Housing recovery boosts Home Depot results; outlook raised

ATLANTA,Tue May 21, 2013 — Home Depot Inc. reported higher-than-expected quarterly results and raised its sales and profit outlook for the year as the world’s largest home improvement chain benefited from a nascent recovery in the U.S. housing market.

The news on Tuesday boosted Home Depot shares by 3.9 percent to $79.75 in premarket trading.

A bubble in the U.S. housing market was at the core of the 2007-2009 financial crisis. During the downturn, Home Depot’s sales at established stores fell more than 20 percent in such markets as Florida and California. In recent quarters, the company has gotten a boost as housing markets have rebounded in regions where it has a heavy presence.

“In the first quarter, we saw less favorable weather compared to last year, but we continue to see benefit from a recovering housing market that drove a stronger-than-expected start to the year for our business,” Chief Executive Officer Frank Blake said.

Despite cooler-than-usual weather in many parts of the United States at the start of the spring selling season, Home Depot’s sales rose 7.4 percent to $19.12 billion in the first quarter ended on May 5. That topped the analysts’ average estimate of $18.68 billion.

Better pricing and customer service have helped Home Depot take market share from smaller rival Lowe’s Cos. The industry leader has also gained from tailoring its marketing to local areas, centralizing distribution centers and shifting more workers to jobs where they serve customers directly.

Sales at Home Depot stores open at least a year rose 4.3 percent, including a 4.8 percent increase in the United States. Many on Wall Street expect same-store sales from Lowe’s to be weaker than those from Home Depot for the 16th straight quarter when the smaller chain reports results on Wednesday.

Under Blake, Home Depot was also quicker than Lowe’s to cut costs in the years after the housing collapse.

Net income in the first quarter rose to $1.2 billion, or 83 cents a share, from $1 billion, or 68 cents a share, a year earlier. Analysts on average had forecast a profit of 77 cents a share, according to Thomson Reuters I/B/E/S.

For the year, the company now expects earnings of $3.52 a share, up from its prior outlook of $3.37. It forecast a sales increase of about 2.8 percent, up from previous expectations of a 2 percent rise.

Linn Energy to buy Berry Petroleum in $2.5 billion stock deal

HOUSTON, Thu Feb 21, 2013 — Oil and gas producer Linn Energy LLC will buy Berry Petroleum Co. for $2.5 billion in stock, boosting its reserves of lucrative oil and raising total output by about a third.

Berry shareholders will receive 1.25 shares of LinnCo. LLC, a company set up by Linn to raise money for acquisitions and other purposes. LinnCo, which went public in October, only owns Linn units and has no assets or operations.

Berry shareholders will get an equivalent of $46.24 per share based on LinnCo. stock’s closing price of $36.99 on Wednesday. This is a 19.8 percent premium to Berry’s closing price of $38.59.

Berry had 54.15 million shares outstanding as of Oct. 26. The deal is valued at $4.3 billion including debt, the companies said.

Berry shares rose 14 percent in premarket trade.

Linn’s offer is higher than Berry’s intrinsic value of $44.06 as measured by Thomson Reuters StarMine.

The StarMine model is a measure of a stock’s current value when considering analysts’ growth estimates for five years, and then modeling the typical growth trajectory over a longer period of time.

Chesapeake fourth quarter profit tops Street, shares rise

OKLAHOMA CITY, Okla., Thu Feb 21, 2013 — Chesapeake Energy Corp. reported fourth-quarter profit that topped Wall Street estimates on Thursday, helped by lower-than-expected expenses and more profitable oil production.

Shares of Chesapeake rose nearly 2 percent to $20.60 before the start of regular trading.

The earnings report came a day after Chesapeake said an internal investigation of the financial dealings of its outgoing chief executive, Aubrey McClendon, found no “intentional” wrongdoing.

McClendon is stepping down in April following a tumultuous year during which the company faced a liquidity crunch and a governance crisis. Now Chesapeake’s board and big shareholders are working to rein in spending, pay down debt and increase production of more profitable oil.

McClendon, who founded the company in 1989, was not quoted in the earnings release as he typically is.

Phil Weiss, an analyst with Argus Research, said expenses in a number of areas came in below his projections while cash flow was higher than he anticipated.

Fed missed warning signs in 2007 as crisis gained steam

WASHINGTON, Mon Jan 21, 2013 — Top policymakers at the Federal Reserve felt for most of 2007 that problems in housing and banking were isolated and unlikely to tear down the U.S. economy as they ultimately did.

Even as crisis signals started flashing red with the freezing of credit markets during the summer, Fed officials believed the troubles would be moderate and short-lived, according to transcripts of the 2007 meetings released on Friday after the customary five-year lag.

 

U.S. Treasury Secretary Timothy Geithner, then president of the New York Federal Reserve Bank, said during an emergency telephone call on August 10 of that year that most of Wall Street was still doing fine.

“We have no indication that the major, more diversified institutions are facing any funding pressure,” Geithner said according to the transcripts, which total 1,370 pages. “In fact, some of them report what we classically see in a context like this, which is that money is flowing to them.”

Similarly, Fed Chairman Ben Bernanke underestimated the risks of a looming financial blow-up.

“I do not expect insolvency or near insolvency among major financial institutions,” he said in December 2007.

By then, the Fed had already launched emergency liquidity measures and begun cutting interest rates, which by December 2008 would be brought all the way down to effectively zero.

New York banker Gordian Group to advise Hostess’ bakery union

NEW YORK, Mon Jan 21, 2013 — The union and pension fund for Hostess Brands Inc. HTBRS.UL has hired Gordian Group, an investment bank specializing in distressed cases, to help preserve jobs and workers’ benefits at the bankrupt maker of Twinkies snack cakes as Hostess negotiates with buyers.

New York-based Gordian, which has no institutional loyalties to funds or bondholders in Hostess, will provide conflict-free advice for the welfare of the company’s workers, The Bakery and Confectionery Union and Industry International Pension Fund (Bakers Fund) said.

Mexico’s Grupo Bimbo and a partnership between Apollo Global Management and veteran food executive C. Dean Metropoulos are among the leading candidates to buy Hostess Brands Inc.’s snack cake brands, according to three people familiar with the matter.

In a separate announcement earlier this month, Hostess said Flowers Foods agreed to pay $390 million for Hostess’s Wonder and other bread brands, including Nature’s Pride and Butternut. That sale is still subject to a court-supervised auction.

The Bakers Fund said it intended to hold direct discussions with the bidders for Hostess and had chosen Gordian to advise it on the basis of the investment bank’s track record in distressed financial situations.

“The Bakers are here to work with bidders in any way as our sole goal is to maximize jobs and pension benefits for our members,” said David Durkee, who is chairman of the Bakers Fund.

Dreamliner probe widens after excess battery voltage ruled out

WASHINGTON, Mon Jan 21, 2013 — U.S. safety investigators on Sunday ruled out excess voltage as the cause of a battery fire this month on a Boeing Co. 787 Dreamliner jet operated by Japan Airlines Co. and said they were expanding the probe to look at the battery’s charger and the jet’s auxiliary power unit.

Last week, governments across the world grounded the Dreamliner while Boeing halted deliveries after a problem with a lithium-ion battery on a second 787 plane, flown by All Nippon Airways Co., forced the aircraft to make an emergency landing in western Japan.

A growing number of investigators and Boeing executives are working around the clock to determine what caused the two incidents which the U.S. Federal Aviation Administration says released flammable chemicals and could have sparked a fire in the plane’s electrical compartment.

There are still no clear answers about the root cause of the battery failures, but the U.S. National Transportation Safety Board’s statement eliminated one possible answer that had been raised by Japanese investigators.

2013 Columbus Pillar Award Winners Unveiled

COLUMBUS, OH (Jan. 21, 2013) – Smart Business Network Inc. is pleased to announce the category winners of the 2013 Medical Mutual Pillar Award for Community Service program, presented by Smart Business and sponsored by Rea & Associates, GREENCREST, Capitol Square Review and Advisory Board, and Catering by Design.

At an awards recognition program held at the Ohio Statehouse January 17, 2013, 15 organizations were unveiled as Pillar Award winners in five distinct categories and participated in a series of panel discussions with TV-10’s Kristyn Hartman about the tie between the for-profit and nonprofit worlds.

Pillar Award for Community Service
• Cardinal Health
• Columbus Crew
• Donatos
• Fifth Third Bank
• Mettler Toledo
• RockBridge
• Safex

Medical Mutual SHARE Award
• Safelite®

Rea & Associates Executive Director of the Year Award
• Jay Jordan, president & CEO, OCLC
• Tammy Wharton, CEO, Girl Scouts of Ohio’s Heartland Council

Nonprofit Board Executive of the Year Award
• Brooke Billmaier (Victoria’s Secret), St. Stephen’s Community House
• Michael J. Fiorile (The Columbus Dispatch), Columbus College of Art and Design
• Laura Warren (Limited Brands), Girl Scouts of Ohio’s Heartland Council

Kent Clapp CEO Leadership Award
• Jane Grote Abell, chairman, Donatos
• Mark Swepston, president & CEO, Atlas Butler Heating and Cooling

“This class of honorees, combined with this year’s group of finalists, is truly inspirational,” says Dustin S. Klein, publisher of Smart Business. “They give back individually and as organizations. They get involved in causes they care about. And the nonprofit leaders have forged meaningful relationships with the for-profit companies and their executive teams to better deliver upon their missions. All told, the Pillar Award class of 2013 truly understands how to strengthen the regional communities where we all live and work.”

The Pillar Award program was founded in 1998 and honors organizations and individuals that best demonstrate a commitment to making a difference. For information on the award winners, along with profiles of the finalists for this year’s Pillar Awards, visit www.sbnonline.com. To receive a nomination for the 2014 awards program, or to learn more about the Pillar Awards, contact Smart Business at dsklein@sbnonline.com or (440) 250-7026.