Zenith Energy 1H19 Results
On 26 February 2019, Zenith Energy reported 1H19 results and reiterated its FY19 guidance. Zenith reported significant growth in its Build Own Operate (BOO) segment, with a 69% increase in MW under control over the prior corresponding period (pcp). BOO revenue and EBITDA were up 53% and 123%, respectively over the pcp. The group NPAT was down AUD4.9m versus 1H18, primarily driven by the strategic transition away from Manage, Operate & Maintain (MOM) and Engineer, Procure & Construct (EPC) contacts to focus on long-tenure BOO contracts. We view this as a positive given the earnings from that segment are generated by longer contracts, providing increased earnings stability and predictability.
Subsequent to its earnings release, Zenith announced on 28 February 2019 that it had extended the maturity of its senior banking facilities and increased the size, while achieving more attractive pricing. This will enable the company to continue funding investments to support its recent contract wins.
Ensco 4Q18 results
On 27 February 2019, offshore oil driller, Ensco plc, reported its 4Q18 and full year results which came in below consensus. Adjusted EBITDA for the quarter was USD45m falling 40% from the prior quarter and down 52% year on year (YoY), primarily as a result of lower activity and declines in average day rates which fell to USD129,000 (USD157,000 in 4Q17). Ensco’s revenues decreased to USD399m for the quarter, down from USD454m in 4Q17. Fleet utilisation increased to 53%, up from 50% in the prior corresponding period.
Last week Ensco also announced that it has received shareholder approval at each company for its acquisition of Rowan Companies plc (Rowan), the transaction is expected to close in 1Q19. Pro forma for the pending merger, total debt stands at USD7.7bn and pro forma net and gross leverage stand at 19.3x and 24.6x, respectively. As at 31 December 2018, the company has pro forma cash of USD1.6bn and USD2.8bn of contracted revenue backlog.
TransAlta 4Q18 and Full Year Results
On 27 February 2019, TransAlta, reported strong 4Q18 and full year financial results and solid operating performance. For FY18, TransAlta delivered USD524m in free cash flow (FCF) and funds from operations (FFO) increased 15% to USD927m (compared to USD804m in FY17). Comparable EBITDA increased 6% to USD1,123m YoY, primarily achieved by strong results in the hydro sector which benefitted from higher market prices for ancillary services and a UD157m termination payment. The company continues to focus on strengthening its balance sheet, reducing net debt by USD220m over FY18 and ending the year with USD3.1bn.