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8:58 am GDP Easily Tops Expectations, Growth Still Below Last Year's Pace

  • Second quarter GDP increased 4.0% in the advance release after declining an upwardly revised 2.1% (from -2.9%) in Q1 2014. The Briefing.com consensus expected GDP to increase 3.2%.

    Real final sales, which fell 1.0% in the first quarter, rebounded and increased 2.3%. That is still well off the pace from the second half of 2013 when real final sales increased 3.0% and 3.9%, respectively, in the third and fourth quarters.

    Simply put, all the predictions for 2014 economic growth that were based on the second half 2013 rebound proved to be faulty. Last year's gains were not sustainable. 

  • Inventories added 1.66 percentage points to GDP growth in second quarter after subtracting 1.16 percentage points in Q1 2014. 
  • Consumption growth accelerated, up 2.5% after increasing only 1.2% in the first quarter. Goods spending increased 6.2%, with a 17.5% increase in motor vehicle and parts spending contributing much of the gain. Services spending increased 0.7%. 
  • Fixed investment increased 5.9% after increasing 0.2% in Q1 2014. Nonresidential investment rose 5.5% in the second quarter, up from a 1.6% increase in Q1 2014. Spending on equipment rebounded from a 1.0% decline in the first quarter and increased 7.0% in the second. Structures spending increased 5.5% and intellectual property products investment increased 3.5%. Residential investment spending ended two consecutive quarterly declines and increased a modest 7.5%. The net export deficit widened to $470.3 bln in the second quarter from $447.2 bln in Q1 2014. That was the largest net export deficit since Q3 2010. The increase in the net export deficit reduced GDP by 0.61 percentage points. 
  • After falling 9.2% in the first quarter, exports increased 9.5% in Q2 2014. Imports rose 11.7% in the second quarter after increasing 2.2% in the first. Government spending increased 1.6% after falling in each of the previous two quarters.

8:23 am July ADP Employment 218K slightly above estitmates

By Sector 

  • Goods-producing 16,000
  • Service-providing 202,000 
Industry Snapshot 
  • Construction 12,000 
  • Manufacturing 3,000 
  • Trade/transportation/utilities 52,000
  • Financial activities 9,000 
  • Professional/business services 61,000 
  • Goods-producing employment rose by 16,000 jobs in July, down from 43,000 jobs gained in June. The construction industry added 12,000 jobs over the month, less than half last month's gain. Meanwhile, manufacturing added 3,000 jobs in July, less than one-third the number of jobs added in June. Service-providing employment rose by 202,000 jobs in July, down from 238,000 in June. The ADP National Employment Report indicates that professional/business services contributed 61,000 jobs in July, down from 79,000 in June. Expansion in trade/transportation/utilities grew by 52,000, down slightly from June's 56,000. The 9,000 new jobs added in financial activities was down 25% from last month's number.
"Although down from June, the July jobs number marks the fourth straight month of employment gains above 200,000," said Carlos Rodriguez, president and chief executive officer of ADP.

Mark Zandi, chief economist of Moody's Analytics, said, "The July employment gain was softer than June, but remains consistent with a steadily improving job market. At the current pace of job growth unemployment will quickly decline. Layoffs are still receding and hiring and job openings are picking up. If current trends continue, the economy will return to full employment by late 2016."

7:01 am Buffalo Wild Wings shares fall 10% despite beat on earnings

  • Buffalo Wild Wings (BWLD $149.00 -18.15) reported second quarter earnings of $1.25 per share, which is higher than expected, while revenues rose 20.0% year/year to $366.0 million which is higher than expected. Same-store sales increased 7.7% at company-owned restaurants and 6.5% at franchised restaurants.
  • "We're pleased with our strong results in the second quarter...Same-store sales were strong during the Final Four and continued through the NBA and NHL playoffs."Co says sales during the World Cup tournament were robust, contributing 100 bp to the company-owned same-store sales increase."Our same-store sales for the first four weeks of Q3 were 8.2% at company-owned restaurants and 7.4% at franchised locations. Company-owned same-store sales include a benefit of 330 bp from the World Cup."

6:58 am Usana shares fall 5% following miss on earnings

  • USANA (USNA $65.00 -3.59) reported second quarter earnings of $1.36 per share, which is worse than expected, while revenues fell 0.4% year/year to $188.3 million which is lower than expected. The company reaffirmed guidance for EPS of $5.50-5.65 which is lower than expected; sees FY14 revs of $770-790 million which is in line with estimates. 
  • "During the second quarter, we faced difficult year-over-year comparables, yet generated strong results. We expect our financial performance to accelerate during the second half of 2014, as we execute initiatives to produce world-wide growth and operational efficiency, and we are reiterating our previously issued guidance. We also believe that these initiatives will provide sustainable growth for the Company over the long-term."

6:57 am US Steel shares rise 5% following beat on earnings

  • U.S. Steel (X $29.06 +1.39) reported second quarter adjusted earnings of $0.17 per share, while revenues fell 0.7% year/year to $4.4 billion which is higher than expected 
  • Outlook:"We expect operating income for our reportable segments and Other Businesses to increase significantly over the second quarter, as we return to normal operating levels. We continue to earn the right to grow as the Carnegie Way transformation allows us to better meet our customers' needs and improves our earnings power. Results for our Flat-rolled segment are expected to improve significantly from the second quarter. Shipments are projected to increase as we return to normal operations while average realized prices are expected to remain consistent with the second quarter...We expect results for our European segment to decrease as compared to the second quarter...Tubular results are expected to improve slightly as compared to the second quarter."

6:56 am Twitter shares post gains of 25% following beat on earnings/revenues

  • Twitter (TWTR $48.47 +9.72) reported second quarter earnings of $0.02 per share, which is higher than expected, whle revenues rose 124.0% year/year to $312 million which is higher than expected. Twitter reports Q3 Mobile Active Users were 271 mln +24% y/y vs 256.64 mln Briefing.com consensus (5 estimates); Q1 was 255 mln, +25% y/y. Mobile MAUs reached 211 million in the second quarter of 2014, an increase of 29% year-over-year, representing 78% of total MAUs.
  • Timeline views reached 173 billion for the second quarter of 2014, an increase of 15% year-over-year.Advertising revenue per thousand timeline views reached $1.60 in the second quarter of 2014, an increase of 100% year-over-year. Revenue Mobile advertising revenue was 81% of total advertising revenue.Data licensing and other revenue totaled $35 million, an increase of 90% year-over-year.International revenue totaled $102 million, an increase of 168% year-over-year.International revenue was 33% of total revenue.
  • Q3 Guidance The company issued guidance for the third quarter with revenues of $330-340 million which is higher than expected. The company sees Adjusted EBITDA in the range of $40-45 mln.
  • FY14 Guidance Raised Sees revenue in the range of $1.31-1.33 bln, which is higher than expected (Prior guidance $1.20-1.25 bln). Sees Adjusted EBITDA in the range of $210-230 mln (Prior guidance $180-205 mln)Reiterates CapEx in the range of $330-360 million.

6:54 am Amgen shares rise 3% following beat on earnings

  • Amgen (AMGN $127.64 +4.33) reported second quarter earnings of $2.37 per share, which is higher than expected, while revenues rose 10.7% year/year to $5.18 billion which is higher than expected. Total product sales increased 8 percent for the second quarter of 2014 versus the second quarter of 2013. The increase was mainly driven by ENBREL, Kyprolis, Prolia and XGEVA. Product sales in the second quarter of 2013 included a positive adjustment of $185 million to previous estimates for managed Medicaid rebates based on claims experience. ENBREL sales increased 7 percent year-over-year for the second quarter driven mainly by price. ENBREL continues to benefit from strong underlying demand and segment growth. Kyprolis sales for the second quarter of 2014 were $78 million. The year-over-year comparison is not relevant as Onyx Pharmaceuticals was acquired in Q4 of 2013. 
  • Prolia sales increased 40 percent year-over-year for the second quarter driven by higher unit demand from share growth. XGEVA sales increased 20 percent year-over-year for the second quarter driven by higher unit demand. XGEVA continues to capture share in a growing market despite competition from generic zoledronic acid. Combined Neulasta (pegfilgrastim) and NEUPOGEN (filgrastim) sales declined year-over-year by 1 percent for the second quarter. Global Neulasta sales increased 1 percent year-over-year for the second quarter driven by price offset partially by the prior year positive Medicaid rebate estimate adjustment. Global NEUPOGEN sales decreased 9 percent year-over-year for the second quarter due to the prior year positive Medicaid rebate adjustment. Underlying demand was slightly impacted by short- and long-acting competition in the U.S. and Europe, respectively. Aranesp (darbepoetin alfa) sales decreased 1 percent year-over-year for the second quarter mainly due to the prior year positive Medicaid rebate estimate adjustment. 
  • Underlying demand continues to decrease slightly due to practice patterns in the U.S. and competitive pricing pressures in Europe.EPOGEN (epoetin alfa) sales increased 2 percent year-over-year for the second quarter driven by price, offset partially by the prior year positive Medicaid rebate estimate adjustment. Unit demand continues to be relatively stable. Sensipar/Mimpara (cinacalcet) sales increased 15 percent year-over-year for the second quarter driven primarily by higher unit demand growth across all regions and price increases in the U.S. Vectibix (panitumumab) increased 42 percent year-over-year for the second quarter driven by higher unit demand across all regions. Nplate (romiplostim) increased 12 percent year-over-year for the second quarter driven mainly by higher unit demand and strong market growth across all regions. 
  • Guidance: The company issued guidance for the fiscal year 2014 with EPS of $8.20-8.40 & revenues of $19.5-19.7 billion which is higher than expected. CapEx expected to be approx $800 mln.

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