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Why Is Macquarie (MIC) Up 4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Macquarie (MIC - Free Report) . Shares have added about 4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Macquarie due for a pullback? 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 drivers.

Macquarie Earnings & Revenues Miss Estimates in Q3

Macquarie’sthird-quarter 2018 adjusted earnings came in at 29 cents per share, missing the Zacks Consensus Estimate of 56 cents by 48.2%. Also, the figure was lower than 48 cents per share reported in the year-ago quarter.

Higher costs associated with acquisitions along with rise in interest expenses were primarily responsible for the year-over-year decline. However, the decrease was partially offset by lower taxes and fall in management fees.

The company generated revenues of $473.3 million, which rose 4.5% year over year.

The top line was driven by solid operational growth in the Atlantic Aviation segment.Service revenues grew 0.8% and product revenues rose 18.4%. However, revenues missed the Zacks Consensus Estimate of $476.2 million.

Segment Details

Revenues from the International-Matex Tank Terminals (IMTT) segment came in at $118.2 million, down 11.9% year over year. It represented 25% of the company’s third-quarter revenues. The segment’s EBITDA declined 12% to $69.3 milliondue to a fall in capacity utilization levels.

The Atlantic Aviation segment generated revenues of $234.9 million, up 11.1% year over year and accounting for 49.6% of the company’s overall revenues. The segment’s EBITDA rose 2.3% from the last-year quarter to $65 million, on the back of contributions from acquired fixed base operations as well as rise in hangar rental income.

The Contracted Power segment’s revenues came in at $52.5 million, up 23.6% year over year. It represented 11.1% of third-quarter revenues. The segment’s EBITDA rose 14% from the prior-year quarter. Positive contributions associated with the expansion of the BEC power generation facility drove the performance.

Revenues in the MIC Hawaii segment were up 4.1% year over year to $68.9 million. It represented 14.6% of overall quarterly revenues. The segment’s EBITDA plummeted 137.5% from prior-year quarter and was hurt by higher expenses.

Operating Costs

In the reported quarter, Macquarie’s cost of services and cost of product sales increased 8.8% and 33.9% year over year, respectively. Selling and administrative expenses also increased 1.9%. Overall, operating expenses rose 7.2% to about $393.5 million.

Liquidity & Cash Flow

Exiting the quarter, the company had cash and cash equivalents of $50.2 million and long-term debt of about $3 billion. Its adjusted free cash flow for the quarter fell 11.7% year over year to $127.5 million, hurt by increase in interest expenses, taxes, maintenance and capital expenditures.

Guidance

The company reiterated guidance for 2018 EBITDA and continues to expect the same in the range of $670-$705 million.

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.

VGM Scores

Currently, Macquarie has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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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