NextEra Energy brings new deal; Electronics for Imaging gives back gains; RH improves

By Stephanie N. Rotondo

Seattle, Sept. 7 – The convertible bond market was eyeing a new issue from NextEra Energy Partners LP on Thursday.

The Juno Beach, Fla.-based power provider announced ahead of the open that it had priced a $300 million Rule 144A offering of 1.5% convertible senior notes due 2020 with an initial conversion premium of 25%.

The deal came in line with price talk but was sold at 99% of par.

A trader said he saw the new issue trading at 98.

As for the underlying stock, it was initially up but ended the day down 61 cents, or 1.44%, at $41.68.

Barclays ran the books.

Meanwhile, Electronics for Imaging Inc.’s 0.75% convertible notes due 2019 continued to be on the radar, just one day after the company said an accounting review was not expected to result in any earnings restatements.

However, while the convertibles had gained ground in the previous session, they were giving back some of the gains on Thursday.

Restoration Hardware Holdings Inc. – now referred to as simply RH – and GoPro Inc. meantime saw their convertible bonds trading up. For its part, RH reported better-than-expected earnings, while GoPro issued a rosier-than-expected forecast for the current quarter.

Electronics steady to lower

Electronics for Imaging’s 0.75% convertibles were again in focus on Thursday, following the company’s announcement on Wednesday that an accounting review was not expected to result in any material issues.

A market source saw the issue trading at 102, which was down about 0.375 point.

Another source also pegged the paper at 102, though he called that about unchanged.

The company’s stock was also giving back, slipping $1.44, or 3.6%, to $38.58.

The equity had improved about 15% on Wednesday in the wake of the news.

In addition to the business update, Electronics for Imaging also produced guidance for the third quarter. The company expects to report revenue of $255 million to $260 million and adjusted earnings per share of 55 cents to 60 cents for the current quarter.

Analysts polled by FactSet are expecting revenue of $262.8 million and adjusted EPS of 63 cents.

RH firm post-earnings

RH’s 0% convertible notes due 2020 got a boost on Thursday in the wake of the company’s quarterly results.

At one shop, the notes were seen in an 84.5 to 85.5 context, which compared to 77.25 to 77.375 previously.

At another desk, the convertibles were pegged with an 85 handle, up over 8.5 points.

The underlying equity meantime surged $22.12, or 44.76%, closing at $71.54.

Late Wednesday, RH reported its second-quarter results, showing adjusted earnings per share of 65 cents on revenue of $615.3 million.

Analysts polled by Thomson Reuters had predicted adjusted EPS of 47 cents on revenue of $606 million.

Same-store sales also improved, rising 7% during the quarter. That was better than the 5.4% gain analysts had forecast.

Additionally, RH upped its full-year guidance. The company is now expecting to see EPS of $2.43 to $2.67, which compared to previous guidance of $1.67 to $1.94 a share.

The home goods retailer also said it expects to generate free-cash flow of $400 million by the end of the year.

The better-than-expected guidance was attributed to the company’s membership model, which it rolled out last year. Under the model, customers can receive 25% discounts on merchandise for an annual fee of $100.

GoPro a-go-go

GoPro’s 3.5% convertible notes due 2022 closed just shy of 109.5, according to a market source on Thursday.

Though the issue doesn’t trade often, that was up about 8 points from previous trades in mid-August.

The company’s stock also did well, adding $1.10, or 12.36%, to end at $10.00.

On Thursday, the camera manufacturer said it expected third-quarter profit and gross margins to be at the high end of previously announced guidance.

For the quarter, GoPro is anticipating revenue of $290 million to $310 million and gross margins of 36% to 38%.

The company also said it expects to turn a profit for the reporting period.

The rosy picture comes after the company reported a second-quarter net loss that was smaller than expected and revenue that beat expectations.

GoPro is planning two new product launches before the end of the year, with the HERO6 slated to come before the holiday season.

Mentioned in this article:

Electronics for Imaging Inc. Nasdaq: EFII

GoPro Inc. Nasdaq: GPRO

NextEra Energy Partners LP NYSE: NEP

Restoration Hardware Holdings Inc. NYSE: RH

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