Earnings from Axalta and Cognizant

We had two more Buy List earnings reports this morning. Axalta Coating Systems (AXTA) reported earnings of 28 cents per share which was one penny below estimates. Quarterly revenues rose 2% to $1.03 billion, which was a little better than estimates. In constant currency, sales rose 5.6%.

Despite the miss, this was a decent quarter for Axalta.

“Axalta’s 2016 financial period ended on a strong note, with fourth quarter net sales and operating performance slightly exceeding the expectations set in October, driven by volume and favorable product mix. For the full year, we also met our key objectives in terms of financial and operating performance, despite a somewhat greater foreign currency headwind,” said Charles W. Shaver, Axalta’s Chairman and Chief Executive Officer. “We are proud of the progress we made this year, including achieving positive growth in a tough global economy, successfully executing on our M&A strategy, meeting our leverage target ahead of plan, and improving productivity through our Axalta Way initiatives. Key milestones were also met in new product technology introduction, refinancing our capital structure, and progressing our product globalization and commercial excellence objectives. We look forward to ongoing momentum in each of these areas in 2017.”

The company doesn’t provide EPS guidance, but here are the numbers they’re expecting for 2017:

• Net sales growth of 1-3% as-reported; 4-6% ex-FX, including acquisition contribution of 2-3%
• Adjusted EBITDA of $930-980 million
• Interest expense of ~$150 million
• Income tax rate, as adjusted, of 22-24%
• Free cash flow of $440-480 million
• Capital expenditures of ~$160 million
• Depreciation and amortization of ~$335 million
• Diluted shares outstanding of 246-249 million

The stock is currently down about 1.6%.

Cognizant Technology Solutions (CTSH) said it made 87 cents per share last quarter, which beat estimates by one penny. For the year, Cognizant made $2.55 per share.

They company offered Q1 guidance of 83 cents per share, and full-year guidance of $3.63 per share. That’s a bit below expectations.

But the more important news is that the company has reached an agreement with Elliott Management. They’re adding three new board members from Elliott. Cognizant also plans to return $3.4 billion to shareholders in the next two years. The company currently has a bank account of more than $2 billion. They also plan to start a dividend of 15 cents per share in Q2.

The stock is up about 4% today.

Posted by on February 8th, 2017 at 10:54 am


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