Latest news with #JefferiesLLC
Yahoo
18-06-2025
- Business
- Yahoo
Bavarian Nordic Announces Sale of Priority Review Voucher for USD 160 Million
COPENHAGEN, Denmark, June 18, 2025 – Bavarian Nordic A/S (OMX: BAVA) announced today that it has entered into an agreement to sell its Priority Review Voucher (PRV) for a total cash consideration of USD 160 million. Bavarian Nordic was awarded the PRV in February 2025, following the approval by the U.S. Food and Drug Administration of the chikungunya vaccine, VIMKUNYA™ for prevention of disease caused by chikungunya virus in people 12 years of age and older. Pursuant to a license agreement assumed upon acquisition of the chikungunya vaccine in 2023, National Institutes of Health (NIH) will receive 20% of the gross proceeds from the sale of the PRV. The proceeds will be recognized as other operating income and thus will not impact the guided revenue expectations for 2025. However, EBITDA will be positively impacted and any impact on the guided EBITDA margin of 26-30% for 2025 will be updated upon closing of the transaction. The transaction remains subject to customary closing conditions, including anti-trust review, which is expected to occur in the third quarter of 2025. Jefferies LLC acted as exclusive financial advisor to Bavarian Nordic on this transaction. About Bavarian NordicBavarian Nordic is a global vaccine company with a mission to improve health and save lives through innovative vaccines. We are a preferred supplier of mpox and smallpox vaccines to governments to enhance public health preparedness and have a leading portfolio of travel vaccines. For more information, visit Forward-looking statements This announcement includes forward-looking statements that involve risks, uncertainties and other factors, many of which are outside of our control, that could cause actual results to differ materially from the results discussed in the forward-looking statements. Forward-looking statements include statements concerning our plans, objectives, goals, future events, performance and/or other information that is not historical information. All such forward-looking statements are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law. Contact investors:Europe: Rolf Sass Sørensen, Vice President Investor Relations, rss@ Tel: +45 61 77 47 43US: Graham Morrell, Gilmartin Group, graham@ Tel: +1 781 686 9600 Contact media:Nicole Seroff, Vice President Corporate Communications, nise@ Tel: +45 53 88 06 03 Company Announcement no. 18 / 2025 Attachment 2025-18-enError in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
03-06-2025
- Business
- Bloomberg
Meta's Deal for Nuclear Power Is Likely Cheaper Than Microsoft's, Jefferies Says
By and Naureen S Malik Corrected June 3, 2025 at 12:58 PM EDT Save Surging demand for power to run artificial intelligence just prompted Meta Platforms Inc. to enter a 20-year contract with the biggest US nuclear operator, penning a deal that's likely to be priced at a cheaper rate than a similar agreement rival Microsoft Corp. entered last year. The parent company of Facebook, Instagram and WhatsApp will probably be paying about $80 per megawatt hour for energy from the Clinton plant in Illinois, according to Paul Zimbardo, an analyst at Jefferies LLC, who made the forecast based on company guidance.
Yahoo
02-06-2025
- Business
- Yahoo
Analysts' Bullish Reviews Mask Weak Conviction in US Stock Rally
(Bloomberg) -- After a furious May rally, Wall Street analysts now have more buy ratings on individual companies in the S&P 500 Index than at any time in more than two decades, according to a Jefferies LLC analysis. Billionaire Steve Cohen Wants NY to Expand Taxpayer-Backed Ferry Where the Wild Children's Museums Are The Economic Benefits of Paying Workers to Move Now With Colorful Blocks, Tirana's Pyramid Represents a Changing Albania NYC Congestion Toll Brings In $216 Million in First Four Months That's usually a sign of froth in a market poised for a pullback, but Jefferies' Andrew Greenebaum sees fewer reasons to worry once you look under the hood. His argument goes like this: While more than four of the five stocks in the S&P 500 have buy recommendations, the price targets underlying those assessments imply just a gain of 10% over the next 12 months, based on the firm's analysis. That's near the average for the US benchmark historically, and should allay fears the current rebound has run its course, he said. 'Wall Street's been upgrading names, probably using the selloff to do it,' said Greenebaum, senior vice president of equity research product management at Jefferies, who compiled the data. 'But I don't take that as overwhelming bullishness, because price targets are not that far away from where stocks currently sit.' The S&P 500 has jumped nearly 20% from the depths of April's rout on a reprieve from President Donald Trump tariff blitz. Yet analysts and strategists alike have been struggling to map out the path forward, penciling in, then erasing forecasts against a backdrop of back-and-forth policy pronouncements from Trump and his administration on trade. Greenebaum says analyst predictions on individual stocks are a better indicator of the market's direction than year-end S&P 500 targets since they more take into consideration individual companies' profits. He calculated the aggregated S&P 500 target over the next 12 months and landed at 6,528, a level that implies a 10% advance from Friday's close. If analyst ratings and price targets are any indicator of stock performance, things look like business as usual, he says. This hasn't stopped prognosticators from fretting. 'You can probably ignore strategy comments and focus on the fundamentals, because the analysts aren't seeing company fundamentals go down,' said Greenebaum. Forecasts Shredded Trump's on-the-fly tariff regime has forced wild swings in expectations from sell-side strategists. After furiously downgrading their US stock forecasts across April, some are starting to make U-turns on their calls once again. Ed Yardeni of Yardeni Research and David Kostin of Goldman Sachs Group Inc. are among soothsayers who lifted their forecasts after lowering them. But economists are warning that although rhetoric around levies has calmed since Trump's April 2 rollout of steep levies, the damage on business and consumer confidence has already been done and could be reflected in economic data in the months ahead. From one vantage point, the economy is already showing cracks. Gross domestic product decreased at a 0.2% annualized pace in the first quarter, the second estimate from the Bureau of Economic Analysis showed Thursday. That compared with an initially reported 0.3% decline. On the other hand, the labor market has so far remained intact with investors looking ahead to next week's payrolls report as the next hurdle. 'The analysts are not actually getting reachy with their price targets,' Greenebaum said. 'When you look at that level, it's basically low, double-digit returns — it's kind of ho-hum boring.' YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Mark Zuckerberg Loves MAGA Now. Will MAGA Ever Love Him Back? Will Small Business Owners Knock Down Trump's Mighty Tariffs? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Sign in to access your portfolio
Yahoo
01-05-2025
- Business
- Yahoo
Q1 2025 LSB Industries Inc Earnings Call
Fred Buonocore; Vice President - Investor Relations; LSB Industries Inc Mark Behrman; President, Chief Executive Officer, Director; LSB Industries Inc Damien Renwick; Executive Vice President, Chief Commercial Officer; LSB Industries Inc Cheryl Maguire; Chief Financial Officer, Executive Vice President; LSB Industries Inc Lucas Beaumont; Analyst; UBS Securities LLC Kevin Estok; Analyst; Jefferies LLC Andrew Wong; Analyst; RBC Capital Markets Robert McGuire; Analyst; Granite Research Charles Neivert; Analyst; Piper Sandler Operator Greetings and welcome to the LSB Industries' first quarter 2025 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. It's my pleasure to introduce your host, Fred Buonocore, Vice President in Investor Relations. Fred, please go ahead. Fred Buonocore Good morning, everyone. Joining me today are Mark Behrman, our Chairman and Chief Executive Officer; Cheryl Maguire, our Chief Financial Officer; and Damien Renwick, our Chief Commercial Officer. Please note that today's call includes forward-looking statements. These statements are based on the company's current intent, expectations, and projections. They are not guarantees of future performance, and a variety of factors could cause the actual results to differ materially. For more information about these risks and uncertainties that could cause actual results that differ materially from those projected or implied by forward-looking statements, please see the risk factors set forth in the company's most recent annual report on Form 10-K. On the call, we will reference non-gap results. Please see the press release posted yesterday in the investors section of our website, For further information regarding forward-looking statements and reconciliations of non-GAAP results to GAAP results. At this time, I'd like to go ahead and turn the call over to Mark. Mark Behrman Thank you, Fred, and good morning, everyone. The global economy has a lot of moving parts right now, not the least of which is the impact that US tariffs could have on our business. While we don't anticipate a big impact to our business, it has created a lot of uncertainty for both planned spending and potential capital projects. We'll provide more color on this later in our comments. Turning our attention to the first quarter. On page 4 of our presentation, we highlight some achievements during the quarter. Overall sales volumes improved 4% quarter over quarter, driven by solid improvement in sales volumes for ammonium nitrate and UAM. These gains are the result of higher ammonia production and better performance by our upgrading plants. We're pleased that the work to improve the reliability and efficiency of our facilities is yielding results, and we expect to see continued improvement as 2025 progresses. Not only did we increase our production and sales volumes during the first quarter, but we did so with zero recordable injuries across the organization. Congratulations to the entire team for embracing our Protect What Matters core value and demonstrating that our goal zero is achievable. Lastly, we continue to make progress with our decarbonization project at our El Dorado facility, which I'll discuss later in the call. Now I'll turn the call over to Damien who will review current market dynamics and pricing trends. Damien? Damien Renwick Thanks, Mark. And good morning, everyone. I'll begin my remarks today by addressing the tariff situation. You'll find a summary of key points on this matter on page 5. Much remains to be seen as to how the US tariffs on imports will affect our business. So far, we've seen a significant uplift in domestic pricing for prompt delivery of urea due to tariffs and other factors. We expect this to persist through the current spring planting season. We believe our market exposure to retaliatory tariffs from other countries is limited. We export less than 10% of our sales, with all our exports to Mexico and Canada. We also believe the impact to ag markets we serve will not be significant. Only 2% of US corn exports were to China in 2024. Lastly, some of the parts, components, and equipment we use to maintain our plants are imported, mainly from Europe. We are evaluating any potential tariff implications for these imports, but we have already seen some pricing pressure from suppliers. We are also looking to source domestically wherever possible. Moving to page 6. Demand for our industrial products remains robust. We continue to ramp up our ammonium nitrates pollution volumes as we expand our industrial business. Copper mining activity and pricing remains strong. Global demand for copper has surged over the past year. Additionally, gold prices have continued to move higher. This price increase is driven by global economic uncertainty. As a result, US gold mining activity continues to be strong. Nitric acid continues to see healthy demand and pricing. We remain sold out. We also continue to see opportunities for growth with existing and new customers. Our primary constraint at this point is production capacity. And we are continually evaluating opportunities to increase our production capacity in both nitric acid and ammonium nitrate. On page 7, we continue to see strong prices for our products. UAN prices continue to increase significantly. The current NOLA UAN price of $350 per tonne is 73% higher than the low price of full 2024. We are seeing strong demand, along with insufficient import volumes which has resulted in tight US inventories. Urea prices have also strengthened considerably, with NOLA prices now above $500 per tonne. This increase is due to seasonal demand, lack of imports, tariff pressures, robust demand from India, and the continued ban on urea exports from China. The Tampa ammonia price has declined since the start of the year. This decline has followed falling natural gas prices in Europe. Europe continues to be the marginal cost producer for ammonia. This dynamic is underpinning ammonia prices globally. But despite this decline, ammonia prices remain attractive due to a globally tight supply and demand balance. US ammonia producers continue to enjoy a significant cost advantage to those in Europe. We expect that spread to persist through the entirety of this year. The spring 2025 planting season is shaping up strongly, with a significant increase in planted corn acres expected. The USDA reported in its prospective plantings report that producers intend to plant 95.3 million acres of corn this year compared to 90.6 million planted acres last year. This significant increase is driving very strong fertilizer demand and is driving pricing for our products up significantly. On page 8, the USDA has lowered its forecast for corn ending stocks. This forecast has provided support for corn prices. US corn prices sit solidly above $4 per bushel supporting favorable farmer economics. Now, I'll turn the call over to Cheryl to discuss our first quarter financial results and our outlook. Cheryl? Cheryl Maguire Thanks, Damien, and good morning. On page 9, you'll see a summary of our first quarter 2025 financial results. You can see the early benefits of the investments we've made in plant reliability and efficiency in our increase in net sales driven in part by stronger volumes. Page 10 bridges our first quarter 2024 adjusted EBITDA of $33 million to our first quarter 2025 adjusted EBITDA of $29 million. Improved sales volumes along with higher pricing for ammonia and AN were offset by materially higher natural gas costs. As we've discussed on previous calls, we like the contractual nature of our industrial business and the benefits this provides to our overall performance. On page 11, we illustrate that many of our industrial contracts are cost plus arrangements where we pass through the cost of the natural gas used to make products like nitric acid or AN and earn a fixed margin. This type of arrangement allows us to contract out the volatility of natural gas prices, is non-seasonal, and provides stability to our business. In 2021, less than 20% of our sales volumes were cost plus contracts. As we've grown our industrial business, we've grown this cost pass through business to approximately 30% as of the end of Q1 2025, and we expect this to grow to 35% by the end of the year as we continue to optimize our product mix. Page 12 provides a summary of our key balance sheet and cash flow metrics. Our cash balance remains strong, and our leverage ratio remains in line with our target level for a mid-cycle pricing environment. We will continue to make investments in the reliability of our facilities while also investing in storage and logistics capability to support our growing industrial business. Turning to the second quarter outlook, the Tampa ammonia price currently sits at $435 a tonne. NOLA UAN pricing rose through April and is currently at its highest level in more than two years. While much of our UN volume for April was sold ahead of this increase, we expect to capitalize on the pricing strength for sales in May and June. Our natural gas costs settled just under $4 per MMBTU for April. However, US gas costs have trended downward closer to $3 per MMBTU as we move toward May settlement, and we look forward to benefiting from that. From a volume perspective, we expect meaningful increases in both UAN and AN volumes compared to prior year. This will come with lower sales volumes of ammonia as we forgo ammonia sales in favor of upgrading into higher margin products. One change to the full-year outlook that we discussed on our Q4 2024 call relates to the turnaround that was scheduled for our El Dorado site for the second half of this year. We have elected to push this turnaround into the first half of 2026 as we have experienced delays in the delivery of key equipment we were planning to replace during the turnaround. As a result, we are increasing our ammonia production outlook for 2025 by approximately 30,000 tonnes. We are also lowering our estimated turnaround expense for the full year by approximately $15 million. And now I'll turn it back over to Mark. Mark Behrman Thank you, Cheryl. Page 13 summarizes a key development with our El Dorado ammonia project. We are excited that in January, we achieved pre-certification status under the Fertilizer Institute's Verified Ammonia Carbon Intensity Program. This is a voluntary certification of the carbon footprint of ammonia production at a specific facility from well to production gate. The program utilizes a standard methodology to calculate the carbon intensity of a facility's ammonia production. The program has been developed by industry experts, and the results are audited by a third party. Once the auditor provides a written report confirming that the carbon intensity was calculated by the facility according to the methodology, verified ammonia carbon intensity certifies the facility. Our ammonia plant at El Dorado is one of four North American plants that have received such a status. We expect this certification to be integral in our ability to secure sales agreements for our low carbon ammonia and upgraded product output. Page 14 is an overview of the project at El Dorado. Our partner, Lapis Carbon Solutions, is completing the drilling of a stratigraphic injection well. Lapis is now gathering data to support the EPA in their continuing technical review of our Class 6 permit application. Once our project receives EPA approval, we will use the same well for CO2 injections allowing us to be very efficient. Based on our ongoing dialogue with the EPA, we continue to expect to begin CO2 injections by the end of 2026. Given the impact of US tariff-related price increases and other global economic uncertainties on project costs, coupled with a slower than anticipated ramp up of low carbon ammonia demand, we have decided to put a pause on our Houston Ship Channel project. While disappointing, we are excited that we will have approximately 250,000 tonnes of low carbon ammonia available for sale out of our El Dorado site by the end of next year. We're off to a good start in 2025. While we're making meaningful production and sales volume improvements, we are continuing to grow and optimize our industrial business in order to increase the stability and predictability of our earning stream. And as I mentioned, we're on track to begin producing low carbon ammonia at our El Dorado facility late next year. We plan to continue to invest in our core business to achieve our plant reliability goals. Additionally, we have a number of opportunities within our existing portfolio of assets to grow our profits while maintaining a strong balance sheet. We will look to make investments in projects that increase our profits and cash flow, while managing our leverage at a level appropriate for the uncertain economic environment. Collectively, we believe that these initiatives will translate into significant incremental EBITDA and shareholder value. Before we open it up for questions, I'd like to mention that we will be participating in the following events in the coming months; The UBS Energy Transition and Decarbonization Conference in New York on May 14, and the Deutsche Bank Industrials Materials and Building Products Conference in New York on June 5. We look forward to speaking with some of you at those events. That concludes our prepared remarks, and we will now be happy to take your questions. Thanks. Operator (Operator Instructions) Lucas Beaumont, UBS. Lucas Beaumont Good morning. So I guess as we head into May, we're seeing very strong derivative pricing sort of including UAN. That looks sort of set to peak here in the second quarter. On the other hand, ammonia has sort of been weakening, and there's expectations that the temp contracts probably going to shift a fair bit lower, for May as well. So I guess with these diverging trends, and just considering some of the timings in the order book that you mentioned earlier, Cheryl, I was just wondering if you could give us a bit more how we should think about the set up for L2 you've realized pricing here in the second quarter? Damien Renwick Hi, Lucas, I'll take that one. So look, we're seeing, as you said, good price increases for our UAN products. We're well positioned to take advantage of that. We're not fully sold out deliberately so through the end of second quarter, so we can capitalize on that pricing and that'll that'll reflect in our results. Lucas Beaumont Right. And then, I guess just given that you've decided to sort of pause the Houston Ship Channel project, I was just wondering if you could kind of give us your thoughts now on your updated capital allocation priorities. Is there anything else on the CapEx side that you guys will look to do now to maybe drive an earnings improvement there or is it more back to repurchases and that sort of thing? Mark Behrman Yeah, good morning, Lucas. Yeah, I think there's nothing, not a project on the horizon as we sit here today that we've committed capital to. We continually look at projects on our existing assets that we can do, that will improve the operating results. But as we sit here today, we haven't FID any of those projects. From a capital allocation standpoint, as always, we're going to focus on improving the reliability and the EH&S of our existing facilities, so we'll continue to do that which I think as we stated before is somewhere in the neighborhood of, $60 million to $65 million of capital a year. And then after that, I think we will take a step back and look at investments in other projects, stock buyback, and of course, debt reduction. Lucas Beaumont Right, thank you. Operator Kevin Estock, Jefferies. Kevin Estok Hey, good morning this is Kevin Estock on for Lawrence Alexander. Thank you for taking my questions. So yeah, my first one is just so there's been obviously quite a bit of talk around deregulation by the administration. And I guess I was wondering whether or not you guys have sketched out or maybe thought about how big of a tailwind or how it could help you guys, I guess, let's say, like related to permitting, etc. I guess many companies that we're covering are actually saying that the impact is going to be quite minimal. And I guess I was wondering if you guys were thinking about it in the same way. Mark Behrman Yeah, good morning. I would say it is going to be quite minimal with the exception of the EPA, where we're having numerous conversations. We did see, I'd say, a slow process before the change in the administration and the change in the head of the EPA and the regional offices. And we certainly saw a pause for a couple of months while they put new people in place to lead all those efforts. But since that -- since the time that Lee Zeldin took over the EPA and our new head of the Region 6 office in Dallas of the EPA took over, we've seen a lot more activity and a lot more conversations, which is encouraging for us on our low carbon ammonia project at El Dorado. Other than that though, I don't think we're going to see much change. Kevin Estok Got it. Okay, thank you. And just, I guess is the second question, but you guys mentioned in the release that there's potential pent up demand, I guess related to UAN at the retailer and producer level. And I guess I was wondering if you could give a little bit more color there, certain like specific dynamics there and it's related to, I guess, higher corn acreage just planting season just any color that would help be helpful. Thank you. Damien Renwick Yeah, Kevin, absolutely. It's down to the higher corn acres forecast. So we talked about it In the prepared remarks around the USDA in the prospective plantings report forecasting over 95 million acres, and that's a significant increase compared to last year. But the other compounding factor that we're seeing in both urea and UAN is the fact that there haven't been enough imports into the country to satisfy that demand, and so that's putting strain on the logistics on river movements, demand on rail as well. And we're all just working as hard as we can to satisfy that demand and that's also having an impact on pricing as well. Operator (Operator Instructions) Andrew Wong, RBC Capital Markets. Andrew Wong Hey, good morning. So as you're considering some of these potential upgrade capacity projects, can you just, nothing's been committed, but can you just talk about what those projects might look like from a tax spaces, like how large that they might be and what kind of margin benefits do you anticipate generally from a project that might increase your nitric acid or AN capacity? Mark Behrman Morning, Andrew. Look I think that while we're doing some work to explore some of the expansion capabilities or potentials that we have, I think it's probably too early for us to talk about, the actual cost. We want to finish engineering studies before we sort of give you a good number. I think that would be the most prudent and. With that, once we get a final or at least a more finalized capital number, then we can sit down and and figure out what kind of EBITDA generation and returns there are and that the project even makes sense. So we have the capability, and I think we've mentioned this in the past, to expand our urea production up at prior, which would be great because we'll upgrade more free ammonia, which we're always interested in doing, capture more margin. We have the ability to expand our ammonia plant down at El Dorado to give us more ammonia, which hopefully then you know allows us to look at possibly expanding nitric acid or AN solution, because we think there's demand, particularly in AN solution, but I think it's a bit too early for us to be talking about the capital cost to do that. Andrew Wong Okay, that's fair. And then on the Houston Channel project, the decision to delay there, makes sense everything you've laid out. Is there the potential for revisiting that project in the future and what might need to change for that? Mark Behrman Yeah, look, I think overall we still believe that over time, there'll be new demand generation for low carbon ammonia. So I think for us, it's really about uncertainty and capital costs right now, as things are moving around and you know, one day we have tariffs and the next day we don't. And you know this whole situation, I think it's -- I think everyone's going through that and you see lots of projects being put on hold. In addition to that, I think there still is an unwillingness from some -- from many actually buyers to actually transact at a cost that I think supports the returns on a facility, and I believe that changes over time. But today, I think you know we're not comfortable with that. So I guess the answer would be we'd like to participate either in the current project that we're in and revisit that, if the economics could make sense and we could certainly put a deal together that would make sense. We'd actually participate in another project that's maybe being developed, and we can make an investment and maybe even operate or have some offtake or something like that so. I think we're open to that, but I think we've just got to be very prudent about what project we get involved in and what's the right timing is. So today, I think it doesn't make sense for us. Andrew Wong It's great. Thanks, Mark. Operator Rob McGuire, Granite Research. Robert McGuire Good morning. Just a couple of big picture topics. So Bloomberg reported a couple of weeks ago that China halted US LNG purchases due to the trade war, and it's boosting supply and lowering gas prices over in Europe. Do do you have a view, and if so, could you just kind of share it with regards to, is it better for Europe to import ammonia or LNG from the US and maybe the reasons why behind that? Damien Renwick Hi, Rob. That's a tricky question, I guess. From an ammonia perspective, European ammonia producers will really just be evaluating, okay, what's the forward outlook on the natural gas purchases and pricing. And then they'll weigh that up against their own landed price for an import, right? So it's really a make versus buy decision, and we've been in that realm now for a number of years, particularly as Russian natural gas has disappeared from Europe. And I don't see that sort of changing at all anytime in the future unless there's some resolution between Russia and Ukraine, and then back to Russian natural gas supply into Europe. In terms of LNG, I think it's much the same really. You've got the Europeans trying to import sufficient natural gas to keep the lights on and make sure they've got enough gas in the system for power for residential and industrial use. So I'm sure they'll look to transact upon that at the best possible price. Robert McGuire Thanks, Damien. And then any further color on potential legislation over in Europe supporting the use of ammonia or CBAM updates, anything you guys are seeing on the ground? Damien Renwick No, we've seen some positive developments with the IMO recently, where they outlined their sort of carbon incentive/ tax program as it relates to marine fuels. And so we think that that one is -- everyone's -- it's rather complex. So once everyone's had the time to digest what that means, I think, we'll see a continued shift there targeting low carbon fuels. In terms of CBAM, look, I think we're still on track for the start-up of the transition into CBAM next year. And there's -- we hear rumors about potential delays or changes, but nothing firm that we're aware of. Mark Behrman While there's conversation in Europe, certainly the EU with what would the carbon intensity scores of the low carbon ammonia versus a zero carbon ammonia look like, there's not been anything finalized. Robert McGuire Well that's great. I really appreciate it. Just one other last quick one are you seeing a a bigger disparity in what you're selling your ammonia inland relative to Tampa? Mark Behrman I think we're seeing pricing that's consistent with what you'd expect to see in the middle of season or just after application for ammonia, Rob. So nothing really too far out of the ordinary there. Robert McGuire Thanks, guys. Operator (Operator Instructions) Charles Neivert, Piper Sandler. Charles Neivert Morning, guys. You mentioned already that you're delaying some scheduled turnarounds because of equipment and things like that delays there. Is there any chance that some of these delays also leak out into the carbon project at El Dorado? I mean, you're talking about the second half of 2026 with all the -- and there's a lot still going on, but is there any risk to the equipment and needs that are there that might get -- that might push it out any further? Damien Renwick Morning, Charlie. No, I don't think so. We're talking about I mean some of the main things we're talking about on the compression facility of compressors, so we've -- actually our partner Lapis has already had discussions about the timing of delivery of equipment, and they're on the precipice basically of of making orders for long lead time items. So I think based on delivery times and if they get ordered over the next couple of weeks, I think we're really comfortable that we have no problem meeting the timeline that we talked about which is the end of next year. Charles Neivert Yeah, and also I mean I know that they're obviously they're footing the bill for all of the equipment and the build out. Is there any risk to the deal that you guys have struck between the two of you in terms of what the payout would look like going forward or is it really it's strictly based on the payments from the government for the carbon, and you're just getting that whatever piece that you're going to be getting and that won't change? Obviously, their profit does if their costs get higher. Mark Behrman Yeah, we have a CO2 sales agreement in place with them, that's been heavily negotiated. So we're really comfortable with us being able to receive the $1 per tonne of CO2 that we've agreed to. Charles Neivert Okay. Thanks very much. Mark Behrman Sure. Operator Lucas Beaumont, UBS. Lucas Beaumont Okay, thank you. So just with the shift that you've outlined going more towards cost plus kind of pricing on the contracts. So I just wanted to -- you're targeting 35% by the end of this year. I guess two things. I just wanted to understand, where would you like to kind of get that to, I guess, over the medium term. And then secondly, sort of what is your assessment been on how that's going to kind of impact your margins over the cycle? So I mean, I'm sure it's going to reduce the volatility in your earnings year to year. But yeah, I guess you're having to give anything up over the cycle, do you think from a margin perspective to get that or would it be similar? Mark Behrman Yeah. I think our commercial team does a really good job of trying to optimize our production, so you will see swings year to year and contracts, even on the industrial side where we have contracts. I mean they roll off and and we've got to make a decision on whether we want to up a contract for a longer term or do we think that the spot market in the ag markets, based on our views, are better play at least for the next 12 months, 18 months, whatever it might be. If I had to think about what would be an optimal mix, certainly 50/50 is something that -- so that 35% moving up to 50% is probably something that would make sense for us. I think in any given year or over a given couple of years, you could see that move up to 60% or you could see it move down to 40%, so probably somewhere between 40% and 60% industrial, with the balance obviously being added. From a margin perspective, absolutely you're right, it's going to give us much more stability and comfortability on what our earnings profile looks like. And from a margin perspective, it really just depends. If you look over a 10-year period on some of the products, the same conversations that at some point that customers who are used to maybe pricing off of a Tampa index or something like that, and we'd like them to now price off of a gas plus contract. And the commercial team again does a really good job and let's go back over the last 10 years and look at how pricing has -- the actual pricing was over the last 10 years versus if you went gas back or cost plus and what that might look like so. I think, well, margins overall over a period of time should actually be relatively similar. We will lose where there's a huge spike in fertilizer pricing since we like we saw in 2022, but we are trading that off for a lot of downside protection in our earnings. Lucas Beaumont Right, thanks. And then I just wanted to follow up with one more on the cost increases on the equipment side of the maintenance that you sort of called out. I guess just maybe -- I don't know if you're able to size that for us relative to your cost base in 2024. I mean, if the tariffs that were in, I'm assuming there's a tariff driven if they were in place today, I guess how much of a cost impact would you expect kind of on that basis? Cheryl Maguire Yeah, hey Lucas, we took a look at that. On the expense side, when water treatment chemicals, things like that, probably looking at maybe $1 million dollars over the year on the expense side. On the capital side, we've got the majority of our equipment kind of ordered and so thinking, maybe could see $2 million there, that's best guess today. It's a moving target. Lucas Beaumont Great, thank you. Operator Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over to Mark for any further closing comments. Mark Behrman Right. Appreciate everyone joining the call today and appreciate everyone's support. So if there are any other questions, feel free to give us a shout and we'll have a conversation, and hopefully, answer your questions. Thanks and have a great day. Operator Thank you. That does conclude today's teleconference and webcast. Let me just connect your line at this time and have a wonderful day. We thank you for your participation today. Sign in to access your portfolio
Yahoo
07-02-2025
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Q4 2024 Affiliated Managers Group Inc Earnings Call
Patricia Figueroa; Head of Investor Relations; Affiliated Managers Group Inc Jay C. Horgen; President and Chief Executive Officer; Affiliated Managers Group Inc Thomas M. Wojcik; Chief Operating Officer; Affiliated Managers Group Inc Dava Ritchea; Chief Financial Officer; Affiliated Managers Group Inc Trevor Dodds; Analyst; Jefferies LLC Bill Katz; Analyst; TD Cowen Operator Greetings and welcome to AMG fourth-quarter 2024 earnings conference call. (Operator Instructions)As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Patricia Figueroa, Head of Investor Relations. Thank you. Please begin. Patricia Figueroa Good morning and thank you for joining us today to discuss AMG's results for the fourth-quarter and full year 2024. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements which could differ from our actual results materially, and AMG assumes no obligation to update these please note that nothing on this call constitutes an offer of any products, investment vehicles, or services of any AMG Affiliate.A replay of today's call will be available on the investor relations section of our website, along with a copy of our earnings release and a reconciliation of any non-GAAP financial measures, including any earnings guidance announced on this addition, this morning we posted an updated investor presentation to our website and encouraged investors to consult our site regularly for updated us today to discuss the company's results for the quarter and full year are Jay Horgan, President and Chief Executive Officer; Tom Wojcik, Chief Operating Officer; and Dava Ritchea, Chief Financial that, I'll turn the call over to Jay. Jay C. Horgen Thanks, Patricia, and good morning everyone. AMG delivered record economic earnings per share in 2024, with full year earnings up 10% year over year, reflecting the ongoing evolution of our business and the positive impact of our disciplined capital allocation strategy. In 2024, we continued to strategically evolve AMG. Increasing our exposure to alternatives, which further enhances our long-term growth private market Affiliates raised approximately $24 billion during the year. Reflecting the ongoing demand for our Affiliate specialized strategies. Throughout the year, we continue to invest our capital and resources alongside our Affiliates, especially in collaboration with our Affiliates to develop new products for the US wealth channel, including additional innovative alternative solutions across private markets and liquid unique model continues to attract outstanding firms seeking a strategic partner. This morning we announced a minority investment in a new Partners, a private markets manager specializing in industrial logistics real estate. The demand for real estate associated with last mile logistics continues to grow. Driven by the expanding digital economy and evolving supply chain the past decade, NorthBridge's experienced and entrepreneurial management team has delivered excellent performance for its LPs while also expanding its team, its geographical footprint, and diversifying its together, the combination of these factors underpin NorthBridge's strong forward growth prospects. Our partnership with NorthBridge is in line with our strategy of investing in high quality independent firms operating in areas of secular growth, especially in private markets and liquid believe that both private markets and liquid alternative strategies are well positioned for future client demand and are areas where AMG's engagement and strategic capabilities can magnify our Affiliates NorthBridge team chose AMG because they were seeking a strategic partner that could provide both growth capital and proven capabilities to support the development of their business while also actively preserving their broadly, our new investment pipeline remains strong including several late stage opportunities. And we continue to focus on partner owned firms operating in specialized areas of alternatives, given the incremental growth and further diversification that these firms can bring to AMG's overall back, The growth investments we have strategically and deliberately made over the last several years have played a critical role in reshaping AMG's business profile. As we continue to execute on our strategy, investing our capital and firms and initiatives aligned with the long-term growth trends, we expect to accelerate the evolution of our exposures towards greater participation in alternatives enhancing our long-term growth prospects and the stability of our cash increasing our private market exposure. We expect the quantum and duration of long lost capital in our business to grow. And as we expand and diversify our footprint and liquid alternatives, we expect that AMG's earnings power will be even more resilient across all stages of a market diversified group of high quality independent partner owned firms operating across private markets, liquid alternatives, and differentiated long only strategies is not only a distinct competitive also supports our capacity to continue investing across our op opportunity set in the areas of highest growth and return to benefit our opportunities to invest for growth are expanding. And with our strong capital position we have ample capital flexibility to execute on our growth opportunities and also return capital through share always, we remain disciplined as we evaluate capital allocation decisions. AMG enters 2025 with significant momentum across our element of our growth strategy from investing in new Affiliate partnerships to investing in existing Affiliates and investing in AMG's capabilities to magnify our Affiliates success, is driving the evolution of our business composition towards greater contribution of in-demand strategies. And as we continue to execute on our strategy, we see increasing opportunities to create meaningful additional shareholder value over with that, I'll turn it over to Tom. Thomas M. Wojcik Thank you, Jay, and good morning everyone. AMG's 2024 results reflect the ongoing evolution of our business, which has been driven by strategically allocating our capital and resources to areas of long-term secular growth. With continued strength in private markets fundraising. Increasing momentum in liquid alternatives and expanding opportunities to invest for entered 2025 well positioned to drive earnings growth and shareholder value. Net client cash outflows of $8 billion in the quarter continue to reflect ongoing strength and alternatives offset by industry headwinds and the challenges in equities, our long-term organic growth profile has improved meaningfully over the last five years. And given our ongoing strategy to evolve our business mix more toward alternatives, we expect further improvement in flow trends over time. Our private markets Affiliates raised $6 billion in the quarter, bringing full year fundraising to $24 billion. And representing annualized organic growth of approximately 20%. These inflows were driven by a broad base of Affiliates, including Comvest, EIG, Forbion, Pantheon, and fundraising strength of AMG's private markets Affiliates reflects investors' conviction in their specialist investment strategies and the positive fundamentals of their private markets Affiliates are at the forefront of secular growth trends and continue to generate outstanding investment performance across a number of high growth areas, including infrastructure, credit, private market solutions, and specialty areas, including industrial decarbonization, life sciences, multi-family real estate, and now industrial logistics through our partnership with liquid alternatives, our Affiliates value proposition is gaining momentum with clients and resulted in a second consecutive quarter of positive flows with $2 billion of net inflows driven primarily by AQR, Winton, Systematica, and Affiliates managing liquid alternative strategies have excellent long-term track records across both beta sensitive and absolute return strategies, including global macro, relative value fixed income, tax aware strategies, and trend of our liquid alternative strategies are designed to protect against volatility and drawdowns, complementing our private markets and differentiated long-only clients continue to focus on portfolio construction amid rising market volatility expectations, we see increasing opportunities for organic growth in liquid alternatives and continue to focus on growing AMG's exposures in this equities, we saw net outflows of approximately $16 billion in the quarter, reflecting industry and near-term performance headwinds, as well as some modest continue to collaborate with our Affiliates on developing new vehicles, including active ETFs, to optimize the delivery of their strategies and enhance their alignment with evolving client demand and fixed income were once again a positive contributor to net flows, with modest inflows in the quarter and approximately $3 billion of inflows for the full Affiliates managing multi-asset and fixed income strategies have consistently benefited from client demand trends, having generated net inflows in 13 of the last 15 we have discussed over the past several quarters, we have significantly invested in our capital formation capabilities, specifically to develop and distribute alternative products in the high growth US wealth markets. And those investments are paying the past five years, alternatives AUM on our US wealth platform has grown more than 10-fold, ending the year at more than $6 billion in AUM. An 2024, we posted $2.5 billion in alternative net inflows to our US wealth addition, we launched three new evergreen products and filed for two additional strategies that we anticipate will go live later this year. These include credit secondaries and infrastructure offerings with Pantheon, a non-traded BDC with Combust and two trend following strategies with combination with the AMG Pantheon Fund, which recently crossed 4.5 billion in AUM, We will now have six alternative continuously offered solutions designed specifically for AMG's US wealth platform, offering clients direct access to excellent investment capabilities from specialized independent we continue to work with our Affiliates to bring new products to market to capitalize on the multi-decade growth opportunity in alternatives in US with the growth that we are generating on the centralized AMG wealth platform, our Affiliates, especially Pantheon and AQR, continue to take advantage of tailwinds and wealth through their own product development and distribution as a result, AMG and our Affiliates are collectively one of the largest sponsors of alternative products for wealth markets globally, with more than $30 billion in total the success that we are having in the wealth channel is resonating not only with clients and existing AMG Affiliates, but also with new investment prospects, as accessing this attractive market requires scale and is difficult, if not impossible, for independent firms to do on their own, given the resources required to be effective in the our proven strategic capabilities to enhance our Affiliates' long-term success. The ongoing fundraising strength of our private markets Affiliates. And improving trends and liquid alternatives. We have entered 2025 in a position of that, I'll turn the call over to Dava to discuss our fourth-quarter results and guidance. Dava Ritchea Thank you, Tom and good morning everyone. In 2024, we continued to strategically evolve our business to expand our exposure to secular growth areas, especially alternatives, and these efforts have contributed to our earnings results. We generated a record proportion of adjusted EBITDA and fee-related earnings from alternative strategies, and together with the discipline ongoing execution of our capital allocation strategy, this contributed to our record economic earnings per share in our strong balance sheet and business momentum, we are well positioned to generate further growth in 2025. In the fourth quarter, adjusted EBITDA of $282 million down 5% year over year, included $70 million in net performance fee earnings. On a full year basis, we reported adjusted EBITDA of $973 million up 4% versus 2023, which included $126 million in net performance fee results primarily reflect higher fee-related earnings, which grew approximately 10% for both the quarter and the full year, driven by growth in average AUM and the impact of recent new was offset by lower net performance fees compared to the fourth-quarter and full year 2023. Economic earnings per share of $6.53 for the fourth quarter, and $21.36 for the full year 2024, further benefited from the impact of a record year of share a full year basis, economic earnings per share grew 10%, demonstrating how our capital allocation strategy can create value for moving to first quarter guidance. A reconciliation slide has been posted to the investor relations section of our website where you can find detailed modeling items for the first expect adjusted EBITDA to be in the range of $220 million and $230 million. This is based on current AUM levels reflecting our market blend, which was up 2% quarter to date as of February 4, includes net performance fees of $10 million to $20 million, and includes no earning contribution from the investment we announced in NorthBridge. Which will start in Q2 and will be modestly positive earnings contributor in 2025 with strong future upside to performance fee earnings, looking at the bigger picture, the mix of strategies deployed by our Affiliates that generate performance fees is diverse across both liquid alternatives and private historically, during times of volatility and stress, we have seen strong performance from our absolute return strategies, many of which are designed to protect against market volatility and continue to believe $150 million is a reasonable expectation for our annual performance fees, and consistent with our prior five year performance fee earnings the first quarter, where our results are primarily driven by Affiliates who report to us on a one quarter lag, we expect performance fee earnings to be $20 million to $30 million below the year ago period. And while we are starting the year lower than where we have been in the past, we remain confident that performance fees will continue to contribute meaningfully to our earnings over the long term. Including a growing contribution from private markets carried interest in the expect first quarter economic earnings per share to be between $5.02 and $5.26 assuming an adjusted weighted average share count of 30.7 million shares for the turning to the balance sheet and capital allocation. We focus on strengthening our balance sheet and enhancing our capital flexibility in 2024, with strong results. We issued $850 million of long duration debt, paid down $750 million of short-term senior debt, and extended our undrawn $1.25 billion revolver for five these actions, the weighted average duration of our debt is now more than 20 years, and we continue to be in a strong liquidity position with $625 million in cash and $475 million in investments across GP commitments, seed capital, and other strategic investments. Our current leverage position remains below historical averages, and our cash plus balance sheet investments equal our existing get maturity through 2034. This provides us with a lot of capital flexibility as we look out over the next few terms of capital allocation, in the fourth-quarter, we repurchased $120 million in shares, bringing us to approximately $700 million for the year, or 13% of our shares a full year basis, given a combination of factors including our strong liquidity position, strength of the balance sheet, current leverage levels, and our view of the value of our business, we were compelled to take a more opportunistic view on the quantum of our purchases in will continue to apply our disciplined capital allocation framework, which is embedded across all elements of our investment process and culture, to make long-term value maximizing decisions on behalf of our as Jay mentioned, we have real momentum on the new investment side with several opportunities in late stages, so we anticipate that we will deploy a balance of capital between both new investments and share repurchases. Based on this, we expect to repurchase at least $400 million in shares in 2025, subject to market conditions and new investment are confident in our ability to execute our disciplined capital allocation strategy and generate meaningful shareholder value over we are happy to take your questions. Operator (Operator Instructions)Dan Fannon, Jefferies. Trevor Dodds Hi, this is [Trevor Dodds] on for Dan. Can you discuss in more detail the pipelines for new investments and how that compares to this time a year ago? Also, did the change in administration have any impact on conversations or dialogue with prospective Affiliates? Jay C. Horgen Okay, thanks. Trevor for your question this morning and good morning to you. So maybe I'll take that one. So as I said in my prepared remarks, our pipeline has and continues to be strong. NorthBridge was just one of those prospects in our pipeline, and we had announced that this we look across our pipeline, we still have several in the later stages, in terms of development. Maybe I'll take a second and talk about NorthBridge, and then, relate it to the broader environment for M&A for us and then I'll address your question on the change in administration. So taking the from the top maybe on NorthBridge, very high quality independent firm operating in an area of secular growth, which is our strategy to invest in businesses in areas of secular growth. It is a private markets manager and it specializes in industrial logistics and importantly, it's picking up on key trends like the e-commerce. Environment accelerating, consumer demand for shorter delivery times and the onshoring of supply chains. So we think this opportunity has a real upside for excited about adding a new private markets manager and excited about adding a real estate manager since those are diversifying for us, and that really does give you some sense for a broader pipeline which is predominantly in areas of alternatives. And specifically in private markets and liquid alternatives, our sort of attractiveness in the market, I think has never been better, mainly because we are unique in that we offer both strategic resources to independent firms, but we also preserve their independence over time, so they really get the best of both when you think about why NorthBridge chose AMG, they really did choose us. Because we have a history of magnifying our Affiliate success through engagement, through strategic engagement, and they were looking for growth capital for their for their funds and the growth of their were also looking for some seed capital which we are going to provide, and they were attracted to our business strategic, business development help as well as product development and distribution capabilities. All of those things factored into why they chose we look more broadly at our pipeline, we see that dynamic playing out, and we think that we compete very well in this environment. Independent firms looking for the benefits of a strategic partner but also leaving them alone in terms of the operations of the day to day and their investment and their investment very attractive environment for us to participate. To your question on the administration, look, I think the administration change probably does favor more new investments for us, anytime there's the potential for lower regulation and, more business development. It generally is pro investment, pro risk on, and so we do think that it has the opportunity to be attractive to us in this environment to accelerate our new investment pipeline. Operator Bill Katz, TD Cowen. Bill Katz Okay, thank you very much for taking the question. Congrats on the small transaction today. As you think about the pipeline from here, Jay is the is the go forward, the NorthBridge kind of model where you have a minority stake in a smaller franchise that you can then sort of lever through your more advanced global distribution platform, or could there be some larger deals that might move the flow and or strategic needle a little bit more quickly at the end of the day. Jay C. Horgen Yeah, I mean, the short answer is both actually, Bill, to put it direct, I think we have a number of sort of mid-sized firms that we think can, triple or do even more than a triple, and frankly using our resources to help them get there, as Tom said in his prepared remarks, we're actually a pretty significant player in bringing a private markets products and liquid alternative products to the wealth I think we look at our pipeline and say there's a number of firms that are choosing us and we are choosing them because we can accelerate their growth, but we also have, some larger new investments in our we might be able to put even more capital, and they just happen to be larger franchises, but the growth dynamics there are attractive as well, we do have the reputation in the market of being a very supportive partner, whatever the needs of the firm, really is. So in some cases we are much more active with our Affiliates. In other cases. We're still strategically engaged, but we have more of a business development, longer term perspective, and they engage with us as when we look at the pipeline, we have a mix of all of the above, both, relatively small and much larger transactions. I'm all in the category of, and I've said before, sort of enterprise value between, 250 to 750, of which we would typically buy either a minority or a bare majority stake in all cases, leaving the business that's kind of our opportunity set. Now there are times where we might actually go, to be on that, and you've seen us do that in A in prior years and that's not off the table for us. We actually think that there's some attractive opportunities out there for us, but we would obviously make sure that the bar was high when we make those investments. Operator Alexander Blostein, Goldman Sachs. Hey, good morning everyone this is Luke on for Alex. Thanks for taking the question. So the last few quarters you've provided really helpful detail into your retail alt product pipeline. I was hoping you could give us an update on the trends you are seeing evolve from both a client demand perspective and distribution fee arrangements and how active are you guys currently in developing active ETFs for your Affiliates. Thank you. Jay C. Horgen Yeah, thanks, Luke for your question. I think Tom, you're well positioned to take. Thomas M. Wojcik Yeah, thanks, Jay and thanks, Luke. So as I talked about in my prepared remarks and really as we've been talking about now over the course of the last couple of years, AMG has pivoted pretty hard with respect to our strategy to really support our Affiliates and to attract the next new investment prospect through our capabilities in the US wealth channel and more broadly as we think about product development, the ability to use our balance sheet to see the exciting new product when you kind of take a full step back, the most unique and interesting thing that we have at AMG are the investment capabilities that exist across our Affiliates around the world in long only asset classes, in liquid alternative asset classes, and in private market asset classes. In 2024 we aggressively ramped our pace of getting new products to been quite some time since we've launched a new product into the US wealth space, and last year we successfully launched three. And filed for two more. So we now have six continuously offered products that are available. We also had a drawdown, so sort of a traditional more closed in private equity style fund in the market in the US wealth channel last year. So we really feel like we're off to the races with respect to alternatives in US terms of the forward product development pipeline, we really view our opportunity set in the space as being a conduit to deliver excellent independent partner-owned alternative product across the spectrum of liquid alternatives and private markets to the US wealth space through this sort of single channel that is AMG. And it allows us to bring really differentiated independent partner owned firm product, but with a sophisticated product development and sales force effort that can really comprehensively cover the channel, and we don't think there's anyone else in the industry who brings together that combination of unique investment expertise and the ability to educate advisers, work with home offices, and really get those products into the respect to the long only side, we do see active ETFs as a really interesting and exciting opportunity. There's been a tremendous amount of innovation that's taken place there over the course of, not only the last decade, but really some acceleration over the course of the last couple of years, particularly with respect to adoption of actively managed had a couple that were launched this past year. By some of our Affiliates. We are spending a lot of time with a group of Affiliates thinking about the right way to enter those markets, and we see it as a really exciting opportunity again to combine excellent investment expertise with where client demand is going in the market with respect to the ability to generate returns, but also putting those returns in an appropriate wrapper that clients can it's a great question, Luke, and it's really a big part of our strategy, and we think it's a big growth driver for us in the future. Operator Thank you. Ladies and gentlemen, this brings us to the end of the question-and-answer session. We would like to thank you for your participation and interest in AMG. You may not disconnect your lines or log up the webcast and enjoy the rest of your day. Sign in to access your portfolio
