Northeast Utilities Beats Earnings Est.

Northeast Utilities (NU) announced first-quarter 2013 pro forma earnings of 73 cents per share, beating the Zacks Consensus Estimate by 8 cents and year-ago level by 30.4%.

Improvement in earnings was primarily driven by 72.6%, 13.4%, 59%, 36.2%, 31% and 194.6% year-over-year rises in Electric Transmission, Electric Distribution and Generation, Connecticut Light and Power Company, Public Service Company of New Hampshire, Western Massachusetts Electric Company and Natural Gas Distribution segments’ earnings, respectively. In addition, NSTAR Electric and NU parent and other businesses also contributed significantly.

On a GAAP basis, the company reported earnings of 72 cents per share versus 56 cents per share a year ago. The difference between GAAP and pro forma earnings was due to a penny cost associated with the NSTAR merger.

Total Revenue

The company’s revenues of $ 1,995 million beat the Zacks Consensus Estimate by $ 88 million. Quarterly revenues increased 81.4% year over year owing to favorable performance from all the segments.

First Quarter Operational Highlights

Northeast Utilities’ overall retail electric sales increased 3.2% year over year to 13,796 Gigawatt hours. The company’s natural gas sales were 39,422 million cubic feet, up 21.8% year over year.

Northeast Utilities’ total operating expenses increased 78.1% year over year to $ 1.6 billion primarily due to higher purchased power, fuel and transmission costs, operations and maintenance costs as well as depreciation expenses. In addition, the company’s spending under its Energy Efficiency Programs was also responsible for this higher expense.

Financial Update

As of Mar 31, 2013, Northeast Utilities had cash balance of $ 60.8 million compared with $ 45.7 million as of Dec 31, 2012.

Long-term debt as of Mar 31, 2013 was $ 7.0 billion versus $ 7.2 billion as of Dec 31, 2012.

Net cash provided by operating activities during the first three months of 2013 was $ 473.1 million, significantly higher than $ 8.8 million in the year-ago comparable period.

Capital expenditures increased to $ 389 million from $ 304.3 million a year ago.

Guidance

Northeast Utilities reaffirmed its full-year 2013 earnings guidance in the range of $ 2.40 to $ 2.60 per share.

Other Utility Company Releases

Exelon Corporation (EXC) announced first quarter operating earnings of 70 cents per share, beating the Zacks Consensus Estimate by 2 cents.

Entergy Corporation (ETR) reported first quarter operational earnings of 94 cents per share that came at par with the Zacks Consensus Estimate.

American Electric Power Co. Inc. (AEP) reported first quarter earnings of 80 cents per share that were in line with the Zacks Consensus Estimate.

Our View

In first-quarter 2013, Northeast Utilities experienced positive impacts from its recently completed NSTAR-merger. Both NSTAR Electric as well as NSTAR Gas Company performed well. We believe this merger continues to aid the company to increase its scale of operations and serve a wider customer base in the future.

In addition, the company expects its Greater Springfield Reliability project to contribute significantly in 2013 as it will be online by this year. Western Massachusetts Electric Company’s improvement in earnings primarily generated from this project as its 345 kilovolt (kV) portion energized in the first quarter.

However, over dependence on transmission and distribution businesses, and stringent regulations, may to some extent restrict the company’s future performance.

Hartford, Conn. and Boston, Mass.-based Northeast Utilities provides energy delivery services to residential, commercial and industrial customers in Connecticut, New Hampshire and Massachusetts. The company currently has a Zacks Rank #2 (Buy).

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GM Beats but Earnings Down 28%

General Motors Co. (GM) reported a 28.0% fall in earnings to 67 cents per share in the first quarter of the year from 93 cents in the same quarter of 2012 (all excluding special items) due to lower earnings generated from the company’s all geographic operations except Europe.

Despite this, the automaker’s earnings exceeded the Zacks Consensus Estimate by 11 cents per share.

Net earnings fell 31.3% to $ 1.1 billion from $ 1.6 billion in the first quarter of 2012. Including a net loss from special items, earnings were $ 0.9 billion or 58 cents per share in the quarter compared with $ 1.0 billion or 60 cents a year ago.

Revenues in the quarter slid 2.4% to $ 36.9 billion, despite a 3.6% rise in retail unit sales to 2.4 million vehicles globally. It was higher than the Zacks Consensus Estimate of $ 36.4 billion.

Wholesale vehicle sales edged down 2.5% to 1.6 million units. The automaker occupied a worldwide market share of 11.4% during the quarter compared with 11.2% a year-ago.

Adjusted earnings before interest and tax (:EBIT) was $ 1.8 billion in the quarter compared with $ 2.2 billion the first quarter of 2012. EBIT for 2013 included the impact of $ 0.1 billion in restructuring costs.

Segment Results

GM North America (:GMNA) generated revenues of $ 23.0 billion during the quarter, down a 0.8% rise from the prior year. Adjusted EBIT decreased 13.9% to $ 1.4 billion from $ 1.6 billion in the first quarter of 2012.

GM Europe (GME) had revenues of $ 4.8 billion, an 8.3% fall from the previous year quarter. The segment reported a narrower adjusted loss of $ 175 million in the quarter compared with $ 294 million in the year-ago quarter.

GM International Operations (:GMIO) generated revenues of $ 4.8 billion, reflecting a 3.9% decline from the prior year. Adjusted EBIT was $ 495 million in the quarter, down 5.0% from $ 521 million in the comparable quarter of 2012.

GM South America (:GMSA) had revenues of $ 3.7 billion, a decline of 4.6% from the prior-year quarter. The segment had an adjusted loss of $ 38 million in the quarter in sharp contrast to a profit of $ 153 million in the first quarter of 2012.

GM Financial reported a 25.3% rise in revenues to $ 540 million during the quarter. Adjusted EBIT was almost flat at $ 180 million compared with $ 181 million in the year-ago quarter.

Financial Position

General Motors had cash and cash equivalents of $ 20.6 billion as of Mar 31, 2013 compared with $ 18.4 billion as of Dec 31, 2012. Total debt (Automotive and Financial) increased to $ 18.4 billion as of Mar 31, 2013 from $ 16.1 billion as of Dec 31, 2012. Consequently, debt-to-capitalization ratio increased to 32.9% as of Mar 31, 2013 from 30.7% as of Dec 31, 2012.

During the quarter, the company had a net cash flow of $ 543 million from automotive operations, significantly down from $ 2.3 billion in the year-ago quarter. The decline was mainly attributable to lower earnings and a series of timing-related items that GM expects to reverse during the rest of 2013.

After deducting $ 1.9 billion and $ 2.0 billion of capital expenditures in the first quarter of 2013 and 2012, respectively, the company had a free cash flow use of $ 1.4 billion during the quarter compared with an inflow of $ 282 million a year ago.

Outlook

General Motors is gearing up for more than 40 major vehicle launches in 2013 across the globe in order to drive sales and revenues. In addition, the company expects that its European results will improve further based on its cost reduction measures.

Our Take

GM is a leading global automotive company. The company has presence in almost 120 countries and has facilities located in 30 countries. It currently retains a Zacks Rank #3 (Hold).

GM’s major rival Ford Motor Co. (F) posted an increase of 4.1% in earnings to $ 1.6 billion and 5.1% in earnings per share to 41 cents in the first quarter of 2013, beating the Zacks Consensus Estimate by 3 cents. Revenues improved 10.5% to $ 35.8 billion, exceeding the Zacks Consensus Estimate of $ 32.8 billion.

The improvement in revenues and earnings was mainly attributable to Ford’s strong performance in North America and Asia Pacific and Africa. The company’s results were disappointing in South America due to an unfavorable exchange rate as well as in Europe due to the sluggish economy.

Few stocks that are performing well in the industry include Visteon Corp. (VC) and Denso Corp. (DNZOY). They carry a Zacks Rank #1 (Strong Buy).

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Luminex Beats 1Q Earnings Est.

Luminex Corporation’s (LMNX) first-quarter 2013 adjusted earnings per share of 14 cents beat the Zacks Consensus Estimate of 8 cents per share by 75%. It also exceeded the year-ago earnings by 75%. Adjusted earnings exclude one-time charges such as the amortization, severance and legal costs along with expenses associated with the termination of molecular diagnostic distribution agreements.

However, the company reported net loss (including one-time expenses) of $ 2.5 million (or a loss of 6 cents per share) in the first quarter compared with a net income of $ 3.5 million (or 8 cents per share). The loss was mainly due to a charge of $ 7 million related to settlement of distribution agreements with prior molecular diagnostic assay distributors.

Revenues

Revenues increased 9% in the reported quarter to $ 53.2 million, marginally surpassing the Zacks Consensus Estimate of $ 53 million. Revenues were driven by double digit growth in royalty revenues and higher shipment of multiplexing analyzers, reflecting strong demand for Luminex products.

For the first quarter, Assay sales grew 6% to $ 18.3 million, led by strong sales in the infectious disease product line as well as higher gastrointestinal pathogen panel (:GPP) and lab-developed tests (:LDT) assay sales.

Revenues from the System segment dropped 6% year over year to $ 6.6 million, mainly due to the ongoing transition from the LX system to the MAGPIX system, which has a lower price point. The company shipped 205 multiplexing analyzers during the quarter, resulting in total life-to-date dispatches of 9,865 analyzers, up 11% year over year.

Consumable sales remained flat at $ 11.9 million, led by stabilization of purchase volume of Luminex’s largest customer. Royalty and All Other revenues jumped 23% and 47% to $ 10.1 million and $ 6.3 million, respectively.

Margins

Gross margin in the quarter was 71% versus 69% in the prior-year quarter, reflecting a strong mix shift toward higher margin products and contribution from a milestone payment related to a development agreement with Merck.

Selling, general and administrative expenses (as a percentage of sales) were 48.5% versus 34.7% in the year-ago quarter. Research and development expenses were 23.9% of sales compared with 20.7% in the previous-year quarter due to expenses related to development of the Aries project.

Operating expenses were up 40% to $ 39.5 million due to costs associated with the settlement of the distributor agreement and pipeline development expenses. Operating loss was $ 1.6 million in the quarter versus an operating income of $ 5.6 million in the year-ago quarter.

Balance Sheet

Luminex ended first quarter 2013 with cash and cash equivalents of $ 54.3 million, up 4.8% year over year. Long-term debt was $ 1.4 million, down 42%.

Guidance  

Moving ahead, Luminex reiterated its expected revenues for fiscal 2013 in the range of $ 220 million to $ 230 million, up 9%–14% year over year.  The current Zacks Consensus Estimate is pegged at $ 224 million.

Recent Developments

In April 2013, Luminex won clearance from the U.S. Food and Drug Administration (:FDA) for its MAGPIX instrument, with its xTAG Gastrointestinal Pathogen Panel (xTAG GPP). Earlier, in Jan 2013, it had received FDA clearance for the GPP on the LX200 system. The expansion of the company’s infectious disease and genetic testing product lines is encouraging.

Luminex has also entered into a collaboration and license agreement with Merck & Co. (MRK) in the quarter. As per the agreement, the company will develop a companion diagnostic device that will assist in screening patients into Merck’s pivotal study for Alzheimer’s disease.

Our View

Luminex possesses an extensive product portfolio and a healthy pipeline of novel assays, which are expected to support growth going ahead. Moreover, Luminex is developing innovative platforms by combining resources from its latest acquisitions. The company’s initiative to establish a direct sales force for its molecular diagnostics customers will likely improve operating efficiency.

However, Luminex operates in a highly competitive life sciences industry. Sluggish growth in its core markets as well as the ongoing global austerity measures are challenges faced by the company. Also, the loss of its assay distributors is affecting the bottom line.

The stock carries a Zacks Rank #3 (Hold). Medical instrument companies, such as Accuray (ARAY) and Abiomed (ABMD) with Zacks Rank #2 (Buy), are expected to do well.

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HERBALIFE BEATS EARNINGS AND REVENUE ESTIMATES, BOOSTS FORECAST

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REUTERS/Brendan McDermid

Herbalife’s Q1 2013 earnings are out.

Adjusted earnings per share came in at $ 1.27, better than the $ 1.06 expected by analysts.

Revenues came in at $ 1.12 billion, in line with company guidance but slightly above analysts’ estimates for $ 1.11 billion in sales.

The company also raised full-year 2013 earnings guidance to a range of $ 4.60-4.80 per share. Analysts were expecting $ 4.66.

Shares are up slightly in after-hours trading.

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Below is the text from the release:

LOS ANGELES–(BUSINESS WIRE)–

Herbalife Ltd. (HLF) today reported first quarter net sales of $ 1.1 billion, reflecting an increase of 17 percent compared to the same time period in 2012 on volume point growth of 13 percent. Adjusted1 net income for the quarter of $ 137.4 million, or $ 1.27 per diluted share, compares to 2012 first quarter net income of $ 108.2 million and EPS of $ 0.88, respectively. On a reported basis, first quarter 2013 EPS of $ 1.10 increased 25 percent compared to the $ 0.88 reported in the comparable quarter last year.

“We continue to deliver record results in sales and profitability as our independent distributors successfully execute numerous growth strategies that enable deeper market penetration, developing customers using our weight management and targeted nutrition products every day,” said Michael O. Johnson, Herbalife’s chairman and CEO. “Obesity and poor nutrition are global public health problems. Our distributors are proud to be part of the solution.”

For the quarter ended March 31, 2013 the company generated cash flow from operations of $ 137.6 million, an increase of 14 percent compared to 2012; paid dividends of $ 30.9 million; invested $ 24.9 million in capital expenditures; and repurchased $ 162.4 million in common shares outstanding under our share repurchase program.

Herbalife is arguably one of the most embattled stocks in America as multiple hedge fund titans square off over its future.

On one side is Bill Ackman, who released a massive, 342-slide presentation in December arguing that the company was a Ponzi scheme and that shares would go to $ 0. Ackman describes his hedge fund’s short position in Herbalife as “enormous.”

On the other side are activist investor Carl Icahn and hedge fund manager Dan Loeb, who both decided to invest in the stock after Ackman went public with his short call.

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Colfax Beats Earnings, Rev Lags in 1Q13

Colfax Corporation (CFX), a manufacturing and engineering company recently announced its results for the first quarter of 2013. Adjusted earnings per share in the quarter were recorded at 26 cents, beating the Zacks Consensus Estimate of 24 cents by 8.33%. Moreover, earnings increased 13.0% year over year, due to improved sales and margins in the quarter.

Revenue: Colfax’s revenue in the first quarter was recorded at $ 947.1 million, which lagged the Zacks Consensus Estimate of $ 955.0 million by 0.8%. Revenue increased 6.8% year over year, due to about $ 105.2 million contribution from various acquisitions, which was slightly offset by a drop in the existing business accompanied by foreign currency adjustments.

Total orders in the quarter were $ 502.1 million, increasing 0.9% year over year, whereas total backlog at the end of the quarter stood at $ 1,443.4 million, compared with $ 1,372.8 million at the end of first quarter 2012.

Revenue from the Gas and Fluid Handling segment came in at $ 425.1 million, slightly below the year-ago revenue of $ 425.3 million. However, the Fabrication Technology segment grew 13.2% year over year to $ 522.0 million, which was essentially inorganic growth.

Costs/Margins: Colfax’s gross profit margin in the quarter was 30.7% in the quarter, increasing 340 basis points year over year, due to active cost control measures pursued by the company. SG&A as a percentage of sales was 22.4%, against 23.9% in the first quarter of 2012. Colfax’s adjusted operating income margin expanded 120 basis points year over year in the quarter to 8.1%.

Gas and Fluid Handling segment’s gross margin was recorded at 29.9% in the quarter, against 29.0% in the first quarter of 2012. Fabrication Technology’s gross margin increased 570 basis points in the quarter to 31.4%.

Balance Sheet/ Cash Flow: Exiting the first quarter of 2013, Colfax’s cash and cash equivalents stood at $ 234.8 million, against $ 482.4 million in the fourth quarter of 2012. Long-term debt for the quarter was $ 1.4 billion, compared with $ 1.7 billion in the preceding quarter.

Cash used in operating activities was $ 13.4 million, decreasing from the $ 109.3 million used in the first quarter of 2012. Colfax bought fixed assets worth $ 18.0 million in the quarter against a purchase of $ 18.9 million in the year-ago quarter.

Outlook: Colfax reaffirmed its revenue guidance in the range of $ 4.175 billion to $ 4.25 billion with an organic revenue increase of 1% to 3%. Moreover, operating margin is expected to be around 10.0% for 2013. The company is expected to witness a hike of 27.0% to 42.0% in its earnings per share for 2013 over 2012, and lie in the range of $ 1.70 to $ 1.90.

Our Recommendation: Colfax currently holds a Zacks Rank #3 (Hold). Other general industrial stocks to look out for are The Babcock & Wilcox Company (BWC), EnPro Industries, Inc. (NPO) and Tri-Tech Holding, Inc. (TRIT); each carrying a Zacks Rank #1 (Strong Buy).

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