Bottomline jumps outright, improves on hedge; EnPro unchanged; Chart Industries expands

By Rebecca Melvin

New York, Nov. 1 - Convertibles were mixed on Friday as corporate earnings reports continued to flow in; but trading was generally quieter in contrast to earlier in the week when reports seemed to be spurring more volatility than usual.

"There have been a lot of earnings misses but also a lot of beats," a Connecticut-based analyst said.

Bottomline Technologies Inc.'s convertibles jumped outright and were better on a dollar-neutral, or hedged, basis by as much as a 0.5 point, a New York-based trader said.

The Portsmouth, N.H.-based business-to-business software company reported fiscal first-quarter earnings that beat estimates on both the bottom and top lines and shares gained 11%.

EnPro Industries Inc.'s 3.938% convertibles due 2015 traded in line on a hedged basis after the Charlotte, N.C.-based diversified company reported an earnings miss that sent shares down 4%.

Chart Industries Inc.'s convertibles held on to their hedged gain in early action and expanded more by the end of the session as shares of the Garfield, Ohio-based engineering, procurement and construction company continued to slide.

"Things were pretty mixed," a trader said. There were things that improved a little bit like no more than 0.25 point, he said, citing Cobalt International Energy Inc. as an example MGM Resorts International was weaker, however, he said.

During the week the Federal Reserve said it would hold steady on asset purchases, as expected. Pundits now predict tapering to begin near the end of the first quarter.

Bottomline better

Bottomline's 1.5% convertibles due 2017 were seen at 132 bid, 132.75 offered with the underlying shares at $34.60. Previously the paper was about 122.75 bid, 123.25 offered, with the shares at $31.42.

The bonds were "better on the day," a trader said. The paper, which trades on about a 77% delta, was marginally improved on a hedged basis. On an outright basis, it was up about 9 points.

Shares added $3.22, or 10%, to $32.64.

The smallish issue of under $200 million priced about a year ago.

Bottomline beat earnings expectations by about 12 cents and also beat on revenue estimates for the quarter ended Sept. 30.

Income excluding some items was $8.4 million. Revenue rose 9% to $67.2 million, as subscription and transaction revenue related to the company's commercial banking, legal spend management and cloud-based applications increased 11%.

EnPro unchanged

EnPro's 3.938% convertibles due 2015 were seen at 174.625 bid, 175.625 offered at the end of the session with the shares at $57.00.

Shares of the diversified company that makes sealing products, metal polymer bearings and compressor systems fell $2.00, or 3.35%, to $57.67.

That was unchanged on a hedged basis, according to a New York-based bank.

The $172.5 million deal of 10-year notes was priced in 2005.

EnPro missed estimates on both the top and bottom lines. Net income was $5.6 million, or 23 cents per share, for the latest period, compared to net income of $11.3 million, or 53 cents per share, in the year-earlier quarter. Excluding items, income was $13 million, or 53 cents a share, which was down compared to $17.2 million, or 81 cents per share, in the year-earlier period.

Revenue fell 5% to $276.0 million due primarily to a decline in sales at the company's engine products and services segment. Those sales were down due to lower demand for parts and service from its U.S. government markets, the company said in its release.

Analysts expected the company to earn 56 cents per share, compared to 53 cents per share for the same quarter a year ago.

Chart expands again

Chart Industries' 2% convertibles due 2018 traded at 159.125 bid, 159.875 offered versus a share price of $100.50. That was down on an outright basis from 171.5 bid, 172 offered versus a share price of $110.50 on Friday, but better by 0.5 point on a dollar-neutral basis, a New York-based trader said.

Chart shares fell $6.74, or 6.3%, to $100.73, on top of an 11% decline on Thursday. The bonds expanded 0.375 point to 0.5 point on Thursday.

Chart missed estimates on both earnings and revenue and also lowered guidance. Looking ahead, the company lowered its earnings and sales guidance based on third-quarter results, the current order backlog and business expectations.

Mentioned in this article:

Bottomline Technologies Inc. Nasdaq: EPAY

Cobalt International Energy Inc. NYSE: CIE

EnPro Industries Inc. NYSE: NPO

Chart Industries Inc. Nasdaq: GTLS

MGM Resorts International NYSE: MGM

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