Dividend Aristocrat Enterprise Products Partners Showcases Strong Earnings Growth in Second Quarter
July 30, 2024
Image Source: 2Q 2024 Enterprise Products Partners Earnings Slides By Brian Nelson, CFA On July 30, Enterprise Products Partners (EPD) reported decent second quarter results. During the quarter, the midstream energy company generated net income attributable to common unitholders of $1.4 billion, or $0.64 per unit on a fully diluted basis, a 12% increase from the same period a year ago. Distributable cash flow [DCF] came in at $1.8 billion, up from $1.7 billion in last year’s quarter and covered its distribution 1.6 times. Enterprise increased its distribution 5% in the second quarter, to $2.10 per common unit on an annualized basis, marking the 26th consecutive year it has raised its payout. Management commented on the second quarter performance: Enterprise
Phillips 66 Records Strong Free Cash Flow in Second Quarter
July 30, 2024
Image Source: Phillips 66 Investor Update By Brian Nelson, CFA Phillips 66 (PSX) reported strong second quarter results July 30, with the firm generating second-quarter earnings of $1.0 billion or $2.38 per share. Adjusted earnings were $984 million or $2.31 per share. The company experienced record midstream NGL pipeline and fractional volumes and noted that synergy capture is driving lower costs. The company recorded strong refining operations with 98% crude utilization and 86% clean product yield. Management commented on the strong quarter: We are systematically executing on our strategic priorities, which is reflected in our second-quarter results. Refining crude utilization was our highest in five years and we lowered our costs by nearly a dollar per barrel, reflecting the success
McDonald’s Speaks of Cautious Consumer But Traction with $5 Meal Deal
July 29, 2024
By Brian Nelson, CFA McDonald’s (MCD) reported results July 29 that showed both revenue and non-GAAP earnings per share coming in lower than the consensus forecast. Consolidated sales were flat (up 1% in constant currencies), while systemwide sales fell 1% (up 1% in constant currencies). Global comparable store sales fell 1% in the quarter, lower than the consensus forecast, with negative comparable store sales across all of its segments. U.S. comps fell 0.7%, International Operated Markets [IOM] comps fell 1.1%, while International Developmental Licensed Markets [IDLM] comps dropped 1.3%. Performance wasn’t as bad as the decline in comps would suggest given the 11.7% comp McDonald’s lapped from the same quarter of 2023. U.S. comps were impacted by negative comparable guest
3M Looks to a Brighter Future, Shares Rally 20%+
July 28, 2024
Image Source: 3M’s second quarter results were better than feared. By Brian Nelson, CFA On July 26, 3M (MMM) reported better-than-expected second quarter results with both revenue and non-GAAP earnings per share coming in higher than the consensus forecast. Though reported sales dropped 0.5%, adjusted organic sales advanced 1.2% on a year-over-year basis. Its adjusted operating income margin expanded 4.4 percentage points from the same period a year ago, to 21.6%. Adjusted earnings per share from continuing operations came in at $1.93, up 39% on a year-over-year basis. New CEO William Brown was upbeat on the results: We delivered another strong quarter with adjusted earnings growth up double-digits and robust cash generation. I want to thank 3M employees for their
Honeywell Adjusts Full Year 2024 Guidance on Margin Pressures
July 25, 2024
Image: Honeywell’s shares have traded sideways for the past 12-18 months. By Brian Nelson, CFA On July 25, Honeywell (HON) reported better than expected second quarter results with revenue and non-GAAP earnings per share coming in higher than the consensus forecast. Reported sales advanced 5% thanks to organic revenue growth of 4%, hitting the high end of its previous guidance. Adjusted earnings per share of $2.49 was above the high end of its previous guidance. Thanks to strength in its ‘Building Automation’ and ‘Energy and Sustainability Solutions’ divisions, orders were up 4%. During the second quarter, ‘Aerospace Technologies’ sales advanced an impressive 16% on an organic basis from last year’s quarter, marking the eighth consecutive quarter of double-digit organic expansion.
IBM’s Free Cash Flow Generation on the Up and Up
July 25, 2024
Image: IBM’s shares have staged a nice recovery since the beginning of 2023. By Brian Nelson, CFA On July 24, IBM (IBM) reported solid second quarter results with both revenue and GAAP earnings per share coming in better than expectations. Total revenue was up 2% on a year-over-year basis (up 4% in constant currency) thanks to strength in its software revenue, which advanced 7.1% (8.4% in constant currency). Consulting revenue and infrastructure revenue were up marginally on a constant currency basis in the quarter. IBM’s margins also fared well in the quarter. Its gross profit margin increased 190 basis points on an operating (non-GAAP) basis, while its pretax income margin expanded 220 basis points on an operating (non-GAAP) basis. Cash
Republic Services Showcases Pricing Strength, Raises Dividend
July 25, 2024
Image: Republic Services’ stock has been consistently strong since the beginning of 2023. By Brian Nelson, CFA On July 24, Republic Services (RSG) reported better than expected second quarter results with both revenue and non-GAAP earnings per share exceeding the consensus forecast. Second quarter total revenue growth was 8.6% consisting of 5.6% organic expansion and 3% growth from acquisitions. Though volumes faced some pressure in the quarter, Republic Services continues to display pricing power, with average yield and total price increasing 5.5% in the three months ended June 30. Republic’s second quarter adjusted EBITDA came in at $1.26 billion, with its adjusted EBITDA margin expanding 110 basis points on a year-over-year basis, to 31.1% of total revenue. On an adjusted
Chipotle’s Comparable Store Sales Growth Impresses
July 25, 2024
Image: Chipotle’s stock has done quite well since the beginning of 2023. By Brian Nelson, CFA On July 24, Chipotle (CMG) reported better-than-expected second quarter results with both revenue and non-GAAP earnings per share coming in above the consensus forecast. Total revenue increased an impressive 18.2%, while comparable store sales leapt 11.1%. Higher transactions of 8.7% and a 2.4% increase in average check drove the comp increase. Digital sales accounted for 35.3% of total food and beverage revenue in the quarter. Chipotle’s operating margin was 19.7%, an increase from 17.2% in last year’s quarter, while its restaurant level operating margin advanced 140 basis points, to 28.9%. Last year’s menu price increases offset inflation of avocados, increased oil usage and higher
AT&T’s Dividend Coverage with Free Cash Flow Is Solid
July 24, 2024
Image Source: AT&T By Brian Nelson, CFA On July 24, AT&T (T) reported mixed second quarter results with revenue coming up short of consensus, but non-GAAP earnings per share coming in line with what the Street was looking for. Revenue for the second quarter declined 0.4% on a year-over-year basis “due to lower Business Wireline service revenues and declines in Mobility equipment revenues driven by lower sales volumes.” Adjusted operating income came in at $6.3 billion versus $6.4 billion in the year-ago quarter. Net income attributable to common stock was $3.5 billion versus $4.4 billion in the same period last year. Adjusted earnings per diluted share was $0.57 versus $0.63 in the same period a year ago. Adjusted EBITDA improved
Tesla’s Second Quarter Report Wasn’t Great
July 24, 2024
Image: Tesla’s trailing twelve-month performance across vehicle deliveries, operating and free cash flow, as well as adjusted EBITDA have faced pressure in recent quarters. By Brian Nelson, CFA On July 23, Tesla (TSLA) reported mixed second quarter results with revenue outpacing the consensus forecast, but non-GAAP earnings per share coming up short. Total automotive revenue fell 7% on a year-over-year basis, while growth in ‘energy generation and storage revenue’ and ‘services and other revenue’ helped to drive total revenue modestly higher on a year-over-year basis. In addition to a decline in vehicle deliveries, reduced average selling prices across its auto line-up hurt performance. During the quarter, Tesla’s gross profit margin contracted 23 basis points, while swelling operating expenses drove income
