Newalta reports solid quarter
Newalta reported their third quarter results on November 4, 2014 and their results look good.This is a new company to look at for this blog.It is a conglomerate with three separate divisions.One division,their Industrial division is having problems and will not likely meet guidance in the fourth quarter but overall the company has solid results.Adjusted EBITDA was $137 million for 9 months which is up 17% over the same period in 2013.The other two divisions,namely,Oilfields and New Markets are doing quite well.
Third Quarter
The Q3 revenues were up by 14% to $456 million and gross profit by 16% to $24 million.Adjusted EBITDA went from $20 million to $24 million.Funds from operations also increased from $49 million to $55 million.Consequently they were able to increase their dividend from $.11 per share per quarter to $.125 per share.Newalta feels that it can deliver growth of 20% in adjusted EBITDA over that for 2013.Debt to EBITDA is about 2.85 for Q3 and is expected to fall to 2.50 for year-end.
Satellite services
Newalta has a number of satellites and uses them extensively in all their three divisions.They seem to use them to improve drilling productivity.So they have ordered two new satellites to be constructed for use in their Oilfield division.No satellites are being used in their Industrial division.This is the division that is being rationalized in order to improve profitability but there will be gains from the Stoney Creek Landfill and oilfield recycling.Overall Newalta expects increased contributions from satelllites. Newalta is attempting to have a 20% gain in adjusted EB ITDA over that of 2013 and looks like they will get it.That would put adjusted EBITDA about $200 million and that should put earnings per share above $3.50 per share.That makes the dividend pretty safe and generates a low price/earnings ratio.That would seem to indicate that Newalta should be heading for $18 to $19 per share but investors are not too aware of this stock yet and so it may struggle in the $13 to $15 range.Also Canadian investors have shown little appetite for conglomerates.The increased use of satellites may act to unify all services and over time raise it's price.It certainly knows how to increase it's profitability.
Third Quarter
The Q3 revenues were up by 14% to $456 million and gross profit by 16% to $24 million.Adjusted EBITDA went from $20 million to $24 million.Funds from operations also increased from $49 million to $55 million.Consequently they were able to increase their dividend from $.11 per share per quarter to $.125 per share.Newalta feels that it can deliver growth of 20% in adjusted EBITDA over that for 2013.Debt to EBITDA is about 2.85 for Q3 and is expected to fall to 2.50 for year-end.
Satellite services
Newalta has a number of satellites and uses them extensively in all their three divisions.They seem to use them to improve drilling productivity.So they have ordered two new satellites to be constructed for use in their Oilfield division.No satellites are being used in their Industrial division.This is the division that is being rationalized in order to improve profitability but there will be gains from the Stoney Creek Landfill and oilfield recycling.Overall Newalta expects increased contributions from satelllites. Newalta is attempting to have a 20% gain in adjusted EB ITDA over that of 2013 and looks like they will get it.That would put adjusted EBITDA about $200 million and that should put earnings per share above $3.50 per share.That makes the dividend pretty safe and generates a low price/earnings ratio.That would seem to indicate that Newalta should be heading for $18 to $19 per share but investors are not too aware of this stock yet and so it may struggle in the $13 to $15 range.Also Canadian investors have shown little appetite for conglomerates.The increased use of satellites may act to unify all services and over time raise it's price.It certainly knows how to increase it's profitability.
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