennsylvania (medical, but pending adult use); and Maryland (small medicine with an adult use initiative on the ballot this fall). Even in conservative West Virginia, the company’s reach includes three dispensaries.

2. Verano has money to burn if federal legalization happens

The company’s most recent financial results make it well prepared for federal legalization:

  • Revenue grew from $120 million in the first quarter of 2021 to $202 million a year later, a 67% year-over-year increase.
  • Gross profits jumped from $54 million to nearly $100 million, an 83% jump year-over-year.
  • In the first quarter, operating profit for the last 12 months reached $109 million, or 13% of revenue. This is an impressive number, given that curafeuille (CURLF -1.77%)the largest cannabis company in the country, has an operating margin of 14%.
  • At the end of the first quarter, Verano had $139 million in cash in the bank.
  • It posted operating cash flow of $53 million in the first quarter of 2022 and free cash flow of nearly $6 million in the same period, bringing Verano’s free cash flow to 12 last months to about $57 million. This type of cash flow will allow Verano to self-finance capital expenditures in the event of federal legalization.

Verano posted a net loss of $7 million in the first quarter of 2022, compared to a loss of $2 million a year earlier, and a net loss in the 12 months ending in the first quarter of 2022 of $19.5 million. The discrepancy between net loss and cash flow is due to a one-time filing fee levied on the company by the Securities and Exchange Commission (SEC) earlier this year.

The company’s $350 million long-term debt, most of which matures next year, will reduce that free cash flow. Paying off this obligation will most likely force the company to refinance its debt, racking up higher interest payments, or sell more stock, diluting existing investors. While neither of these options bodes well for investors, Verano’s debt situation is still fairly normal for a young, aggressively growing company. ,

Why getting legal cannabis through the Senate remains a challenge

Before Verano and other major MSOs can reap the benefits of federal cannabis legalization, that legalization must actually happen.

In mid-July 2022, Senate Majority Leader Chuck Schumer introduced the Cannabis Administration and Opportunity Act (CAOA), which would decriminalize cannabis at the federal level while allowing states to set their own policies by cannabis material. The bill, however, has a long chance in the Senate, where it faces a filibuster and a handful of Democrats, like West Virginia Sen. Joe Manchin, who are already saying they won’t support the bill. law. It’s unclear whether the growing presence of cannabis dispensaries in West Virginia will influence Manchin, and it’s equally uncertain whether the Biden White House supports the new measure. The president has previously supported the decriminalization of cannabis, but opposed full legalization.

Verano’s large footprint in the United States and strong financials make it a company to watch as federal legalization approaches. With its positive free cash flow and cash in the bank, it is poised to move to other markets if federal restrictions ease and more states enact adult cannabis use regulations. Unfortunately, that opportunity may still be years away.

That said, there is no indication that the business will slow down any time soon. Cannabis investors should keep an eye on how they choose to manage their large debt next year, as this decision could affect the company’s earnings and share price.

Lucas Barfield has no position in any of the listed stocks. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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I am a retiree and I want to invest in loan funds. What are my options? https://hhqh.net/i-am-a-retiree-and-i-want-to-invest-in-loan-funds-what-are-my-options/ Thu, 28 Jul 2022 05:31:25 +0000 https://hhqh.net/i-am-a-retiree-and-i-want-to-invest-in-loan-funds-what-are-my-options/ I am a retiree with an investment horizon of 5-6 years. I want to invest in a few debt funds to maximize my expected returns. Could you please suggest a variety of debt instruments? -Name masked on request Debt funds work well for investors with low risk appetite. So yes, loan funds are a good […]]]>

I am a retiree with an investment horizon of 5-6 years. I want to invest in a few debt funds to maximize my expected returns. Could you please suggest a variety of debt instruments?

-Name masked on request

Debt funds work well for investors with low risk appetite. So yes, loan funds are a good choice for you at this stage of your life. Rising interest rates had a positive impact on the returns of debt mutual fund (MF) portfolios across all categories. Investors can look into short-term debt, although the period of rising interest rates is not considered the best for debt investors, especially for long-term debt instruments. Ultra-short, floating-rate debt funds are a good investment right now, given the global economic instability caused by the war and its cascading effects on commodities and economies in general.

Over the past year and a half, we have seen attractive returns in the 4-6 year duration segment. Over this period, 10-year G-Sec hardened to approximately 7.3+%. You could turn to these instruments to restructure your portfolio if you have a medium-term horizon. Your corpus could be invested in debt mutual funds (MF) with a portfolio duration of one to three years, such as corporate bond funds, PSUs or bank funds, where the effect of rising interest rates on overall returns is minimal. Target maturity funds that invest in GILTs (government securities) and SDLs (government development loans), which mature in 2027-2028, may be considered by investors as they offer attractive returns around 7.2 to 7.4%. Due to the benefits of indexing, their after-tax returns may be more efficient than those of 5-year DFs.

Currently, investing in debt funds that hold debt securities with shorter maturities carries low interest rate risk if risk-adjusted returns are the desired outcome.

Tarun Birani, Founder and CEO of TBNG Capital Advisors. Queries and views to mintmoney@livemint.com

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Hawaiian Electric: An underperformer in an overperforming industry (NYSE: HE) https://hhqh.net/hawaiian-electric-an-underperformer-in-an-overperforming-industry-nyse-he/ Tue, 26 Jul 2022 03:48:00 +0000 https://hhqh.net/hawaiian-electric-an-underperformer-in-an-overperforming-industry-nyse-he/ Don White/iStock via Getty Images Investment thesis Over the past three years, we have seen great volatility in the market due to the pandemic, high inflation, recessionary pressures and the Russian-Ukrainian conflict. The pandemic is now considered a benchmark for identifying and assess resilient companies that have held up through the pandemic and challenging market […]]]>

Don White/iStock via Getty Images

Investment thesis

Over the past three years, we have seen great volatility in the market due to the pandemic, high inflation, recessionary pressures and the Russian-Ukrainian conflict. The pandemic is now considered a benchmark for identifying and assess resilient companies that have held up through the pandemic and challenging market conditions.

According to a McKinsey Report, the past year in capital markets has underestimated the increasing pace of change. Several cyclical correlations have played a significant role in various industries, for example, a downward trend seen in consumer discretionary and an upward movement in commodity-related stock prices due to the commodity super cycle.

Hawaiian Electric Industries, Inc. (NYSE: IT), the largest electricity provider in the state of Hawaii, has been on a very monotonous road since Covid-19. Observing the price movement of the last 3 years compared to pre-Covid and post-Covid returns with the average Dow Jones Utility returns over the same period shows that the company has not followed DJU in the period post Covid.

At the same time, the company’s weak price momentum over the past 3 years has underperformed the S&P 500 by more than 40% over the past three years.

Chart
Data by Y-Charts

Investors in a bear market are reluctant to act boldly, and a recent spike in inflation made investors more risk averse. Moreover, fearing a recession-type market situation, investors are more inclined to recession proof Industries.

Looking at the returns of Hawaiian Electric Industries, it is clear that when a sector performs well, correlated with the macro indicators, it does not necessarily mean that all companies in the respective sector will be profitable. The utilities sector generated stable returns over the past year compared to other sectors. According to S&P Globalthe last quarter of 2021 saw electric and multi-utility stocks recover, with indices reaching highs of 12.1% to 13.4%, by far the best performance for the sector during the year.

Change in utility and market stock prices in 2021

S&P Global

With a highly leveraged capital structure, slow growth relative to its peers, and recent insider selling, I would rate the stock as a “sell”.

Company presentation

Hawaiian Electric, a public NYSE-listed company with a market capitalization of $4.32 billion, is engaged in investing in electric utilities, banking, and renewable infrastructure in Hawaii. With more than 16 years of experience in the utility industry, Hawaii Electric is responsible for providing essential electrical services to more than 1.40 million people, or 95% of Hawaii’s population, holding a monopoly on electricity. state energy supply. The company generates 1,794 megawatts of electricity by operating four company-owned power plants and four other IPPs.

On the other hand, American Savings Bank, a subsidiary of Hawaiian Electric Industries, is one of Hawaii’s largest financial institutions, with over $9 billion in assets.

HE turnover

Author

The company generated $2.9 billion in MRQ revenue with year-over-year growth of 17.56%, with its banking subsidiary responsible for 10% and the electric utility segment accounting for 90% of total turnover, respectively.

Insider Selling

Investors generally view insider buying and selling as an indicator of future stock performance. Hawaiian Electric has a relatively high percentage of insider sells, with nearly one million or about 1% of total outstanding shares sold in the last 3 months. This higher percentage can be partly attributed to its relatively larger board, as 6 new directors have joined the board in the past 3 years.

Hawaii Electric has seen significant insider selling over the past year. With CFO Gregory Hazelton selling more than $0.9 million in shares in May 2022 and $1.4 million in shares sold by CEO Constance Lau in December 2021, investor sentiment is not positive.

He sells insiders

TipRanks

Source: Insider Trading Activity in Hawaii Electric Stock – TipRanks

Evaluation

Earnings per share have followed a stable trajectory over the past five years, with MRQ EPS at $0.63. Interestingly, these earnings don’t impact his lofty P/E multiple of 17.36x as much as it should. Slower-than-market growth and a lower earnings outlook can drive the stock price down, putting current shareholders’ investments at risk. It could also mean that new investors wanting to invest in the company will pay a high premium on the stock price.

HE Earnings Outlook

Looking for Alpha

So how much premium? If we run a DCF fair value model based on FCF, with a decent long term growth rate of 10%, a discount rate of 9% representing the high leverage and a terminal growth rate of 2 %, the stock yields a fair value of $17.90, almost 30% less than its current price.

DCF model based on HE FCF

Author

According ForbesDJUA’s current yield is 2.3x that of the typical S&P 500 ETF. And best-in-class companies have a clear path to increasing dividends by at least 6-8% per year, enough to match even the current rate of inflation. Unfortunately, HE’s dividend growth history doesn’t paint a good picture. Growth prospects aren’t just there, with the most recent dividend growth rate of 3.01% versus the industry median of 5.50% and a 3-year, 5-year, and 10-year dividend CAGR years of 3.08%, 2.16%, and 1.08%, compared to 3.86%, 5.7%, and 4.47% for the industry.

Additionally, its FCF yield of 2.46%, lower than its dividend yield, and cash dividend payout ratio of 1.4x dampen any prospect of dividend growth.

High debt is high risk

HE’s debt ratio has gone from 86.7% to 108% over the last 5 years and from 114.49% at MRQ. The operating cash flow to debt ratio of 0.16x suggests that debt is not well covered by current operating cash flow.

Elements of the HE balance sheet

Looking for Alpha

The company would need a major recapitalization if it were to pay off its creditors soon. Still, the long-term debt to EBITDA ratio of 3.2x and its EBIT covering its interest expense of 4.1x show that the company can manage the current debt as a capital-intensive sector. Additionally, since nearly all debt is long term, the company’s current and fast ratio of around 12x means that its short term is secured by a strong cash balance.

The high leverage is primarily in response to high post-pandemic working capital needs due to high accounts receivable balances and write-offs, primarily due to high inflation affecting consumers’ ability to make timely payments timely. According to the MRQ, about $38 million (about 10%) of utility accounts receivable were 30 days past due, including about 23% on payment plans. The collection delay has resulted in a 44-day accounts receivable turnaround, which if not addressed quickly will lead the company to seek additional funding from WC.

Still, that doesn’t mean HE can afford more debt, as he wouldn’t want to be exposed to high levels of credit risk, especially given his high 56x debt-to-FCF ratio and fully consumed balance. on the revolving credit facility. .

Chart
Data by Y-Charts

Since debt is cheaper than equity, high leverage should result in a lower cost of capital and higher profitability, which means the higher risk should be offset by higher rewards . However, the company’s profit margins are mediocre at best.

HE profit margins

Looking for Alpha

What’s the benefit?

As the sole electricity provider for most of Hawaii’s population, the company can become an attractive investment if it can improve its cash flow and maintain a return above its current 3.4%. Going forward, high costs imposed by inflation will likely affect the company’s short-term profitability. Nevertheless, it could turn the tide in the long term by making the risk-reward dynamic more favorable, either by deleveraging or by improving its growth indicators.

This could be done in a number of ways, including paying down its long-term debt to reduce interest payments, optimizing its working capital by accelerating accounts receivable, and investing in high-return assets.

Given that the company missed 5 out of 8 previous analysts’ revenue targets, but beat 7 out of 8 EPS targets, it is evident that HE can achieve operational optimization through careful resource management.

Conclusion

According Deloitte, In 2021, the electricity and utilities sector overcame tough challenges, made measurable progress and received clean energy encouragement from a new administration. But the utilities sector has done well recently. As the U.S. economy began to emerge from its pandemic-induced recession, electricity sales increased 3.8% through August 2021 from a year earlier.

This has not been the case for Hawaii Electric in recent years as it has reinvested capital and generated low returns for its shareholders, including below-industry dividend growth of 2.16% CAGR over the past five years, while its peers averaged around 6.80%.

Investors could generate much better returns by investing in other income or growth stocks, as Hawaiian Electric’s poor performance and negligible growth indicators appear to be indicators of a sell call.

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Is China headed for a Lehman crisis? This property bust is different. https://hhqh.net/is-china-headed-for-a-lehman-crisis-this-property-bust-is-different/ Sun, 24 Jul 2022 13:41:00 +0000 https://hhqh.net/is-china-headed-for-a-lehman-crisis-this-property-bust-is-different/ Text size The slowdown in the Chinese real estate market is unlikely to lead to a collapse triggering a financial crisis. STR/AFP via Getty Images The housing slump and China’s ailing economy have some wondering if China could be on the brink of its own Lehman-like crisis. While the problems facing China’s economy are significant, […]]]>

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Airline stocks: United Airlines sinks on missed gains, American Due Next https://hhqh.net/airline-stocks-united-airlines-sinks-on-missed-gains-american-due-next/ Wed, 20 Jul 2022 20:49:00 +0000 https://hhqh.net/airline-stocks-united-airlines-sinks-on-missed-gains-american-due-next/ United Airlines (LAU) and other airline stocks fell after hours on Wednesday after the carrier announced second-quarter results that beat expectations, but it signaled confidence that travel demand could withstand a economic slowdown in the coming months. X The carrier reported that the airline industry was trying to manage the rebound in travel, a torrent […]]]>

United Airlines (LAU) and other airline stocks fell after hours on Wednesday after the carrier announced second-quarter results that beat expectations, but it signaled confidence that travel demand could withstand a economic slowdown in the coming months.




X



The carrier reported that the airline industry was trying to manage the rebound in travel, a torrent of staffing issues and concerns about rising fare prices, a spike in fuel costs and a slowdown. American airlines (AAL) reports Thursday.

Both reports track last week’s earnings from Delta Airlines (DAL), who said travel demand is still holding up, even though the carrier is keeping a cap on adding new flights to bolster service.

United Airlines Earnings

United earned $1 per share, below estimates of $1.85 per share. The quarter was the first non-GAAP earnings per share for the company since the pandemic began.

Revenue of $12.112 billion beat expectations of $12.123 billion.

Total unit revenue was up 24% from pre-pandemic levels in 2019. United said it expects this key metric – which counts sales spread across available seats and flights – improves in the third quarter of 2019.

“Second quarter revenue improved at a rapid pace and while the company anticipates a slowing economy in the short to medium term, the continued pandemic recovery is more than offsetting economic headwinds, resulting in an expected acceleration in revenue and earnings in the third quarter,” United said in a statement.

“As a result, the company continues to expect to be profitable for the full year 2022,” the company continued.

The airline said it expected year-round flight capacity – a measure of the size of an airline’s network of available flights – to be down around 13% this year. , compared to 2019 levels, and up “no more than” around 8% in the next year compared to 2019.

United said it expected flight capacity in the third quarter to fall 11% from 2019 and 10% in the fourth quarter. United expects operating revenue to grow about 11% in the third quarter compared to 2019. Wall Street expects a 10% gain.

United will hold its earnings conference call with airline stock analysts on Thursday.


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United Airlines sank 5% after hours stock market today. Among other airline stocks, American Airlines fell 2%. Delta lost 2%. South West (LUV) fell 1.5%.

Airline stocks mostly rose in Wednesday’s regular trading session.

The results from United and American come as airlines raise ticket prices – a reflection of strong demand from passengers willing to pay, after two years of travel postponement, and rising fuel prices resulting from the war in Russia in Ukraine. United said it expects fuel costs to reach $3.81 a gallon in the third quarter, from $4.18 in the second quarter.

Airline stocks, personnel issues

As demand evaporated in 2020, airlines encouraged employees to leave in order to control costs and cash burn. But they are now finding themselves short-staffed – especially among pilots – and are trying to hire as workers demand more of their employers. Thousands of flights have been canceled or delayed, due to staffing issues and extreme weather conditions, leaving an uncertain environment for businesses and investors in airline stocks.

Delta CEO Ed Bastian on Delta’s earnings call said the airline was facing a “training and experience bubble,” rather than hiring issues. The carrier also said service is improving. It said it canceled only 25 flights, out of more than 30,000 worldwide, in the first seven days of this month.


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Still, airline stock investors will be on the lookout for carrier plans to minimize the damage.

“We look forward to hearing how the various carriers plan to approach capacity in 2H22, as well as their insights into the state of the consumer, the risks of demand destruction due to high ticket prices and the resumption of international and business travel,” Cowen analyst Helane Becker said in a research note Monday.

“Leadership teams will also likely be asked about the characteristics of their booking curves and how they handle operational issues due to factors such as employee training backlogs and staffing shortages at airports,” he said. she continued. “We expect Americans will likely face questions about their prospects for debt repayment.”

American Airlines Earnings

Estimates: Wall Street expects American Airlines to earn 77 cents per share, compared to a loss a year ago. Similar to United, it would be the first US earnings per share during the pandemic.

Revenue was expected to jump 78% to $13.331 billion.

American had long-term debt and finance leases of about $35 billion in the first quarter. The company said it wants to pay off about $15 billion in debt by the end of 2025.

Like most airline stocks, American and United are trading lower so far for the year. US stocks have fallen 17.5% since Dec. 31. United are down 4.5%.

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Is it time to cash in Novavax shares? https://hhqh.net/is-it-time-to-cash-in-novavax-shares/ Tue, 19 Jul 2022 05:01:05 +0000 https://hhqh.net/is-it-time-to-cash-in-novavax-shares/ Vaccine Developer Novavax (NASDAQ: NVAX) Stock fell (-61%) in 2022. The company’s protein-based COVID-19 vaccine, Nuvaxovid, has been launched in Europe and is awaiting CDC approval for launch in the United States. US FDA approval was granted on July 13e making it the fourth COVID-19 vaccine approved in the United States, but still needs CDC […]]]>

Vaccine Developer Novavax (NASDAQ: NVAX) Stock fell (-61%) in 2022. The company’s protein-based COVID-19 vaccine, Nuvaxovid, has been launched in Europe and is awaiting CDC approval for launch in the United States. US FDA approval was granted on July 13e making it the fourth COVID-19 vaccine approved in the United States, but still needs CDC approval to begin marketing. The company had its first profitable quarter in its history in the first quarter of fiscal 2022. The market adage “Buy the rumor and sell the news” applies here. The COVID-19 pandemic sent Novavax stock skyrocketing from a low of $6.26 in February 2020 to a nosebleed high of $331.68 in February 2021. While most COVID vaccines in the US have been supplied by Pfizer (NYSE: PFE) and Moderna (NASDAQ: MRNA) or Johnson and Johnson (NYSE: JNJ), there is optimism for Nuvaxovid apps for those unable to tolerate mRNA technology.

Side effects are all over the news

Recently, the European Medicines Agency (EMA) indicated that serious allergic reactions would be added to the label as a side effect, including paresthesia and hypoesthesia. The vaccines have an effectiveness rate of 90.4% according to its trials in the United States and Mexico. The company may prove to be a one-off wonder as Nuvaxovid’s FDA approval marks its first in 35 years. Novavax has $20.11 cash per share and no long-term debt with a small float of 78 million shares with 19% short interest. However, the race for COVID-19 vaccines has already been won by the top three and there are very few indications of significant demand in the United States. Investors expecting a return to earlier highs should reconsider using opportunistic exit levels to gain strength.

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Publication of results for the first quarter of fiscal year 2022

On May 9, 2022, Novavax released its fiscal first quarter 2022 results for the quarter ending March 2022. The company reported earnings per share (EPS) of $2.56 compared to analysts’ consensus estimate of 2, $49, a beat of $0.07. The company saw revenue increase 57.4% year-over-year (YoY) to $703.97 million, which was below analyst estimates of $845.2 million. The company reaffirms its fiscal 2022 revenue forecast of $4 billion to $5 billion, down from analysts’ estimate of $4.49 billion. Novavax CEO Stanley Erck commented, “Novavax has been successful in launching our protein-based COVID-19 vaccine globally and executing our plans for continued label expansion for pediatrics and homologous and heterologous enhancement. Strengthened by our profitable first quarter, with $704 million in revenue, we continue our robust commercial deployment. Importantly, as new variants emerged, we advanced our strategy to be ready for the dynamic environment and continue development beyond COVID-19 with our combination vaccine candidate COVID. -19-flu.

It's time to cash in Novavax shares

NVAX Opportunistic Exit Levels

Using rifle charts on the weekly and daily timeframes provides an accurate view of the landscape for the NVAX stock. The Rifle’s weekly chart hit a low of $37.37 and staged a rally as shares hit a high of $76.77 ahead of the FDA approval announcement. Shares sold off and sparked a mini reverse PUP breakdown on the rejection of $73.91 Fibonacci level (fib). The weekly uptrend ended with a 5-period moving average (MA) at $55.92 and a 15-period MA at $52.92. The weekly 200-period MA resistance sits at the $84.60 fib. The weekly Stochastic triggered a mini pup bounce through the 20 band but is stagnating at the 40 band. The weekly market structure sell high (MSL) triggers on a breakdown below $47.68. The Daily Rifles chart attempts to reverse and break down as the 5-period MA down at $62.58 falls towards the 15-period MA at $60.47. The daily 50-period MA stands at $52.54. The daily stochastic has a mini inverse pup going through the 80 band. The daily weak market structure (MSL) buy triggered on the breakout at $39.50. The price level of $20.11 is the floor in cash per share. The daily lower Bollinger Bands (BB) lie at $27.69. Investors can use opportunistic exit levels from the $60.37 level to the $84.60 level to reduce or sell stocks. The MSH weekly trigger at $47.68 can act as a trap door trigger for the stock price if it breaks out. The daily MSL trigger of $39.50 can be used as a stop-loss level. Seasoned and nimble traders can look for a bounce off the low of $20.10 in cash per share.

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High operating costs push companies to debt market for funding https://hhqh.net/high-operating-costs-push-companies-to-debt-market-for-funding/ Sun, 17 Jul 2022 12:45:20 +0000 https://hhqh.net/high-operating-costs-push-companies-to-debt-market-for-funding/ Nigerian companies have turned to the debt market to raise funds to cushion the impact of the continued rise in the cost of diesel, the devaluation of the naira, the scarcity of foreign exchange, among others, on their costs. operational. Manufacturers have been under severe pressure due to the high cost of diesel and raw […]]]>

Nigerian companies have turned to the debt market to raise funds to cushion the impact of the continued rise in the cost of diesel, the devaluation of the naira, the scarcity of foreign exchange, among others, on their costs. operational.

Manufacturers have been under severe pressure due to the high cost of diesel and raw materials, coupled with the scarcity of foreign exchange, high inflationary pressure and other factors which have significantly affected their operating costs.

The tight operating environment has forced many companies to rely heavily on the debt market to obtain funds to finance their activities through the issuance of commercial paper (CP) in the debt capital market (DCM ) instead of regular equity financing.

LEADERSHIP Sunday’s findings showed companies continued to raise capital through DCM, particularly commercial papers, which are more short-term.

As a result, only one company, Neimeth International Pharmaceuticals, has shown interest in raising N3.680 billion from rights issues in the Nigerian stock market.

On the other hand, 17 companies covering several sectors of the economy registered a total of 857 billion naira of commercial paper from January to June 2022 on the trading floor of the FMDQ Stock Exchange.

FMDQ approved the registration of MTN Nigeria Communication N150 billion CP. FCMB Group, FBNQuest Merchant Bank, Providus Bank and Coronation Merchant Bank each quoted 100 billion CP on the FMDQ, while Rand Merchant Bank Nigeria quoted 80 billion CP.

The other companies are Nova Merchant Bank, Lekki Gardens Estate Limited, Robust Intentional Commodities Limited, UAC of Nigeria (UACN), SKLD Integrated Services, Veritasi Homes and Properties, Skymark Partners, Total Nigeria, Babban Gona Farmer Services Nigeria and Mixta Real Estate.

CPs are short-term debt financing securities (up to 270 days in maturity) consisting of unsecured, discounted promissory notes issued by large corporations with good credit ratings, which can be easily negotiated.

To this effect, the operators urged the government to launch strategic policies that would help to develop businesses in the country and address the challenges of macroeconomic policies and hostile and inconsistent regulatory environments that hinder the development of the country.

This, they said, would help combat ongoing stock market volatility, bring the market back to a sustainable rebound and attract new issuance to the national exchange.

A Calyxt Securities Limited stockbroker, Tunde Oyediran, said stock market regulators could bring more trouble to the market with incentives such as lowering transaction costs, introducing tax cuts and tax cuts. removing bottlenecks around application processes.

He pointed out that raising funds for working capital through CP has become a faster and cheaper way for companies to obtain financing for their business compared to the cost of raising such funds through the stock market.

Similarly, the Chief Operating Officer of InvestData Consulting Limited, Ambrose Omordion, said the issuance of commercial papers (CPs) has become the new trend in the Nigerian capital market used by companies to finance their operations.

He noted, “When businesses need a cash injection to meet their working capital needs, they turn to commercial paper rather than borrowing short-term from Nigerian commercial banks. CPs are usually issued at a discount to their face value, reflecting prevailing market interest rates in the country.

“As a result, it is cheaper for companies to raise capital from commercial paper markets than to borrow from commercial banks, as bank loans carry higher interest rates.”

On equity financing, he said, “The weak macroeconomic environment, continued equity market volatility, low investor participation and other equity market bottlenecks make equity financing unattractive. for companies.

“Additionally, the high transaction costs and complicated application process when issuing shares are some of the factors that have attracted companies to the trading markets space.

“Regulators should review the cost of fundraising and listing requirements to incentivize more companies to seek funds through equity and encourage listing.”

For his part, Vice Chairman of Highcap Securities Limited, David Adonri, said: “Commercial paper (CP) are short-term money market instruments used to finance working capital, while equities are long-term loans used to finance fixed or long-term assets. They serve different purposes.

“The increasing issuance of CP may be due to an increase in the need for short-term working capital financing rather than the need for project financing.”

For his part, Managing Director of APT Securities Limited, Mallam Garba Kurfi, said, “Share prices are below fair value, which discourages companies from issuing discounted shares; instead they choose to go into the fixed income market through bonds or CP. CPs are also cheap compared to bank loans.

Further, FMDQ Group Managing Director, Bola Koko, stated that, “As Nigerian DCM continues to witness significant activity with various corporate institutions tapping into the market as an effective alternative to meet their funding and liquidity needs, FMDQ Exchange will continue to provide timely and cost-effective services to help its stakeholders, in particular issuers and investors, access capital, manage risk and, invariably, improve their profile of business.

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