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It has been about a month since the last earnings report for Macquarie (MIC). Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Macquarie due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Macquarie Q4 Earnings and Revenues Miss Estimates
Macquarie Infrastructure reported disappointing fourth-quarter 2020 results wherein both earnings and revenues missed estimates.
On an adjusted basis, the company’s earnings were 85 cents per share, missing the Zacks Consensus Estimate of 88 cents by 3.4%. Also, the bottom line declined from 90 cents per share reported in the prior-year quarter.
In 2020, the company’s adjusted earnings were $2.89 per share, down 39.4% from the previous year.
In the fourth quarter, Macquarie generated revenues of $220 million, down 28% year over year. The decline was attributable to a lackluster performance across its Atlantic Aviation and MIC Hawaii segments. Product revenues were $44 million, marking a decrease of 27% year over year. Service revenues declined 29% to $176 million. Also, the top line missed the Zacks Consensus Estimate of $339 million by 35.2%.
In 2020, the company’s revenues were $847 million, down 30.1% on a year-over-year basis.
Atlantic Aviation generated revenues of $176 million, down 29% year over year and accounted for 80% of the company’s overall revenues. The segment’s EBITDA declined 18.3% to $58 million.
Revenues in MIC Hawaii were $44 million, down 27% year over year. It represented 20% of overall quarterly revenues. The segment’s EBITDA declined 14.3% to $12 million.
In the fourth quarter, Macquarie’s cost of services decreased 46% to $61 million on a year-over-year basis, whereas cost of product sales decreased 27% to $27 million.
Selling and administrative expenses were $121 million, down 48% year over year. Overall, operating expenses declined 11% to about $242 million.
Liquidity & Cash Flow
As of Dec 31, 2020, the company had cash and cash equivalents of $1,828 million, up from $260 million on Dec 31, 2019. Long-term debt (net of current portion) was $1,555 million, marginally up from $1,554 million recorded at the end of 2019. In 2020, the company generated net cash of $127 million from operating activities, down 40.9% year over year.
During 2020, the company paid out dividends amounting to $87 million, representing a 74.7% decrease from 2019’s disbursement.
The company stated that it remains confident in the outlook for its operating businesses as the end markets recover from the effects of the coronavirus outbreak.
For 2021, the company anticipates to generate adjusted EBITDA in the range of $230-$260 million. For the year, it expects to generate free cash flow of $130-$160 million. Moreover, it expects to deploy $70-$80 million of growth capital during the year.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Currently, Macquarie has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Macquarie has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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