09:00 am Multi-Decade Growth Seen in the November Housing Data
Housing starts increased 22.7% in November, from 889,000 in October to 1.091 mln. That was the biggest monthly increase, in percentage terms, since January 1990 and the first time starts have topped 1.0 mln since March. The Briefing.com consensus expected 950,000 starts in November. This was the first housing starts data released since the government shutdown. Start levels for September (-0.9%, 883,000) and October (+1.8%, 889,000) were unknown prior to the release. The big increase in starts was, statistically, very unusual. Yet, the underlying trends support such a move. Over the last three months, the moving average for building permits was at its highest point since July 2008.
Furthermore, inventories of new homes were well below normal stocking points and required an increase in construction. Single-family construction, which follows a more stable trend, increased 20.8% in November to 727,000. That was the most single-family starts since March 2008. The volatile multifamily sector increased 26.8% in November to 364,000, which was the most multifamily units starts since March. The number of homes under construction increased 2.5% in November to 685,000. That will put upward pressure on residential construction spending. October levels increased 1%. The October construction spending report showed a decline in residential construction spending. The data from the housing starts report suggests an upward revision to the October construction data.
08:24 am Lennar shares spike 2% following better than expected earningsLennar
(LEN $36.00 +0.80) reported fourth quarter earnings of $0.73 per share, which is higher than expected, while revenues rose 41.8% year/year to $1.92 billion which is higher than expected.
- Key metrics:
- Deliveries of 5,650 homes; +27%
- New orders of 4,498 homes; +13%; New orders dollar value of $1.4 bln +34%
- Backlog of 4,806 homes; +19%; backlog dollar value of $1.6 bln +40%
- Gross margin on home sales of 26.8% -- improved 330 basis points.
07:51 am FedEx shares fall 1% following miss on earningsFedEx
(FDX $137.50 -1.59) reported second quarter earnings of $1.57 per share, which is worse than expected, while
revenues rose 2.6% year/year to $11.4 billion which is in line with estimates. The company raised its fiscal year 2014 guidance for EPS growth to 8-14% from 7-13%; remains in line (approximately $6.73-7.10, which is line with expectations).
FedEx Express Segment
- Operating income of $827 million, up 15% from $718 million last year
- Operating margin of 7.3%, up from 6.5% the previous year
- Net income of $500 million, up 14% from last year's $438 million.
FedEx Ground Segment
- Revenue of $6.84 billion, down slightly from last year's $6.86 billion
- Operating income of $326 million, up 42% from $230 million a year ago
- Operating margin of 4.8%, up from 3.4% the previous year
- Revenue decreased slightly due to lower express freight revenue and lower fuel surcharges, mostly offset by increased base package yields.
FedEx Freight Segment
- Revenue of $2.85 billion, up 10% from last year's $2.59 billion
- Operating income of $424 million, up 3% from $412 million a year ago
- Operating margin of 14.9%, down from 15.9% the previous year
- FedEx Ground average daily volume grew 8% in the second quarter, as growth in both business-to-business and FedEx Home Delivery services was driven by market share gains.
FY 2014 Outlook
- Revenue of $1.43 billion, up 4% from last year's $1.38 billion
- Operating income of $77 million, up 1% from $76 million a year ago
- Operating margin of 5.4%, down from 5.5% the previous year
- Less-than-truckload (LTL) average daily shipments and weight per shipment increased 4% and 2%, respectively.
- FedEx is increasing its forecast of full-year earnings per share growth to 8% to 14% above last year's adjusted results, compared to its previous growth range of 7% to 13%. This outlook reflects share repurchases made to date but does not include any benefit from additional share repurchases. Share repurchases are expected to continue, but the timing will be at the company's discretion. The outlook also assumes the market outlook for fuel prices and continued moderate economic growth. The capital spending forecast for fiscal 2014 remains $4 billion.
07:47 am Onconova Therapeutics shares plunge 15% following discontinuation of Phase 3 study
- Onconova Therapeutics (ONTX $13.78 -2.60) announced the discontinuation of the Phase 3 ONTRAC study of intravenous rigosertib plus gemcitabine in front-line metastatic pancreatic cancer. Upon completion of a planned interim analysis, the Data Safety Monitoring Board determined that the combination of rigosertib and gemcitabine is unlikely to demonstrate a statistically significant improvement in overall survival compared to gemcitabine alone.
- There were no safety concerns raised in the DSMB review of the study. A detailed analysis of the efficacy and safety results will be conducted and presented at a future scientific meeting. Any alternative trials for this patient population may be explored upon complete analysis of this information.
07:45 am Syntroleum shares soar 52% following acquisition by Renewable Energy (REGI)
- Renewable Energy Group (REGI $10.94 +0.38) and Syntroleum Corporation (SYNM $3.75 +1.29) announced today that they have entered into an asset purchase agreement pursuant to which REG would acquire substantially all of the assets of Syntroleum Corporation, and assume substantially all of the material liabilities of Syntroleum.
- The terms of the transaction call for Syntroleum to receive 3,796,000 shares of REG common stock (subject to reduction in the event that the aggregate market value of the REG common stock to be issued would exceed $49 million or if the cash transferred to REG is less than $3.2 million). \
- Syntroleum's Board of Directors also has approved a plan of dissolution for Syntroleum pursuant to which Syntroleum will be liquidated and dissolved, in accordance with Delaware law, following consummation of the asset sale and subject to stockholder approval of the plan of dissolution at the special meeting.
- Before distributing any amounts to its stockholders, Syntroleum must satisfy all of its obligations not being assumed by REG. The asset purchase agreement with REG provides for Syntroleum to retain a cash reserve equal to the lesser of $5.3 million or the amount of cash on hand at Syntroleum as of the closing. Syntroleum currently intends to distribute all of the shares of REG common stock received in the asset sale to Syntroleum's stockholders which would result in Syntroleum stockholders receiving 0.3809 shares of REG common stock for each outstanding share of Syntroleum common stock.
07:41 am Verifone shares fall 4% following disappointing EPS guidance
- VeriFone (PAY $24.00 -1.00) reported fourth quarter earnings of $0.27 per share, which is better than expected, while NON-GAAP revenues fell 11.7% year/year to $432 million which is higher than expected.
- The company issued first quarter with EPS of $0.26, excluding non-recurring items, which is below estimates with first quarter NON-GAAP revenues $425-430 million which is line with estimates.
- The company issued fiscal year 2014 with EPS of $1.35-1.40, which is below estimates with revenues of $1.77-1.80 billion which is line with estimates.
07:32 am Jabil Circuit shares plunge 19% following miss on earningsJabil Circuit
(JBL $15.85 -3.87) reported first quarter earnings of $0.51 per share, which is worse than expected, while revenues fell 0.6% year/year to $4.61 billion which is higher than expected. The company issued second quarter guidance for EPS of $0.05-0.15 and revenues of $3.5-3.7 billion which is worse than expected. The company also announced that its Board of Directors has authorized the repurchase of up to $200 million of its common stock over the next 12 months.
The company also announced that it has entered into an agreement with iQor Holdings for the sale of its aftermarket services business for $725 mln. "Today, Jabil's AMS business is concentrated in depot repair for consumer electronics, which is not aligned with our strategy to focus on diversified manufacturing solutions...
This divesture should provide us the financial flexibility to potentially add more engineering intensive capabilities, which should allow us to expand and diversify our core manufacturing business." Of the $725 million purchase price, $675 million is cash and $50 million is senior nonconvertible preferred stock of iQor.
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