RBC’s Douglas Miehm and Joel Hurren consider the impact of Valeant Pharmaceutical International’s (VRX) amended loan agreements–beyond the fact that it won’t default:
Kris Tripplaar/Sipa USA
Amendments to term loans will see 100bps increase in interest rate until certain financial metrics are met, 50bps increase thereafter. Following Valeants announcement on March 15th that it would seek amended credit terms from its lenders, the company announced several revisions including a 100bp increase in term loan interest rates (except Series D-2 T-B which increases 75 bps) until the outstanding financials are delivered and the quarter ended June 30 2017 is concluded at which point the rate can decrease by a maximum of 50bps related to Secured Leverage Ratio (SLR) tiering. The interest rate stays at the highest level until the SLR declines below 1.75x (drops 25 bps) and if below 1.25x drops another 25bps. We have revised our model to reflect these amendments. We believe 1.75x will be hit by approximately mid 2017 and 1.25x by the end of 2018. We have incorporated a one-time fee equivalent to 50bps on outstanding term loans (~$56MM). We had previously noted that we b elieved the announcement of bank debt amendments would be the first step towards share price recovery for Valeant but we remain somewhat cautious until the 10k is filed even given a favourable Ad Hoc Committee outcome…
Top International Stocks To Watch For 2016: Smith & Nephew SNATS, Inc.(SNN)
Smith & Nephew plc develops, manufactures, markets, and sells medical technology products and services worldwide. The company offers sports medicine joint repair products for surgeons, including an array of instruments, technologies, and implants necessary to perform minimally invasive surgery of the joints; and arthroscopy enabling technologies for healthcare providers, such as fluid management equipment for surgical access, high definition cameras, digital image capture, scopes, light sources, and monitors to assist with visualization inside the joints, radio frequency wands, electromechanical and mechanical blades, and hand instruments for removing damaged tissue. It also provides trauma and extremities products consisting of internal and external devices used in the stabilization of severe fractures and deformity correction procedures; gynecological instrumentation devices; knee implant products for specialized knee replac ement procedures; and hip implant products for reconstruction of the hip joint, as well as various products and technologies to assist in surgical treatment of the ear, nose, and throat. In addition, the company offers advanced wound care products for the treatment of acute and chronic wounds, including leg, diabetic and pressure ulcers, burns, and post-operative wounds; advanced wound devices, including traditional and single-use negative pressure wound therapy and hydrosurgery systems; and biologics and other bioactive technology products for debridement and dermal repair/regeneration. The company primarily serves the providers of medical and surgical treatments and services. Smith & Nephew plc was founded in 1856 and is headquartered in London, the United Kingdom.
- [By Charles Carlson, CEO and Portfolio Manager, Horizon Investment Services]
For investors looking for growth but also income, I especially like three health-care related stocksFresenius Medical (FMS), Novo Nordisk (NVO), and Smith & Nephew (SNN).
Top International Stocks To Watch For 2016: Helmerich & Payne, Inc.(HP)
Helmerich & Payne, Inc. engages in the contract drilling of oil and gas wells. It provides drilling rigs, equipment, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and from fixed platforms, tension-leg platforms, and spars in offshore areas. The company operates through three segments: U.S. Land, Offshore, and International Land. The U.S. Land segment drills primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Pennsylvania, Ohio, Utah, New Mexico, Montana, North Dakota, West Virginia, and Nevada. The Offshore segment has drilling operations in the Gulf of Mexico and Equatorial Guinea. The International Land segment conducts drilling operations in Ecuador, Colombia, Argentina, Bahrain, the United Arab Emirates, and Mozambique. As of November 12, 2015, the company operated a fleet of 344 land rigs in the United States; 38 international land rigs; and 9 offshore platform rigs. The company also owns, develops, and operates commercial real estate properties; and researches and develops rotary steerable technology. Its real estate investments include a shopping center comprising approximately 441,000 leasable square feet; multi-tenant industrial warehouse properties covering approximately one million leasable square feet; and approximately 210 acres of undeveloped real estate located in Tulsa, Oklahoma. Helmerich & Payne, Inc. was founded in 1920 and is headquartered in Tulsa, Oklahoma.
- [By Richard Moroney, Editor, Dow Theory Forecasts]
Helmerich & Payne (HP) has paid a dividend without interruption since 1959 and raised the distribution in 40 straight years.
Following a pair of hikes in less than 12 months, Helmerich’s quarterly dividend stands at $0.50 per share, compared to $0.07 per share a year ago.
Best Value Stocks To Invest In 2016: Manitowoc Company, Inc. (The)(MTW)
The Manitowoc Company, Inc. (MTW), incorporated on July 15, 1920, is a multi-industry, capital goods manufacturer. The Company operates in two principal markets: Cranes and Related Products (Crane) and Foodservice Equipment (Foodservice). Crane is a provider of engineered lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks. Foodservice is a manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food-preparation, holding and cooking needs of restaurants, convenience stores, hotels, healthcare and institutional applications. Its Crane products are principally marketed under the Manitowoc, Grove, Potain, National Crane, Shuttlelift and Manitowoc Crane Care brand names. Its Foodservice products, services and solutions are marketed under brands, including Cleveland, Convotherm, Dean, Delfield, Fabristeel, Frymaster, Garland, Inducs, Kolpak, Koolaire, Lin coln, Manitowoc Beverage Systems, Manitowoc Ice, Merco, Merrychef, Moorwood Vulcan, Multiplex, RDI Systems, Servend, TRUpour, U.S. Range and Welbilt, and are supported by Manitowoc KitchenCare.
Cranes and Related Products
The Company’s Crane segment designs, manufactures and distributes a diversified line of crawler-mounted lattice-boom cranes, which the Company sells under the Manitowoc brand name. Its Crane segment also designs and manufactures a diversified line of top-slewing and self-erecting tower cranes, which it sells under the Potain brand name. It designs and manufactures mobile telescopic cranes, which it sells under the Grove and Shuttlelift brand names, and a range of hydraulically powered telescopic boom trucks, which it sells under the National Crane brand name. The Company also provides crane product parts and services, and crane rebuilding, remanufacturing, and training services, which are delivered under the Manitowoc Crane Care br and name. In some cases its products are manufactured for th! e Company or distributed for the Company under strategic alliances. Its crane products are used in a range of applications throughout the world, including energy production/distribution and utilities, petrochemical and industrial projects, and infrastructure applications, such as road, bridge and airport construction, plus commercial and residential construction.
The Company, under the Manitowoc brand name, designs, manufactures and distributes lattice-boom crawler cranes. Lattice-boom cranes consist of a lattice-boom, which is a fabricated steel structure that has approximately four chords and tubular lacings, mounted on a base, which is either crawler or truck mounted. The Company offers models of lattice-boom cranes with lifting capacities of over 2,500 United States tons, which are used to lift material and equipment in a range of applications and end markets, including heavy construction, bridge and highway, duty cycle and infrastructure and energy-related projects. These cranes are also used by the crane rental industry. The Company also offers its lattice-boom crawler crane customers various attachments that provide its cranes with capacity in terms of height, movement and lifting. Its principal attachments are MAX-ER attachments, luffing jibs and RINGER attachments.
The Company, under the Potain brand name, designs and manufactures tower cranes utilized primarily in the energy, building and construction industries. The Company offers a range of tower crane products, including top slewing, luffing jib, topless, self-erecting and special cranes for dams, harbors and other building projects. Top-slewing cranes are the traditional form of tower cranes. Self-erecting cranes are bottom-slewing cranes, which have a counterweight located at the bottom of the mast and are able to be erected, used and dismantled on job sites without assist cranes. Top-slewing tower cranes have a tower and multi-sectioned horizontal jib. It offers over 20 models of top-slewing tower cranes with ma! ximum jib! lengths of over 80 meters and lifting capabilities ranging between 3 and 80 metric tons. Topless tower cranes are a type of top-slewing crane and have no cathead or jib tie-bars on the top of the mast. It offers approximately 20 models of topless tower cranes with maximum jib lengths of over 70 meters and lifting capabilities ranging between 1.1 and 16 metric tons. Luffing jib tower cranes, a type of top-slewing crane, have an angled jib. The Company offers over 10 models of luffing jib tower cranes with maximum jib lengths of over 60 meters and lifting capabilities ranging between 1.6 and 32 metric tons. Self-erecting tower cranes are mounted on axles or transported on a trailer. It offers approximately 20 models of self-erecting cranes with maximum jib lengths of over 50 meters and lifting capacities ranging between 0.65 and 8 metric tons, which are utilized in low to medium rise construction and residential applications.
The Company, under the Grove brand na me, designs and manufactures over 30 models of mobile telescopic cranes utilized primarily in industrial, commercial and construction applications, as well as in maintenance applications to lift and move material at job sites. Mobile telescopic cranes consist of a telescopic boom mounted on a wheeled carrier. The Company offers over four types of mobile telescopic cranes capable of reaching tip heights of over 440 feet with lifting capacities approximately 550 United States tons, which include rough-terrain, all-terrain, truck-mounted and industrial. Rough-terrain cranes are designed to lift materials and equipment on rough or uneven terrain. The Company produces, under the Grove brand name, over 10 models of rough-terrain cranes capable of tip heights of over 310 feet and maximum load capacities of approximately 150 United States tons. All-terrain cranes are cranes designed to lift materials and equipment on rough or uneven terrain. The Company produces, under the Grove bra nd name, over 10 models of all-terrain cranes capable of tip! heights ! of approximately 450 feet and maximum load capacities of over 550 United States tons. It produces, under the Grove brand name, three models of truck mounted cranes capable of tip heights of over 230 feet and maximum load capacities of over 110 United States tons. Industrial cranes are designed for plant maintenance, storage yard and material handling jobs. It manufactures, under the Grove and Shuttlelift brand names, approximately 10 models of industrial cranes. It produces industrial cranes with over 20 United States ton capacity and tip heights of over 80 feet. The Company offers hydraulic boom truck products under the National Crane product line. It offers, under the National Crane brand name, over 20 models of telescoping boom trucks. This type of cranes are capable of reaching maximum heights of over 200 feet and have lifting capacity of over 60 United States tons.
The Company competes with Hitachi Sumitomo, Kobelco, Liebherr, Sumitomo/Link-Belt, Terex, XCM G, Zoomlion, Sany, Comansa, Terex Comedil/Peiner, FM Gru, Jaso, Raimondi, Viccario, Saez, Benezzato, Cattaneo, Yongmao, Wolffkran, Kato, Locatelli, Broderson, Manitex, Altec, Elliott and Tadano.
The Company’s Foodservice Equipment business designs, manufactures and sells primary cooking and warming equipment; ice-cube machines, ice flaker machines and storage bins; refrigerator and freezer equipment; beverage dispensers and related products; serving, warming and storage equipment; and aftermarket parts and service solutions. Its range of products are used by commercial and institutional foodservice operators, such as full service restaurants, quick-service restaurant (QSR) chains, hotels, caterers, supermarkets, convenience stores, business and industry, hospitals, schools and other institutions.
The Company designs, manufactures and sells an array of ranges, griddles, grills, combination ovens, convection ovens, c onveyor ovens, induction cookers, broilers, tilt fry pans/ke! ttles/ski! llets, braising pans, cheese melters/salamanders, cook stations, table top and counter top cooking/frying systems, fryers, steam jacketed kettles and steamers. It sells traditional oven, combi oven, convection oven, conveyor oven, rapid cooking ovens, range and grill products under the Convotherm, Garland, Lincoln, Merrychef, U.S. Range and other brand names. Fryers and frying systems are marketed under the Frymaster and Dean brand names, while steam equipment is manufactured and sold under the Cleveland brand.
The Company designs, manufactures and sells ice machines under the Manitowoc brand name and Koolaire brand names. The Company designs, manufactures and sells commercial upright and undercounter refrigerators and freezers, blast freezers, blast chillers and cook-chill systems under the Delfield brand name. The Company manufactures, under the brand name Kolpak, modular and fully assembled walk-in refrigerators, coolers and freezers, and prefabricated cooler and freezer panels for use in the construction of refrigerated storage rooms and environmental systems. It also designs and manufactures refrigeration systems under the RDI brand name. The Company produces beverage dispensers, blended ice machines, ice/beverage dispensers, beer coolers, post-mix dispensing valves, backroom equipment and support system components and related equipment use by quick-service restaurant chains, convenience stores, bottling operations, movie theaters and the soft-drink industry. Its beverage and related products are sold under the Servend, Multiplex, TRUpour and Manitowoc Beverage Systems brand names. It designs, manufactures and sells a range of cafeteria/buffet equipment stations, bins, boxes, warming cabinets, display and deli cases, insulated and refrigerated salad/food bars, and warmers. Its equipment stations, cases, food bars and food serving lines are marketed under the Delfield and other brand names.
The Company provides par ts and aftermarket service, as well as provides a range of s! olutions ! under the KitchenCare brand name. The end-customer base for the Foodservice segment consists of a range of foodservice providers, including multinational and regional chain restaurants, convenience stores and retail stores; chain and independent casual and family dining restaurants; independent restaurants and caterers; lodging, resort, leisure and convention facilities; healthcare facilities; schools and universities; business and industrial customers, and other foodservice outlets.
The Company competes with Aucma, Brema, Follett, Hoshizaki, Ice-O-Matic, Scotsman, Vogt, Automatic Bar Controls, Celli, Cornelius, Taylor, Vin Service, American Panel, Arctic, Bally, Beverage Air, ICS, Master-Bilt, Nor-Lake, Thermo-Kool, Traulsen, True Foodservice, TurboAir, Ali Group, Dover Industries, Duke, Electrolux, Henny Penny, ITW, Middleby, Rational, Alto Shaam, Cambro, Hatco, Standex and Vollrath.
- [By Ben Levisohn]
With a neutral sector rating, we are working on evaluating risks to negative calls, and identifying potential value opportunities. Last week we noted more work might be worthwhile on Wabco Holdings (WBC), Terex, Manitowoc (MTW), and Caterpillar, two of those names have rallied for other reasons but the attractive price made the upside/downside skew up. We remain positive (OW) on Allison Transmission Holdings (ALSN) & United Rentals. Our and consensus 2017Allison Transmission Holdings estimates have fallen by 2% vs. ~15% for the group, while the shares are down 10% since launch. We continue to see United Rentals as the best value in our group…