Endo rises despite negative earnings, sector negativity; Adient gains on quarterly report

By James McCandless

San Antonio, Aug. 6 – The distressed debt space was awash with earnings reports, lifting some and punishing others.

Endo International plc’s notes rose despite reporting negative earnings and ongoing problems in the sector.

Sector peer Mallinckrodt plc’s issues tanked after issuing its own earnings and nixing a spin off.

Teva Pharmaceutical Industries Ltd.’s paper was also under pressure.

Meanwhile, in the auto space, Adient plc’s notes spiked in reaction to the company’s positive earnings.

Tenneco Inc., another auto parts maker to release earnings on Tuesday, saw its issues trend upward.

Dairy name Dean Foods Co.’s paper crashed after posting the latest in a string of dismal earnings reports.

Oil futures fell again, spurring negative movements in California Resources Corp.’s and Chesapeake Energy Corp.’s notes while Diamond Offshore Drilling, Inc.’s issues gained.

Endo rises

Endo’s notes were on the rise on Monday, traders said.

The 6% senior notes due 2025 rose ½ point to close at 59½ bid. The 7½% notes due 2027 gained 1¾ points to close at 92 bid.

The two notes combined for $46 million on the tape by the close.

The modest gains for the Dublin-based generic drug maker’s structure came despite the company’s release of an earnings report that skewed negative after the close on Tuesday.

The name reported a profit of 52 cents per share, beating analyst expectations of 47 cents per share.

Revenues also beat expectations at 699.73 million.

“The top line isn’t so bad,” a trader said. “But it’s the underlying numbers that are weighing on it, at least on the equities side.”

The company saw a higher net loss, a reduction in adjusted net income and a slight fall in revenues.

The sector continues to face pressure as lawsuits and negative headlines largely tied to the opioid epidemic abound.

Mallinckrodt, Teva down

Sector peer Mallinckrodt’s issues tanked during the session, market sources said.

The 5 5/8% senior notes due 2023 fell 5¼ points to close at 58¼ bid. The 5¾% notes due 2022 took off 5½ points to close at 69¼ bid.

On Tuesday morning, the Staines-upon-Thames, England-based sector peer released its own second-quarter earnings.

Earnings per share were listed at $2.53, performing better than the $2.10 per share predicted by analysts.

Revenues were $823.3 million.

Despite the positive showing, the company concurrently announced that it would be suspending its plans to spin off its specialty generic drugs business.

The name said that uncertainty over opioid litigation was the main reason.

“That’s where the industry is right now,” a trader said. “This is going to hang on to this space for at least a year.”

Petach Tikva, Israel-based generics name Teva’s paper was also under pressure.

The 6¾% senior paper due 2028 shed ¾ point to close at 87¾ bid. The 3.15% paper declined by ½ point to close at 77 bid.

Adient spikes

Meanwhile, automotive name Adient’s notes saw a spike, traders said.

The 4 7/8% senior notes due 2026 jumped up 4 points to close at 77¾ bid.

Reporting its third-quarter earnings on Tuesday morning, the Dublin-based auto parts manufacturer’s results boded well for the company’s turnaround efforts.

The name showed an earnings per share of 38 cents, beating analyst expectations of 31 cents per share.

It also outpaced revenue expectations, listing $4.22 billion.

“They ended last year in trouble,” a trader said. “The dividend was suspended and it looked like another trade war casualty. But it looks like they are on their way back up.”

Tenneco better

Elsewhere, domestic peer Tenneco’s issues were also trending upward, market sources said.

The 5% senior notes due 2026 improved by 5¾ points to close at 81¾ bid. The 5 3/8% notes due 2024 added 2 points to close at 85 bid.

The Lake Forest, Ill.-based powertrain name also received a boost thanks to its latest earnings report.

Second-quarter earnings per share were listed at $1.20, better than analyst consensus at 93 cents per share.

Revenues were a robust $4.5 billion.

Dean Foods crashes

In dairy, Dean Foods’ paper crashed, traders said.

The 6½% senior paper due 2023 lost 9 points to close at 46 bid.

In the latest in a series of worsening quarterly reports, the Dallas-based dairy product producer saw more dismal numbers.

The company reported a 36 cents per share loss, quadruple the amount that analysts had expected.

Revenues also highlighted underperformance at $1.84 billion.

After its previous earnings report in May, the company said that it would be conducting a strategic alternatives review to explore its options, not ruling out a sale.

Last month, the company replaced its chief executive officer.

“All signs point to declines in milk sales,” a trader said. “On the call, one of the executives put some of the blame on more people shifting to water. So what they do next to pull themselves out of the hole is not clear yet.”

Oil negative

Distressed oil tranches trended towards the negativity shown by oil futures Tuesday, market sources said.

Los Angeles-based independent oil and gas producer California Resources’ notes were under water.

The 6% senior notes due 2024 dropped 1 point to close at 44 bid. The 8% notes due 2022 shed 3 points to close at 56 bid.

The 8% notes saw $33 million trading.

Oklahoma City, Okla.-based peer Chesapeake Energy’s issues were also shifting downward.

The 8% senior notes due 2025 fell 3 points to close at 76½ bid. The 8% notes due 2027 gave back 2¾ points to close at 71½ bid.

The 2025 and 2027 notes saw $68 million on the tape during the session.

Houston-based oil and gas driller Diamond Offshore’s paper saw a slight reprieve.

The 7 7/8% senior paper due 2025 rose ½ point to close at 87 bid.

On Monday, the company reported a quarterly loss of 99 cents per share and revenues of $216.71 million.

West Texas Intermediate crude oil futures for September delivery dropped $1.06 to settle Tuesday at $53.63 per barrel.

North Sea Brent crude oil futures for October delivery ended the day at $58.94 after an 87-cent loss.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.