Canaccord Genuity Global Growth Conference: Sustainability Part II (FTEK, GEVO, HW, ITRI, REGI, WPRT, CECE)
Tweet
Share
E-mailGet Alerts FTEK Hot Sheet
Price: $1.15 --0%
Rating Summary:
2 Buy, 2 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Rating Summary:
2 Buy, 2 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 11 | New: 14
Join SI Premium – FREE
Summaries of presentations from Canaccord Genuity Global Growth Conference: Sustainability Part II
Analyst, John Quealy, said, "In sum, the Sustainability sector continues to offer compelling growth opportunities, even though the risk/reward for specific sub-sector and individual stocks varies significantly...Alternative Fuels remains a key area of focus, as investors await the deployment of natural gas refueling stations and the announcement of future OEM platform wins in H2/12. Smart Grid continues to show attractive value, as sentiment is troughed and earnings and cash flow resilience improves for certain names. Biofuels stays more variable near term, as high corn prices and regulatory uncertainty remain a headwind for that group."
Hold-rated Fuel Tech (Nasdaq: FTEK): China business continues to gain momentum, with better drivers given higher energy prices and pollution control metrics. RFPs and awards continue to open up here (~$9M won in July). Notably, the company is opening a new office in Latin America (Chile) to help support ~$30M in business through '14...FUEL CHEM (~50 percent of business and gross margins) remains hampered by low natural gas prices and coal switching (though appears to have troughed).
Buy-rated GEVO (Nasdaq: GEVO): Management is 100% focused on the ramp up of the first commercial isobutanol plant at Luvernne (specialty chemicals market). Notably, the Sasol offtake agreement is indexed to corn (take or pay), mitigating potential drought volatility concerns. Redfield (plant 2) is slated to follow Luvernne (benefitting from “lessons learned”), with expectation for positive EBITDA from these two plants...continue to like capital light strategy, but see volatility in IP litigation with Butamax (BP (NYSE: BP) \ Dupont (NYSE: DD).
Buy-rated Headwaters (NYSE: HW): Contribution margins in light building products of ~42% are actually running ahead on favorable mix shift and accelerated cost savings, with each ~100K incremental housing starts translating into ~$8M of incremental adjusted EBITDA on a trailing twelve month basis. We also note price increases of ~2.5-3% implemented for the siding accessories business in July...Flyash volumes appear to be improving...EPA methodology with regards to flyash regulation looks to be released in the near-to-mid term...
Buy-rated Itron (Nasdaq: ITRI): Current manufacturing restructuring activities are driving increased profitability, with 4 (of 10) facilities closed/sold so far. Run rate savings of ~$30M are expected in 2013, with manufacturing capacity actually increasing on automation\optimization (covenants previously limited ability to undertake these improvements given upfront charges). Global purchasing initiatives are also gaining momentum, with related savings expected to double next year (from ~$10M to ~$20M)...Transition period in N. American AMI wave, but Large new orders in 2012-14 pipeline.
Buy-rated Renewable Energy Group (Nasdaq: REGI): Renewable volume obligation (RVO) for '13 remains the biggest issue, while expectations still remain positive for 1.3B gallons...The company continues to emphasize its feedstock flexibility (margin advantage given ability to process lower cost inputs), though near-term vegetable oil dynamics are still tough...Management remains keen on resuming its build/buy strategy, but not at the expense of target returns.
Hold-rated Westport Innovations (Nasdaq: WPRT): New engine introductions remain on track in 2013, while CWI momentum continues near term. Management is also focusing on the high horsepower opportunity (Caterpillar), with initial demo mine haul trucks expected late ‘13/14 (commercialization a couple of years later)...HD volumes at 1,500 would accelerate gross margins, as manufacturing transfers to Cummins at that point. Nat gas filling stations are expected to ramp Q4 into early '13...New OEMs remain a focus, with announcements likely in the near term (in our view).
Not-rated CECO Environmental (Nasdaq: CECE): A leading global provider of air pollution control equipment and services, CECO Environmental helps "clean the stack" for larger industrial markets. Roughly 25% of the business is higher margin recurring parts and services, the company is looking to leverage an installed base of ~$2B to drive that higher...New management (2010) has streamlined operations...CECO is actively pursuing the natural gas opportunity (organic and inorganic), with an estimated ~$3-4M sales opportunity for each new natural gas turbine put in service.
Analyst, John Quealy, said, "In sum, the Sustainability sector continues to offer compelling growth opportunities, even though the risk/reward for specific sub-sector and individual stocks varies significantly...Alternative Fuels remains a key area of focus, as investors await the deployment of natural gas refueling stations and the announcement of future OEM platform wins in H2/12. Smart Grid continues to show attractive value, as sentiment is troughed and earnings and cash flow resilience improves for certain names. Biofuels stays more variable near term, as high corn prices and regulatory uncertainty remain a headwind for that group."
Hold-rated Fuel Tech (Nasdaq: FTEK): China business continues to gain momentum, with better drivers given higher energy prices and pollution control metrics. RFPs and awards continue to open up here (~$9M won in July). Notably, the company is opening a new office in Latin America (Chile) to help support ~$30M in business through '14...FUEL CHEM (~50 percent of business and gross margins) remains hampered by low natural gas prices and coal switching (though appears to have troughed).
Buy-rated GEVO (Nasdaq: GEVO): Management is 100% focused on the ramp up of the first commercial isobutanol plant at Luvernne (specialty chemicals market). Notably, the Sasol offtake agreement is indexed to corn (take or pay), mitigating potential drought volatility concerns. Redfield (plant 2) is slated to follow Luvernne (benefitting from “lessons learned”), with expectation for positive EBITDA from these two plants...continue to like capital light strategy, but see volatility in IP litigation with Butamax (BP (NYSE: BP) \ Dupont (NYSE: DD).
Buy-rated Headwaters (NYSE: HW): Contribution margins in light building products of ~42% are actually running ahead on favorable mix shift and accelerated cost savings, with each ~100K incremental housing starts translating into ~$8M of incremental adjusted EBITDA on a trailing twelve month basis. We also note price increases of ~2.5-3% implemented for the siding accessories business in July...Flyash volumes appear to be improving...EPA methodology with regards to flyash regulation looks to be released in the near-to-mid term...
Buy-rated Itron (Nasdaq: ITRI): Current manufacturing restructuring activities are driving increased profitability, with 4 (of 10) facilities closed/sold so far. Run rate savings of ~$30M are expected in 2013, with manufacturing capacity actually increasing on automation\optimization (covenants previously limited ability to undertake these improvements given upfront charges). Global purchasing initiatives are also gaining momentum, with related savings expected to double next year (from ~$10M to ~$20M)...Transition period in N. American AMI wave, but Large new orders in 2012-14 pipeline.
Buy-rated Renewable Energy Group (Nasdaq: REGI): Renewable volume obligation (RVO) for '13 remains the biggest issue, while expectations still remain positive for 1.3B gallons...The company continues to emphasize its feedstock flexibility (margin advantage given ability to process lower cost inputs), though near-term vegetable oil dynamics are still tough...Management remains keen on resuming its build/buy strategy, but not at the expense of target returns.
Hold-rated Westport Innovations (Nasdaq: WPRT): New engine introductions remain on track in 2013, while CWI momentum continues near term. Management is also focusing on the high horsepower opportunity (Caterpillar), with initial demo mine haul trucks expected late ‘13/14 (commercialization a couple of years later)...HD volumes at 1,500 would accelerate gross margins, as manufacturing transfers to Cummins at that point. Nat gas filling stations are expected to ramp Q4 into early '13...New OEMs remain a focus, with announcements likely in the near term (in our view).
Not-rated CECO Environmental (Nasdaq: CECE): A leading global provider of air pollution control equipment and services, CECO Environmental helps "clean the stack" for larger industrial markets. Roughly 25% of the business is higher margin recurring parts and services, the company is looking to leverage an installed base of ~$2B to drive that higher...New management (2010) has streamlined operations...CECO is actively pursuing the natural gas opportunity (organic and inorganic), with an estimated ~$3-4M sales opportunity for each new natural gas turbine put in service.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Goldman Sachs on Meta Platforms Inc. (META): 'We expect investors to have an initial negative reaction'
- Celestica (CLS) Tops Q1 EPS by 14c
- First Mid Bancshares, Inc. (FMBH) Tops Q1 EPS by 8c
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
Raising Prices, Earnings, Housing Starts, Canaccord GenuitySign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
