CAM High Yield Weekly Insights

Fund Flows & Issuance:  According to a Wells Fargo report, flows week to date were -$1.1 billion and year to date flows stand at -$25.6 billion.  New issuance for the week was $4.7 billion and year to date HY is at $83.2 billion, which is -20% over the same period last year.   

(Bloomberg)  High Yield Market Highlights 

• CCC yields saw the biggest drop since October 2017 as U.S. high yield firmed with rising oil and growing appetite for risk assets.
• High yield spread fell to 336bps from 343bps at the start of the week
• Investors, starved of supply, shrugged off outflows from retail funds
• Most of the Primary issuance was the $3.2b issued on Wednesday
• High-yield is best performing asset class in fixed income, led by CCCs
• CCCs beats BBs, single-Bs, with positive YTD return of 1.90%
• IG bonds have lost 3.46% this year
• CCC spread also tightened most in 6 months yesterday
• Moody’s said the U.S. speculative-grade default rate was projected to decline to 1.5% by April 2019

(Bloomberg)  Arconic Cuts Outlook on Higher Aluminum Costs

• Arconic Inc. sold off after the company slashed its forecast because of rising aluminum prices and business inefficiencies.
• Adjusted profit will be 18 percent less than the previous estimate, the New York-based metals maker said in a statement. That trailed the lowest estimate of analysts surveyed by Bloomberg.
• “It is clear that we have areas in need of operational improvement,” Chief Executive Officer Chip Blankenship, who took the reins in January, said in the statement. “We are updating our full year 2018 guidance due to rising aluminum prices and my deeper understanding of our operations.”
• The comments reflect Blankenship’s challenge as he looks to revitalize Arconic after a bitter battle with Elliott Management Corp. last year. He has already pledged to review Arconic’s strategy and portfolio while moving the headquarters to a lower-cost location. More recently, growing tensions over aluminum and steel tariffs, as well as U.S. sanctions on Russian aluminum giant United Co. Rusal, have roiled metals producers and their customers.

(Hollywood Reporter)  AMC Entertainment Posts Higher First-Quarter Earnings, Beats Estimates

• Cinema giant AMC Entertainment posted higher first-quarter earnings and revenues on the strength of Black Panther and Jumanji‘s box-office returns and its Nordic Cinema Group Holding acquisition internationally.
• Net earnings for the three months to March 31 climbed to $17.7 million against a year-earlier $8.4 million. Overall revenues rose 8 percent to $1.387 billion, exceeding a $1.35 billion analyst forecast.
• “We are truly heartened by AMC’s start to 2018 and couldn’t be more excited about the prospects for the year after the record-breaking success of Avengers: Infinity Warearly in the second quarter,” AMC CEO Adam Aron said in a statement.
• During an analyst call that followed the release of his latest results, the AMC boss took a bullish stance on his company’s prospects going forward, as Aron pointed to a bounce-back in early 2018 box office on the strength of Black Panther and Avengers ticket receipts after the “painful depths” of the summer 2017 multiplex business.
• The exec argued market analysts who had questioned the prospects of movie theaters amid the rise of streaming content competition like Netflix and Amazon Prime had been proven wrong. “When Hollywood makes movies that people want to see, they flock to our theaters and they do so in huge numbers,” Aron added.

(Business Wire)  B&G Foods Reports Financial Results for First Quarter 2018

• Base business net sales for the first quarter of 2018 increased $1.1 million, or 0.3%, to $411.1 million from $410.0 million for the first quarter of 2017. The $1.1 million increase was attributable to an increase in net pricing of $1.2 million, or 0.3%, partially offset by a decrease in unit volume of $0.1 million.
• For the first quarter of 2018, adjusted EBITDA, which excludes acquisition-related and non-recurring expenses and the non-cash accounting impact of the Company’s inventory reduction plan, was $89.4 million, a decrease of 2.9%, or $2.6 million, compared to $92.0 million for the first quarter of 2017. Adjusted EBITDA as a percentage of net sales was 20.7% for the first quarter of 2018.
• Robert C. Cantwell, President and Chief Executive Officer of B&G Foods stated, “When we laid out our vision for 2018 earlier this year, we expressed our belief that during 2018 we would return to modest growth, stable margins and strong free cash flow generation, benefiting in part from our inventory reduction plan, and we delivered on those expectations in the first quarter.”
• B&G Foods reaffirmed its guidance for full year 2018. Net sales are expected to be approximately $1.720 billion to $1.755 billion, adjusted EBITDA is expected to be approximately $347.5 million to $365.0 million and adjusted diluted earnings per share is expected to be approximately $2.05 to $2.25.