Daily Archives: May 26, 2017

Introduction

Although fertilizer prices remain relatively weak, I do agree with the assessment of CF Industries' (NYSE:CF) management, which expects things to improve in 2018. This could indicate it's the right time to position yourself into the fertilizer companies in anticipation of higher prices. Whilst most American investors focus on the well-known mammoth companies like CF Industries, Agrium (NYSE:AGU) and Potash Corp. (NYSE:POT), I'd like to highlight one European fertilizer company as well, OCI (OTC:OCINF) (OTCQX:OCINY).

Some readers will remember the name, as CF Industries originally wanted to merge with this company and re-domicile itself in the UK and subsequently the Netherlands, but the deal ultimately fell through and CF Industries had to pay OCI a break fee.

CF Year to Date Price Returns (Daily) data by YCharts. OCI's main listing is on Euronext Amsterdam, where it's trading with OCI as its ticker symbol. The average daily trading volume is in excess of 600,000 shares for a dollar volume of approximately $14M. The current market capitalization is 4.61B EUR.

A brief overview of CF Industries' Q1

CF Industries saw its revenue increase by 3% to $1.04B, but unfortunately, its gross margin and operating income came in substantially lower as the pressure on its margins continued. This shouldn't be a surprise and even the net loss of $23 million (or 10 cents per share) was pretty much expected.

But just as in my previous articles I wrote about CF Industries, you should care more about the company's cash flows rather than the income statement as the depreciation rate ($205M in Q1) is substantially higher than the sustaining capex ($94M) to keep the plant and equipment in good shape.

Source: SEC filings

So whereas the company reported a net loss, its cash flow statements were actually showing a positive free cash flow. The adjusted operating cash flow was $234M, and after deducting the $94M in capex and the $54M distributed to non-controlling interests, the adjusted free cash flow was approximately $86M. Granted, that's still not great, but a FCF/share of $0.37 is definitely better than the net loss of 10 cents per share.

And what's perhaps even more important is the fact that the quarterly dividend was fully covered by the free cash flow in the first quarter. And that has been a while!

OCI only released a 'trading update', but the 2017 outlook is what matters

Dutch companies are only required to file financial reports on a half-year basis, so OCI only released a brief trading update, which actually sounded pretty positive. The utilization rate of its Egyptian urea facilities was approximately 100%, and the sales prices are increasing again compared to Q4.

This bodes well for the company's revenues, and as the new Iowa fertilizer plant has started to produce nitrogen and is the first greenfield factory built in almost three decades, I expect to see a substantial pick-up in the total sales volumes and revenue from the current quarter on, as this is the very first quarter wherein the new Iowa plant will start to contribute to the total result.

Source: OCI press release

Indeed, the company's capital expenditures will drop sharply to just $150-200M from this year on. Even if I would use the upper end of this guidance, OCI's free cash flow will increase tremendously from FY 2017 on, and I think the company will surprise a lot of investors. The recent strength in its share price shouldn't be a surprise, as the market is anticipating a windfall of cash flow in the 2017-2020 era, even at below-average fertilizer prices.

Comparing the metrics based on the 2016 results

Let's now put everything in perspective and compare some of the most important metrics of both companies. As OCI hasn't provided detailed financials after its first quarter, unfortunately, I will have to use the annual results of both companies. All amounts and numbers are in US Dollars.

As you can see, CF Industries scores better than OCI on the net debt/EBITDA metrics as well as the operating cash flow margin. However, I do expect OCI's EBITDA and operating cash flow to increase faster in 2017-2018, as the company has completed its Iowa nitrogen facility and is in the final construction phase of the Natgasoline site (methanol) which should be completed by the end of this year.

On top of that, OCI's board has sanctioned the re-start of the second production line at BioMCN to increase its methanol production even further. This shouldn't be surprising as the methanol price has been booming lately, as you can see in the next image:

Source: OCI Trading update

The 430,000 tonnes of Methanol in Europe will add at least $150M to the revenue, whilst the 875,000 tonnes of methanol produced in Texas at the Natgasoline facility will add an additional $310-340M per year. This means OCI will see its revenue increase by $500M based on these projects alone, and this could push the EBITDA to in excess of $600M (this still excludes the contribution from the new Iowa plant, the higher commodity prices and the lower interest expenses). Throw in the $100M in annual cost savings that has been identified, and OCI is ready to flex its muscles.

Investment thesis

So whilst CF Industries seemed to be scoring better based on the 2016 results, investing is about looking to the future. I'm particularly pleased to see that OCI is now planning to use pretty much its entire free cash flow to reduce its net debt in order to obtain an investment grade rating by 2018-2019. I would expect the net debt to drop below $4B by the end of this year, and to less than $3.5B by the end of 2018.

Considering OCI's cost of debt is really high (it's a non-investment grade issuer) at 5.25% ($242M in interest expenses divided by $4.6B gross debt), reducing the net debt will have a huge impact on its interest bill and free cash flow. A positive snowball effect, that's for sure.

Investing in CF Industries and in OCI isn't a mutually exclusive scenario, and a combination of both companies might cover your needs. CF Industries will act as the dividend payer whilst OCI is focusing on repairing its balance sheet to get an investment grade rating. It still is a pity the merger didn't go through, as the combination of both companies and OCI's renewed investments in Methanol would have resulted in a strong conglomerate.

And before we leave: Consider joining European Small-Cap Ideas to gain exclusive access to actionable research on appealing European-focused investment opportunities, and to the real-time chat function to discuss ideas with similar-minded investors!

Disclosure: I am/we are long CF, AGU, OCINF.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

See the original post:

Should You Buy CF Industries Or OCI? - Seeking Alpha

Wall Street Journal (subscription)

CF Corp to Buy Fidelity & Guaranty Life Wall Street Journal (subscription) An acquisition company created by a former Blackstone Group L.P. partner and Fidelity National Financial Inc.'s chairman reached a deal Wednesday to buy life insurance provider Fidelity & Guaranty Life in an all-cash deal worth about $1.84 billion. CF ... CF Corp. to Buy Fidelity & Guaranty for $1.8 Bln (CFCO, FGL)Investopedia CF Corporation to Acquire Fidelity & Guaranty Life in Transformative All-Cash Transaction Valued at $1.835 BillionPR Newswire (press release) CF Corp to acquire Fidelity & Guaranty Life for about $1.84 blnNasdaq Reuters -The Insurance Insider (subscription) -Benchmark Monitor -Zacks all 84 news articles »

See the rest here:

CF Corp to Buy Fidelity & Guaranty Life - Wall Street Journal (subscription)

Forbes

How Reg CF Closes the Financing Gap for Women Entrepreneurs Forbes The small businesses financing gap. Many small businesses struggle to get the funding they need. In fact, 60% had a financing shortfall, meaning they received less than the amount they applied for, according to 2016 Small Business Credit Survey: Report ...

Read the original post:

How Reg CF Closes the Financing Gap for Women Entrepreneurs - Forbes

YONKERS, NY--(Marketwired - May 25, 2017) - ContraFect Corporation(NASDAQ: CFRX), a biotechnology company focused on the discovery and development of protein and antibody therapeutics for life-threatening, drug-resistant infectious diseases, today announced the initiation of an international Phase 2 study evaluating its first-in-class lysin, CF-301, as a potential treatment of Staphylococcus aureus (Staph aureus) bacteremia including right sided endocarditis. Staph aureus bacteremia and endocarditis are serious life threatening infections, associated with substantial morbidity and mortality despite currently available conventional antibiotics. This multicenter, randomized, double-blind, placebo-controlled study is designed to evaluate the potential for CF-301 to be used in addition to standard-of-care (SOC) antibiotics to significantly improve clinical success rates compared to SOC antibiotics alone. Safety, tolerability, and pharmacokinetics of CF-301 will also be evaluated in the study. The company expects to announce top line results in Q4 2018.

"We are very pleased to initiate the first clinical study of CF-301 in patients with S. aureus bacteremia. Based on the extensive amount of pre-clinical data generated, CF-301 has the potential to improve clinical outcomes for these patients by rapid bacterial killing, synergy with conventional antibiotics and clearance of biofilms that complicate Staph aureus infections, " said Cara Cassino, M.D., EVP of Research and Development and Chief Medical Officer at ContraFect.

"We are excited about the initiation of this trial, and the promise that CF-301, and potentially other lysins in our pipeline, may offer important new advances in the treatment of bacterial infections which are a global health care threat," said Steven C. Gilman, Ph.D., Chairman of ContraFect.

In the United States alone, there are approximately 120,000 cases annually of the bloodstream infection Staph aureus bacteremia, which causes approximately 30,000 deaths. Staph aureus bacteremia can be further complicated when the infection spreads into the heart muscle, heart valves or lining of the heart, causing endocarditis. Even with current SOC antibiotic therapy, the resulting damage to the heart muscle or heart valves could require surgery for definitive treatment to prevent stroke, heart failure or multi-organ system damage. Of further concern, drug-resistant strains of Staph aureus are now evolving additional resistance against SOC antibiotics, which may ultimately result in an increase in the number of cases and in mortality from Staph aureus bacteremia, including endocarditis.

About the Trial:

ContraFect plans to conduct the trial in approximately 70 sites worldwide including North America, South America, and Europe. A total of 115 patients are expected to be enrolled, randomized 3:2 to receive either a single dose of 0.25 mg/kg CF-301 administered via a 2 hour IV infusion in addition to SOC antibiotics or placebo plus SOC antibiotics.

The primary endpoint of the trial is early clinical response. In addition, safety, tolerability, pharmacokinetics, and a number of exploratory clinical and health resource utilization endpoints will be evaluated.

More information about the trial is available at http://www.clinicaltrials.gov.

About ContraFect:

ContraFect is a biotechnology company focused on discovering and developing therapeutic protein and antibody products for life-threatening, drug-resistant infectious diseases, particularly those treated in hospital settings. An estimated 700,000 deaths worldwide each year are attributed to antimicrobial-resistant infections. We intend to address life threatening infections using our therapeutic product candidates from our lysin and monoclonal antibody platforms to target conserved regions of either bacteria or viruses (regions that are not prone to mutation). ContraFect's initial product candidates include new agents to treat antibiotic-resistant infections such as MRSA (Methicillin-resistant Staphylococcus aureus) and influenza.

About CF-301:

CF-301 is a recombinant bacteriophage-derived lysin with potent bactericidal activity against Staph aureus, a major cause of blood stream infections, or bacteremia. CF-301 has the potential to be a first-in-class treatment for Staphylococcus aureus (Staph aureus) bacteremia. It has a novel, rapid, and specific mechanism of bactericidal action against Staph aureus and does not impact the body's natural bacterial flora. By targeting a conserved region of the cell wall that is vital to bacteria, resistance is less likely to develop to CF-301. Combinations of CF-301 with standard of care antibiotics significantly increased bacterial killing and survival in animal models of disease when compared to treatment with antibiotics or CF-301 alone. In addition, in vitro and in vivo experiments have shown that CF-301 is highly active against biofilm infections. CF-301 was licensed from The Rockefeller University and is being developed at ContraFect. It is the first lysin to enter clinical studies in the U.S.

FORWARD-LOOKING STATEMENTS

This press release contains, and our officers and representatives may make from time to time, "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements can be identified by words such as "projects," "may," "will," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "potential," "promise" or similar references to future periods. Examples of forward-looking statements in this release include, without limitation, statements regarding our ability to discover and develop protein and antibody therapeutics for life-threatening, drug-resistant infectious diseases, including whether CF-301 has the potential to be a first-in-class lysin therapeutic for the treatment of Staph aureus bacteremia including right sided endocarditis, whether CF-301 used in addition to SOC antibiotics can significantly improve clinical success rates compared to SOC antibiotics alone, whether CF-301 can improve clinical outcomes for patients by rapid bacterial killing, synergy with conventional antibiotics and clearance of biofilms which complicate Staph aureus infections, whether CF-301 and other lysins in our pipeline will offer important new advances in the treatment of bacterial infections which are a global health care threat, our plans to conduct the trial in approximately 70 sites worldwide including North America, South America, and Europe, our ability to enroll a total of 115 patients, whether we achieve our clinical endpoints, the announcement of top line results in Q4 2018 and our ability to address life threatening infections using our therapeutic product candidates from our lysin and monoclonal antibody platforms to target conserved regions of either bacteria or viruses. Forward-looking statements are statements that are not historical facts, nor assurances of future performance. Instead, they are based on ContraFect's current beliefs, expectations and assumptions regarding the future of its business, future plans, strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict and many of which are beyond ContraFect's control. Actual results may differ from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, among others, our ability to develop treatments for drug-resistant infectious diseases and those detailed under the caption "Risk Factors" in ContraFect's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 and its other filings with the Securities and Exchange Commission. Any forward-looking statement made by ContraFect in this press release is based only on information currently available and speaks only as of the date on which it is made. Except as required by applicable law, ContraFect expressly disclaims any obligations to publicly update any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

View original post here:

ContraFect Announces Initiation of Phase 2 Study Evaluating CF-301 in Patients with Staphylococcus aureus Bacteremia - Markets Insider

CF Industries Holdings, Inc. (CF - Free Report) has been disappointing investors of late, given that the shares of this nitrogenous fertilizer manufacturer and distributor have recorded a negative return of 9.7% year-to-date. Moreover, the company has a long term estimated earnings growth rate of -1.23%.

Should investors dump this stock from their portfolio? Lets find out.

Estimates Moving South

Estimates for the company for second-quarter 2017, fiscal 2017 and fiscal 2018, have moved south in the past 30 days, reflecting the negative outlook of analysts. For the second quarter, estimate has plunged 82.6% from 23 cents to 4 cents per share in the past 30 days.

For fiscal 2017, the estimate has dropped from earnings of 25 cents to a loss of 23 cents. For fiscal 2018, the estimate has declined 42.2% to 52 cents per share.

Negative Earnings Surprise History

CF Industries missed the Zacks Consensus Estimate in the last reported quarter, recording a negative surprise of 44.4%. In the trailing four quarters, the company posted an average negative earnings surprise of 121.5%.

Disappointing Q1

CF Industries posted a loss of $23 million or 10 cents per share in first-quarter 2017, as against a profit of $26 million or 11 cents recorded a year ago. Barring one-time items, adjusted earnings came in at 5 cents per share for the quarter, compared with the year-ago figure of 43 cents. Earnings missed the Zacks Consensus Estimate of 9 cents.

Price Performance

CF Industries stock has lost around 1.8% in the past one year, underperforming the Zacks categorized Fertilizerssub-industrys 2% gain.

Persistent Headwinds

CF Industries continues to bear the brunt of pricing pressure. Urea prices have been under pressure due to higher nitrogen supply. High supply levels in the global nitrogen market due to capacity additions pressured pricing in the last reported quarter.

Unfavorable Zacks Rank & Score

CF Industries currently carries a Zacks Rank #5 (Strong Sell) and a VGM score of F. Here 'V' stands for Value, 'G' for Growth and 'M' for Momentum. CF Industries score is a weighted combination of these three scores (Value - B, Growth - A, Momentum - B). Such a score allows investors to eliminate the negative aspects of stocks and select winners.

Key Picks Some better-ranked stocks in the basic materials space include Kronos Worldwide Inc. (KRO - Free Report) , ArcelorMittal (MT - Free Report) and The Chemours Company (CC - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of todays Zacks Rank #1 stocks here.

Kronos has an expected long-term earnings growth of 5%.

ArcelorMittal has an expected long-term earnings growth of 11.4%.

Chemours Company has an expected long-term earnings growth of 15.5%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>

Continued here:

Why Should You Dump CF Industries (CC) from Your Portfolio ... - Zacks.com