9:01 am Schnitzer Steel Reports Third Quarter Results Below Expectations
Schnitzer Steel (SCHN $24.44) reported third quarter adj. earnings of $0.09 per share, worse than expectations. Revenue fell 19.3% year/year to $710 mln and also came in below expectations.
"During the third quarter we achieved higher sales volumes in each of our businesses despite weaker market conditions. Operating income in our Metals Recycling Business was negatively impacted by the significant drop in ferrous selling prices which fell more quickly than purchase prices and offset some of the benefits from the increased volumes. Our major capital projects for fiscal 2013 in Canada and Puerto Rico continue to progress on schedule. In our Auto Parts Business, seasonal trends contributed to improved sequential results for stores owned more than one year and the integration of our 11 new sites added this fiscal year are on track. In our Steel Manufacturing Business, higher sales volumes reflected, in part, a market environment that is improving."
8:54 am Initial Claims Remain on Flat Track
The initial claims level fell from an upwardly revised 355,000 (from 354,000) for the week ending June 15 to 346,000 for the week ending June 22. The Briefing.com consensus expected the initial claims level to fall to 345,000.
Over the past several weeks, the initial claims level has followed a soft sawtooth path with the four-week moving average remaining nearly flat the entire time. The claims data suggest that labor market conditions have not materially changed during this time. The continuing claims level fell to 2.965 mln for the week ending June 15 from an upwardly revised 2.966 mln (from 2.951 mln) for the week ending June 8. The consensus pegged the continuing claims level at 2.958 mln.
8:53 am Stronger Than Expected Income Gains Lead to Potential Positive Revisions to May Employment Data
Personal income increased 0.5% in May after increasing an upwardly revised 0.1% (from 0.0%) in April. The Briefing.com consensus expected personal income to increase 0.2%. The May employment report showed a very minor 0.1% increase in aggregate wages. The data from the income report negate that view and suggest an upward revision is coming to the average workweek and/or average hourly earnings. Personal spending increased 0.3% in May and nearly reversed the entire 0.3% decline that occurred in April. The consensus expected spending levels to increase 0.4%. Spending on goods rose 0.5%, which was in-line with the retail sales report. Services spending rose 0.1%. The personal savings rate increased to 3.2% and is nearly back to the 3.5% it averaged for most of 2012. The core PCE price index increased 0.1% in May. That was up from no growth in April and exactly what the consensus expected. Year-over-year, core PCE increased 1.1%. That is well below the Fed's target rate of 2.0% and suggests no immediate tapering is necessary.
8:51 am KB Home shares spike 2% following smaller than expected loss
KB Home (KBH $20.30 +0.41) reported second quarter loss of $0.04 per share, which was a smaller than expected loss, while revenues rose 73.1% year/year to $524.4 million, which easily topped expectations. The company produced a second quarter operating profit -- $8.7 million -- for the first time since 2006, and has now reported operating income for the past four quarters.
The Company's adjusted housing gross profit margin, improved by 610 basis points to 18.2% for the current quarter from 12.1% for the year-earlier quarter. Homes delivered rose 39% YoY to 1,797 homes, the seventh consecutive quarter of year-over-year growth. The co's overall average selling price of $290,400 increased 25% YoY, marking the highest Q2 ASP since 2006 and the twelfth consecutive quarter of YoY improvement. The higher average selling price reflected the Company's ongoing strategy of repositioning its operations into higher-performing choice locations in land-constrained growth markets that feature greater demand for larger homes, and continued emphasis on pricing discipline to drive profitability. It also resulted from a greater percentage of homes delivered from the Company's West Coast homebuilding region, where the co has prioritized its investments, as well as the overall market increases in home prices.
Compared to the year-earlier quarter, average selling prices increased 15% in each of the Company's West Coast and Central homebuilding regions, 26% in the Southwest homebuilding region and 16% in the Southeast homebuilding region. Potential future housing revenues in backlog at May 31, 2013 increased to $826.6 million, up 19% from $693.4 million at May 31, 2012. The number of homes in the Company's backlog rose 6% to 3,128 at May 31, 2013 from 2,962 at May 31, 2012. The overall value of second quarter net orders was $639.6 million, up 27% from $503.1 million in the year-earlier quarter. Each of the co's homebuilding regions generated a year-over-year increase in net order value, ranging from 10% in the Southwest region to 46% in the Soudeltheast region. The Company generated 2,162 net orders in the second quarter of 2013, up 6% from 2,049 net orders in the year-earlier quarter. The year-over-year increase in net orders reflected growth in the Company's Central and Southeast homebuilding regions of 8% and 31%, respectively, partly offset by lower net orders in its West Coast and Southwest homebuilding regions.
8:33 am ConAgra Sees Fiscal Year 2014 Earnings Below Expectations
ConAgra Foods (CGA $33.35) reported fourth quarter earnings results this morning of $0.60 per share, excluding non-recurring items, which was just slightly better than expectations. On the top line, revenues rose 33.7% year/year to $4.59 bln, which came in-line with expectations.
Looking forward to next year, the company expects to see earnings in fiscal year 2014 of $2.40 vs. $2.48 Capital IQ Consensus.
Low-single-digit organic volume growth and mid-single-digit operating profit growth for the Consumer Foods segment.
The company expects first quarter 2014 EPS to be in line with comparable year-ago amounts due to significant slotting and marketing investments associated with summer 2013 new product introductions, as well as the timing of the impact of the customer transition issues at Lamb Weston. The other quarters of fiscal 2014 are expected to reflect good EPS growth. The co currently expects cost-related synergies resulting from the Ralcorp acquisition to reach $300 million of annual pre-tax benefit by fiscal 2017, an increase from prior estimates of $225 million.
The company expects annual adj. diluted EPS growth of at least 10% for fiscal years 2015-2017 as significant cost synergies related to the Ralcorp acquisition materialize. Given the growth throughout this period, comparable EPS is expected to be greater than $3.00 in fiscal 2017.
After the 2015-2017 period, when the majority of cost-related synergies are realized, the co expects long-term annual diluted EPS growth of 7-9%, adjusted for items impacting comparability, and long-term annual sales growth in the range of 3-4%. The long-term EPS and sales expectations reflect the benefit of ongoing innovation, marketing, margin enhancement initiatives, and capital allocation as well as anticipated benefit from greater participation in the attractive private brand segment. These long-term goals apply for fiscal 2018 and beyond, and are upward revisions from prior long-term targets of 6-8% for comparable annual EPS growth and 3% annual sales growth.
7:53 am Progress Software shares spike 8% following beat on earnings
Progress Software (PRGS $24.00 +1.95) reported second quarter earnings of $0.27 per share, excluding non-recurring items, which was better than expected, while revenues rose 10.3% year/year to $81.7 million, which topped expectations. The company issued upside guidance for the third quarter with revenue growth of +2-4% compared to the fiscal third quarter of 2012.
2:18 am ConAgra among the companies set to report earnings before the open on Thursday (CAG)
Look for the following companies to report before the open:
CMC, CAG, KBH, MKC, OMN, SCHN, SJR, WGO, WOR
2:16 am Paychex falls after hours following earnings (PAYX)
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings: PRGS +9.3%, BGCP +1.6%, TEP +0.6%
Companies trading higher in after hours in reaction to news: PRGS +9.3% (announced plan to complete additional $100 mln share repurchase by December 31, 2013; co also reported earnings), UCBI +3.1% (announced sale of classified assets and reversal of deferred tax asset valuation allowance), ACAS +2.6% (announced the purcahse of 9.1 mln of its shares at an average price of $13.77 per share), MW +0.6% (George Zimmer released open letter; 'believe that the Board should be open to at least consider the full range of possibilities that could optimize the future value of the company for all stakeholders')
After Hours Losers:
Companies trading lower in after hours in reaction to earnings: MLHR -3.7%, PAYX -2.7%, CACI -1.0%, BBBY -0.02%
Companies trading lower in after hours in reaction to news: SIR -5.7% (announced proposed public offering of 8 mln shares of common stock), CLWR -2.2% (DISH Network announced withdrawal of Clearwire tender offer), MDT -1.0% (issued medical device notifications regarding the SynchroMed Implantable Infusion System), BKS -0.7% (filed to delay filing of Form 10-K), ITC -0.5% (priced $550 mln debt offering)
