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The NYSE Has Now Been "Broken" For An Hour
At 1138ET, the NYSE reported that its data feed is currently experiencing an issue with the symbol range D through J... and an hour later... it is still broken...
http://www.zerohedge.com/news/2014-05-14/nyse-has-now-been-broken-hour
received email alert but already sold it
http://www.snl.com/Cache/23640100.pdf?IID=4050540&FID=23640100&O=3&OSID=9
Sold CNQ MAY 17 2014 40.00 C @ 90 cents per guess
$RCL on watchlist. Insider bought $248k worth of shares at 52.6
GSB will do much better in the upcoming quarters with their new employees completing current/new projects, IMO.
Both GM and CNQ stock prices up from when I bought the call options. This does not mean anything but it looks good so far. Not sure what holds tomorrow. CNQ must cross $41 in 2 days for me to get out with some gains..else --will try next time with something else.
Sold GPS MAY 17 2014 40.50 C for 100 cents
$HLS call options on watch list..They had good result despite severe weather all across the country. At this time, the stock is only on watch list. Will be buying whenever it falls below the current price. Latest 10Q - Questions/Answers
Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Whit Mayo of Robert Baird.
Whit Mayo - Robert Baird
Hey, thanks. The first question, I just was wondering if you guys could maybe reflect for a minute on the recent denovo’s over the past two years or so, just wondering if you could frame up maybe returns that you’ve achieved versus expectations, margins, occupancy, just anyway to give us a sense of – sort of, what the returns have been versus your internal expectations?
Jay Grinney
Yes, I would say the returns have been quite impressive. We do have a page in our investor reference book that shows all of the recent denovo’s, I think there are, maybe 8 or 9 of them that we’ve highlighted there and we show not only how quickly did each hospital get to certain occupancy levels but we also then indicate when each of them are achieving positive sustained EBITDA. And so as you can see on that page – I’m sorry, I don’t have that reference right away but we will get it to you shortly. So those of you who have the investor reference book can look at that, but it is at page 73 in the IRB. You can see that virtually all of the hospitals achieve positive sustained EBITDA in months [indiscernible] and most of the hospitals achieved the average occupancy of the company which was just under 70% within the first year. As a reminder, all of the hospitals that we’re building are private room facilities, so the expectation would be that maximum occupancy in those hospitals would be much closer to the 95% level because we have much more flexibility in all private rooms. In terms of actual returns that we’ve said – I’d ask Doug to respond.
Douglas Coltharp
Yes, as we’ve stated previously we target for our denovo’s and acquisitions a pretax return of at least 15%, and we’ve been forced to note that the denovo’s that we have added to our portfolio over the last several years have exceeded their return metric.
Whit Mayo - Robert Baird
Great. And this is really segue to my second question too, and this relates to LTACs. And it just seems so clear that CMS is redefining the role of that particular sector and really pointing the industry towards the most medically complex cases out there. And given your JV strategy on the rehab side, the success with the denovo’s which seems like they make a lot of sense that many hospitals could benefit from dedicated ICU’s and facilities, and these seem to be so complimentary to what you’re doing on rehab. So, I’m just kind of curious how you’re thinking about that, maybe over the next two or three years?
Jay Grinney
Thinking about what?
Whit Mayo - Robert Baird
LTACs.
Jay Grinney
As a provider of healthcare services, we recognize the benefit that LTACs provide to patients who need those services. We are familiar with how to own and operate LTACs, we’ve done that previously as most of you know. I will say that the new patient criteria is welcomed because it now creates some certainty with respect to the next several years, but it is a little troubling to us as you look at the transition – we believe that the transition from current state to future state is going to be a little bumpy. We look at – we’ve done a pretty deep dive on LTACs throughout the country, we’ve done a heat map [ph] to show where are the compliant hospitals, where are the non-compliant hospitals, and well over half of the LTACs out there are currently not compliant. The fact that there is going to have to be such a large transformation is concerning – that doesn’t mean that we are not monitoring the LTAC environment, we are – but frankly, we think it’s a little early to be judging whether or not this is going to present huge upside for the LTAC segment. The biggest concern in our mind is the fact that the non-compliant patients will be paid at the lower – the IPPS monitoring to see how this transition is going to play out.
Operator
Our next question comes from the line of Sheryl Skolnick of CRT Capital.
Sheryl Skolnick - CRT Capital
Hi, thank you very much. I know you can’t comment terribly much about the situation with the OIT and the soppiness [ph] but I’m wondering if you could update us on your levels of compliance with the 60% rule as you have done in the past and your thoughts around the process that you’ve gone through to ensure that you have compliance with the updated parameters in 2009. And any other descriptions of your current operations and posture with respect to the lower acute patients specifically targeted and those that meet the criteria or excluded from normal patient criteria?
Jay Grinney
You’ve stated little bit at the end trouble, I think I caught the question. I’ll take the last part of the question first and then I’ll ask Mark to respond to where we are with respect to overall compliance. But I think as everybody knows, all of us who operate in the healthcare environment are subject to a lot of regulations, many of which come out with certain rules and regulations associated with it. It requires a fair amount of analysis to understand exactly what the new rules mean, then establishing training material, utilizing outside parties when necessary, going to CMS for clarification when necessary, and then attempting to get those new regulations out across the entire portfolio. I think we’ve done a pretty good job with that, we feel very confident that we’re on top of the regulations. At the proposed stage, we’re on top of it once they are actually promulgated, we pay a lot of attention to that and want to make sure that those rules and regulations are complied with and we put training materials together, we have onsite training, we have online training, and we really try to do the very best we can to ensure compliance. In terms of our overall, 60% compliance, and we’d ask Mark to address that.
Mark Tarr
Yes, sure. Our overall compliance of the company is 76%, that is, as you can imagine, a number of that we monitor very closely at each individual hospital to make sure that each hospital is in full compliance with the 60% guidelines and to the extent that hospital gets closer to the 60% then they will closely monitor those patients coming in and make sure that we had a higher percentage of compliant cases to make sure that we have a little bit of a buffer there.
Sheryl Skolnick - CRT Capital
Can you just clarify on that, the 76% overall, meaning that overall for the company as a whole you’re at 76% versus the 60% total rate or does it mean that 76% of your facilities are compliant with the 60%?
Mark Tarr
That 76% overall on the compliance percentage.
Sheryl Skolnick - CRT Capital
Okay.
Mark Tarr
All in.
Sheryl Skolnick - CRT Capital
Okay, that’s great. Thank you very much. And…
Mark Tarr
Sheryl?
Sheryl Skolnick - CRT Capital
Yes, I just wanted to say thank you for releasing that disclosure as soon as you got it, that’s really a best practice and it’s very much appreciated.
Mark Tarr
You’re welcome. Sorry there, it was on a Friday but we got it on Friday so we wanted to make sure that – today we wanted to make sure that everybody saw that.
Sheryl Skolnick - CRT Capital
Thank you.
Operator
Our next question comes from the line of Frank Morgan of RBC Capital Markets.
Frank Morgan - RBC Capital Markets
Good morning.
Jay Grinney
Good morning.
Frank Morgan - RBC Capital Markets
Within your guidance on the volume side, the 2.5% to 3.5%, how much of that would you say is implied to be same-store?
Jay Grinney
No, we haven’t broken that out but historically there has been a roughly 40%, 50% somewhere in that range new store and same-store, but that fluctuates Frank. And that – so it’s very hard for us to precisely say every single quarter same-store is going to be X percent and the new store is going to be Y percent. As you know, when we bring on new hospitals, and for instance this year we’re going to be bringing on new hospitals – three new hospitals in the fourth quarter. But clearly that will have a disproportionate impact on overall discharge growth as we go into 2015, and there will be a disproportionate impact on new stores. Similarly, in years gone by we’ve added hospitals more spread out throughout the year and so the impact is a little bit less. But if you think about it historically and again, we provide this information in the investor reference book on page 12, if you look at it overall, you can see there is a lot of variation in the new store, a new store can be as low as 0.4%, it can be as high as 2.5% or 2.8%, and same-store can be as low as 0.6% as it was in Q3 of 2010, as high as 5% in Q1 of 2012. So I think if you could look at the page 12 in our investor reference book, you’ll see that it’s very hard to say with any certainty or I shouldn’t – with any precision in some sort of formulaic way. If you look at the overall growth, it will consist of X percent same-store and Y percent new store, there is a lot of variability in those numbers.
Frank Morgan - RBC Capital Markets
I got you. Thanks. And in terms of just – in forth of generalization, I understand you’re having – you’re coming up against difficult times, 2.5% to 3%, would you say that’s a good – kind of normalized sustainable run rate on the company? And then – or is there anything else that you’re seeing out there, either new capacity coming around, a new competitor, any other shift that you’re seeing that might influence volume or do you think this 2.5% to 3.5% is a good long-term number that we should model off? Thanks.
Jay Grinney
Yes, we think that that’s a good long-term number that you can model off for the planning horizon that we outline in our business outlook which is found on page 22 of the supplemental slide and would take us out through 2016.
Frank Morgan - RBC Capital Markets
Okay, thanks.
Operator
Our next question comes from Josh Raskins of Barclays.
Unidentified Analyst
Jack, it’s Roth [ph]. So first question just – the update on the guidance where we touched the high end. I understand there was a couple of million dollar gain, I think the $2 million, but my guess is whether there was probably $1.5 million or $2 million as well. So maybe what’s driving the comfort towards the higher end of the range relative to what you guys knew a little more due two months ago?
Jay Grinney
No, just the fact that we’re two and a half months down the road and even though we did see the disruption to discharges in Q1 as a result of the winter storms, as I mentioned, we’re feeling pretty good about the discharge growth in April, it’s one month out of the quarter but we’re back on-track, and so we feel that now we have a little more visibility, little more confidence in the overall numbers and feel that guiding to the high end is the appropriate thing to do.
Unidentified Analyst
Got you. And hi guys, it’s Jack. I just wanted to follow-up operationally with the weather, how does that directly affect the business? Is it more on the admission side bringing people in because you’re downstream from acute care providers or is it more – have a length of stay issued, we can’t necessarily discharge someone with a weather [ph]. I’d imagine that the acute – just the type of population that you’re seeing, that’s not going to change much, you’re going to still – obviously, have the same sort of dramatic injury at each quarter, right?
Jay Grinney
Yes, let me begin, and I’m going to ask Mark to give you a little more color commentary. I mean that the easiest way to think about this because this is the way it happened is – these storms literally locked down on communities that they hit. It did made getting out on the roads virtually impossible. So in those communities and the markets that were hit by these storms and as I think all of us know, there were multiple storms, sometimes days apart. During the build up to and certainly during those storms, these communities shutdown, roads were closed, people couldn’t get in or out of their homes, they couldn’t get in or out of hospitals, be it acute cares and going in terms of admissions, acute cares in terms of discharges, we couldn’t get our lays on instead of the acute care hospitals, and we couldn’t get patients into our hospitals, there were facilities that had to keep patients longer than we would have otherwise wanted to or certainly longer than the patients would have wanted to. So the impact was multifaceted, there wasn’t any just one specific thing that happened, but what we did see was that it occurred in those hospitals, those markets that I mentioned, multiple times, particularly in late January and into February.
Mark Tarr
Yes, this is Mark. Operationally the biggest challenge is just getting the patients in, we can handle referral from acute care hospital but then the storm hit, and then having the ability to actually move to the patient from acute care hospital into our hospital is where the challenges really came into play. And as Jay alluded, it shuts down the entire marketplace, so we couldn’t discharge patients out although we didn’t see a huge increase and overall length of stay for the company as a whole, and those hospitals impacted – there was a bit of an impact there but the greatest challenge was getting patients into the hospital and get that conversion, we call it from the point of having a patient referral to the point of a patient admission.
Unidentified Analyst
Got it. Okay, thanks guys.
Operator
Our next question comes from Darren Lehrich of Deutsche Bank.
Darren Lehrich - Deutsche Bank
Thanks. Good morning, everybody.
Jay Grinney
Good morning.
Darren Lehrich - Deutsche Bank
I just wanted to ask a little bit more about the Mountain States JV and just the overall JV opportunity. It looks like based in your comments this was a freestanding facility and I guess I’d be curious to see your thoughts on the end market and the overall market opportunities for hospitals that are on these kind of freestanding [ph] or if this is something different that you’ll be converting it to that? And then just more broadly get your thoughts on other JVs with hospital based units of – or interested in your comments on the JV potential here.
Jay Grinney
I’m going to ask Mark in a minute to comment on the Mountain States opportunity which we do think is a terrific opportunity for us to partner with, an outstanding organization, and to enhance the overall rehabilitative services in that market. To answer the broader question, we do see that there are increased opportunities to joint venture with acute care hospitals that are providing rehab services today. Some of those services offered by the acute care hospitals are in the form of freestanding hospitals like Quillen. Most however are services that are offered in an HIH. What we are seeing is that many acute care hospitals are acknowledging that in today’s reimbursement environment of reduced Medicare, Medicaid and commercial payments, it’s hard for them to offer a consistently high quality level of rehab services, and at the same time meet all of their medical, surgical and core business needs. Accordingly, we’re seeing more increase and more responses to our increase about joint venturing those services to provide the full continuum of care but now doing it on a partnership basis. And so as I mentioned in my comments, that we were very pleased to announce this joint venture and we are looking forward to announcing additional additions to our portfolio in the balance of the year.
Mark Tarr
Yes, Darren, it’s Mark. We’re very excited about the Quillen opportunity, that kick off our hospital, the building itself was built to be a freestanding rehab hospital, over the years it has had couple of different transitions, it currently houses both, our inpatient rehab, hospital beds as low sniff-beds. The long-term prognosis is to continue to grow the rehab and sniff-beds will be transferred out but needless to say we’re very excited about working with the team there, working with Mountain States, and continuing to grow in that marketplace.
Darren Lehrich - Deutsche Bank
That’s great. And then, if I could just – I wanted to follow-up – Jay, you made a mention of the rule making process, and I’d be curious to know if the rule is coming soon. Are there any expectations for the upcoming PPS we’re making, anything that we should be on the lookout for – that’s any different this year? Thanks.
Jay Grinney
Darren, we are not hearing anything about the proposed rule, we’re not hearing positive, we’re not hearing anything negative. So – but we’re not expecting anything that would be coming from left field. But we’re going to be waiting expectedly just like everybody else to get the proposed rule, probably sometime in May.
Darren Lehrich - Deutsche Bank
Got it. Thank you very much.
Operator
Our next question comes from Robert Mains of Stifel.
Robert Mains - Stifel
Thanks, good morning.
Jay Grinney
Good morning.
Robert Mains - Stifel
The question on the outpatient – I know we’re talking 6% – even though that there are 10 fewer clinics than last year, was there a decline from the fourth quarter or the first quarter or some of that decline also weather related?
Jay Grinney
Well the weather related hit in this first quarter for sure. I mean, that was not something we’d put a number on Rob but it was certainly impacted a significant number of our outpatient business itself is located in those states of which Pennsylvania is one of the higher states that we definitely saw an impact there.
Robert Mains - Stifel
Okay, fair enough. And second, a follow-up to Darren’s question. We’ve got the latest Medicare [ph] behind us, in your mind what is that’s kind of legislative priorities that you’re looking at both for HealthSouth and for the industry?
Jay Grinney
The legislative priorities really are – the sustainable growth rate in 2015 and the debt-ceiling debate that will go along with that. Our assessment is that legislatively there is not going to be anything else occurring in 2014 because everybody’s focus is on the mid-term elections and each party wants to enhance their position in both, the House and the Senate, in terms of the number of representatives and centers that they have. So the next real priority is going to be – what happens to SGR in Q1 of 2015, and how does that fit within the overall debate of the debt-ceiling. That – those I should say will be informed by what kind of – what the House in the Senate looks like in terms of leadership, and which will be dictated by the mid-terms. So that’s the next sort of marker for us, and right now we’re just – when we go to Washington and we meet with members, we are trying to underscore the value proposition that inpatient rehabilitation services offers to their constituent, primarily the Medicare constituents. And we’re very pleased that that message is very well received. I think the members who represent our hospitals, many of whom come to our hospitals, they visit our hospitals, they see the services that we provide, they see the value that we’re offering to the patients who need and deserve inpatient rehabilitative care, and so they get that we’re an important part of the continuum. But to answer your question again, I think the next real milestone legislatively will be next year with SGR and debt-ceiling.
Robert Mains - Stifel
Right, thank you.
Operator
Our next question comes from Chris Rigg of Susquehanna Financial.
Chris Rigg - Susquehanna Financial
Thanks for taking my questions. Just hoping to get a quick refresher on the NOLs and whether there has been any change, quarter-to-quarter I know sometimes the changes at year end and whether – just updated from the timing of when you think you’ll be a full cash tax payer again. Thanks a lot.
Douglas Coltharp
It’s Doug. And the – obviously the NOL does change from quarter-to-quarter as we’re utilizing that to offset what otherwise would be the federal taxes due on our earnings. So we’ve included in the supplemental slides on page 18 with the balance clause at the end of the first quarter, and that was at $866 million. Again, you can then utilize the effective tax rate assumption of roughly 40% and then that will give you a sense as to how long we’ll continue to have the benefit of those NOLs. And as we’ve stated here on page 18 as well, for the near term, we continue to estimate that our annual cash taxes will be in that $10 million to $15 million range.
Chris Rigg - Susquehanna Financial
Okay. And then just one other question, I know you can’t say a lot about the DOJ investigations, but I just want to make sure I understand exactly what happens here and they just be legally if they want but it was OIG-HHS for a number of quarters in your disclosures, and then in the 10-Q it took the change to the DOJ and the disclosures from last week, the DOJ was in there. Has the DOJ always been involved, or did they get inserted into the process at some later date?
John Whittington
Good morning, this is John Whittington. They’ve always been involved and we’ve always disclosed their involvement from the beginning.
Chris Rigg - Susquehanna Financial
Okay. It just looked like it’s in the 10-K and OIG-HHS and then the DOJ came into the disclosures later, but we can follow-up offline. Thanks.
John Whittington
They represent the government, they represent the healthcare administration.
Jay Grinney
Yes, so it’s been in there.
Chris Rigg - Susquehanna Financial
Okay.
Jay Grinney
And Chris, what we’ll do is, we’ll send the excerpts from the Q’s and the 8-K’s just so you can confirm that.
Chris Rigg - Susquehanna Financial
Yes.
Operator
Our next question comes from the line of AJ Rice of UBS.
AJ Rice - UBS
Hello, everybody. Good morning. Two quick questions, first of all, maybe just – is there any further color on what you’re seeing with respect to your labor, particularly your therapist, I know you said EPOB was flat year-to-year but how about turnover rates, availability of people as it tightened it all with the economy getting a little better or not really?
Jay Grinney
The answer is not really. We are very pleased with our ability to recruit and importantly, retain really top talent, both in the nursing side as well as the therapy side. And our turnover in the therapy area has remained consistently in the single digits for – as long as I’ve been here. I mean it’s really been one of the things that I think makes this company unique, and we haven’t seen any volatility in that. On the nursing side, we also have very good retention rates, and part of that has been a push to ensure that as many of our registered nurses has possible seek and apply to become certified as a rehabilitation RN [ph] and that’s been a very successful program for us.
AJ Rice - UBS
Okay. And then the other follow-up I guess would be the – I think last quarter you guys mentioned that you were sort of waiting to see how the doc showcased [ph] and so forth, maybe with respect to in case of share buybacks and obviously, you’ve bought some in the first quarter, do you see that now that we have some clarity around the launch and it seems at least until next spring, do you see an acceleration in your pace on share repurchases or any commentary along there will be helpful.
Douglas Coltharp
AJ, its Doug. Obviously we continue to have capacity for further share repurchases, both in terms of the authorization that is in place from our Board of Directors, and in terms of our balance sheet capacity and specifically the amount of availability that we have on our revolving credit facility. And as we have stated I think pretty consistently here over the course of the last two years, shareholder distributions, both in the form of the dividends that we’re paying on our common stock and incremental share repurchase are going to continue to be an important component of our business model.
AJ Rice - UBS
Okay, thanks a lot.
Operator
Our next question comes from the line of Gary Lieberman of Wells Fargo.
Gary Lieberman - Wells Fargo
Good morning, thanks for taking my question.
Jay Grinney
Good morning.
Gary Lieberman - Wells Fargo
Just a follow-up on your conversations that you had in DC, did the idea or the concept of slight neutral payments corrupt when you’re having your discussions and sort of where are we on that front?
Jay Grinney
They have not come up on a regular basis, they do come up from time to time. I think as most everybody knows there was a bipartisan-bicameral discussion draft if you will that was issued earlier this year, the impact act, and that was to – really it was an effort by the finance committee on the Senate side ways and means on house side to begin looking at post acute payment reform and some options that might be part of that, side neutral payments would be included in that construct. But if you go in and you analyze what was said, basically the conclusion was, this was very complicated, there are a lot of additional steps that need to be followed, there needs to be the adoption of a common patient assessment tool. And in the impact outline, the draft goes outline, the work that it would have to be done on this occurs from now until I think 2020 or 2022. So, does it get some attention, yes; is it acknowledged that it is a very complicated transition to make, yes; are there any proposals that have been put on the table that say these would be the services or the CMGs that would be paid on a slight neutral, these would be the services that our CMG – that would not be, and the answer is no. So I think it’s very much in the – in its infancy, but it’s certainly a concept that’s out there and as we’ve said in the past, we don’t necessarily believe that moving to side neutral would be negative for HealthSouth because presumably in that calculation of what that side neutral payment would be, especially if the comparison is between a rehabilitation payment and a nursing home payment, factors beyond just what is the per day payment would be included, and those factors would include items such as length of stay, return rates or reignition rates to acute care hospitals, and more importantly outcomes. So it is something that gets talked about, it’s not something that is ready for prime time in our space. And as I’ve said, we’re not looking at it necessarily a big negative, it could be a real positive for us.
Gary Lieberman - Wells Fargo
Okay. And then as a follow-up, you said that you were expecting soppiness [ph] that you received – are there any other soppiness [ph] that you’re anticipating regarding investigation?
John Whittington
Again, this is John Whittington. At this time we don’t have any reason to expect any additional soppiness [ph] but as you know, the government is free to investigate in the way it deems appropriate but right now we’re not aware of any reason to expect new soppiness [ph] but I wouldn’t rule anything out.
Gary Lieberman - Wells Fargo
Thanks very much,
Operator
Thank you. Our final question comes from the line of Kevin Fischbeck of Bank of America.
Unidentified Analyst
Hey, this is Feebeck [ph] for Kevin. Just a question on the pay-mix. Our fee for service Medicare continue to tick up in managed care which includes Medicare advantage, continues to trend down a little bit. Given the growth in the MA program and the improving economy and the potential impact on commercial, that seems a little bit surprising to me. So any color you could give – just volume dynamic or is there something going on what pricing on the managed care side that we should be thinking about, any kind of uptick [ph]? Thanks.
Jay Grinney
Yes, sure. So if you look at Q1 of 2013 versus Q1 of 2014, there was about a 1.8% decline in the number of Medicare advantage discharges treated in our hospitals, and maybe that’s kind of the numbers that you’re focusing on. If you break that down however, there are two buckets underneath managed Medicare; one would be the traditional fee for service payment, the other would be on a contract that where we go out and we negotiate with an MA plan to be an inpatient rehabilitation provider. The fee for service is a very small component of the overall Medicare advantage numbers but that bucket has actually gone down 29% year-over-year, now it’s a small number to begin with, so from 375 discharges down to 265 discharges. On the other hand, the contracted bucket actually went up, 2.5%.
Unidentified Analyst
I appreciate the color.
Operator
And thank you, that was our final question. I will now turn the floor back over to Mary Ann Arico for any additional or closing remarks.
http://seekingalpha.com/article/2174013-healthsouths-ceo-discusses-q1-2014-results-earnings-call-transcript
GM JUN 21 2014 35.00 C bought @ 90 cents (including transaction cost)
$HII $100 call option, expiration Dec 20, 2014 - bid - $6.1 - ask $7.9- on watch list. Will be a buyer if ask goes below $5
Only 4 positions left..
http://globalscapejobs.iapplicants.com/searchjobs.php
Sales director tweet from April 2nd --
I have four open channel sales positions on my rapidly expanding team. Tremendous opportunity, we have the people
Looks like too much debt here and too little cash and still losing. This may go below $1. Good luck.
"-- Balance Sheet: As of March 31, 2014, total debt consisted of $86.25 million in convertible notes, $29.7 million under a senior secured term loan, $105.3 million outstanding under a revolving credit facility and $20.0 million under an unsecured term loan. Cash and cash equivalents were $3.3 million, for a net debt position of $237.9 million at March 31, 2014, compared to a net debt position of $200.0 million at December 31, 2013. The increase in net debt is primarily due to the continued working capital needs for the Company’s four projects in Mexico. The net secured debt amount that is subject to financial covenants was $131.7 million at March 31, 2014, compared to $93.8 million at December 31, 2013. Total debt presented on the consolidated balance sheet at March 31, 2014 is net of a debt discount of $17.7 million on the Company’s convertible debt."
http://www.marketwatch.com/story/cal-dive-reports-first-quarter-2014-results-reschedules-time-of-conference-call-2014-05-08?reflink=MW_news_stmp
ANCOUVER, May 8, 2014 /CNW/ - Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) (the "Company", or "Pan American"), is pleased to report that its consolidated first quarter silver production increased by 5% to 6.61 million ounces, while gold production rose 43% to 45,900 ounces. At the same time, cash costs dropped 27% to $8.25 per ounce and All-in Sustaining Cost per Silver Ounce Sold "AISCSOS" (1) was reduced 20% to $15.54 per ounce. The first quarter results are on track for the Company to achieve or surpass its consolidated forecast for this year, particularly in relation to gold production and cash costs.
First Quarter 2014 Highlights (unaudited)(2)
Silver production of 6.61 million ounces, up 5% year-on-year Gold production
of 45,900 ounces, up 43% year-on-year AISCSOS of $15.54, net of by-product
credits, down 20% year-on-year Consolidated cash costs(3) of $8.25 per silver
ounce, net of by-product credits, down 27% year-on-year Revenue of $209.7
million Mine operating earnings(4) of $31.6 million Net earnings of $6.8
million or $0.05 per share Adjusted earnings(5) of $8.6 million or $0.06 per
share Net cash generated from operating activities of $36.1 million, or $0.24
per share, up 12% year-on-year Total dividends paid to common shareholders of
$18.9 million
Financial Position at March 31, 2014
Cash and short term investments of $394.4 million
Working capital of $680.3 million
Long term debt of $40.3 million
(1) All-in sustaining costs per silver ounce sold ("AISCSOS") is a non-GAAP
measure. The Company has adopted the reporting of AISCSOS as a measure of
a silver mining company's consolidated operating performance and the
ability to generate cash flow from all operations collectively. We
believe it is a more comprehensive measure of the cost of operating our
consolidated business than traditional cash and total costs per ounce as
it includes the cost of replacing ounces through exploration, the cost of
ongoing capital investments (sustaining capital), general and
administrative expenses, as well as other items that affect the Company's
consolidated earnings and cash flow. This measure including its
subcomponent Sustaining Capital are non - GAAP measures and readers
should refer to the table in the Alternative Performance (Non-GAAP)
Measures section of the MD&A for the period ending March 31, 2014 for a
reconciliation of this measure to the unaudited condensed interim
consolidated financial statements.
(2) Financial information in this news release is based on International
Financial Reporting Standards ("IFRS"); results are unaudited;
percentages compare period-on-period.
(3) Cash costs per payable ounce of silver, net of by-product credits, is a
non-GAAP measure. The Company believes that in addition to production
costs, depreciation and amortization, and royalties, cash costs per ounce
is a useful and complementary benchmark that investors use to evaluate
the Company's performance and ability to generate cash flow and is well
understood and widely reported in the silver mining industry. However,
cash costs per ounce does not have a standardized meaning prescribed by
IFRS as an indicator of performance. Investors are cautioned that cash
costs per ounce should not be construed as an alternative to production
costs, depreciation and amortization, and royalties determined in
accordance with IFRS as an indicator of performance. The Company's method
of calculating cash costs per ounce may differ from the methods used by
other entities and, accordingly, the Company's cash costs per ounce may
not be comparable to similarly titled measures used by other
entities. This measure is a non-GAAP measure and readers should refer to
the table in the Alternative Performance (Non-GAAP) Measures section of
the MD&A for the period ending March 31, 2014 for a reconciliation of
this measure to the unaudited condensed interim consolidated financial
statements.
(4) Mine operating earnings is a non-GAAP measure used by the Company to
assess the performance of its silver mining operations. Mine operating
earnings is calculated as revenue less production costs, depreciation and
amortization and royalties. The Company and certain investors use this
information to evaluate the Company's performance.
(5) Adjusted earnings and adjusted earnings per share are non-GAAP
measures. Adjusted earnings is calculated as net (loss) earnings for the
period adjusting for the gains or losses recorded on fair market value
adjustments on the Company's outstanding derivative instruments,
impairment of mineral property, unrealized foreign exchange gains or
losses, unrealized gain or loss on commodity contracts, realized and
unrealized losses on silver and gold forward contracts, severance
expense, the transaction costs arising from the Minefinders transaction,
gain or loss on sale of assets, and the effect of taxes on the above
items. The Company considers this measure to better reflect normalized
earnings as it does not include items which may be volatile from period
to period. See "Financial and Operating Highlights at the end of this
news release for a reconciliation of this measure to the Company's Net
income.
Commenting on the Company's first quarter results, Geoff Burns, President & CEO said, "We have had a very strong start to 2014, recording increased silver and gold production at lower than forecast costs. The excellent production results are really just an extension of the operating efficiencies and momentum we generated over the second half of last year, in response to falling metal prices, and I fully expect it to continue throughout the year. The first quarter also saw us kick off our exciting La Colorada expansion project where we are making good progress on the underground development needed to commence shaft boring, while concurrently completing the detailed engineering required for the expansion of the sulfide plant. Lastly, we are nearing completion of the engineering work necessary to fully evaluate the economic potential of adding a pulp agglomeration circuit and underground mine at Dolores and we expect to release the results of these studies near the end of the second quarter. Burns continued, "We significantly reduced our costs in the second half of 2013 and it is gratifying to see this trend continue into 2014."
Financial Results
Pan American generated revenue of $209.7 million during the first quarter of 2014, 14% less than in the first quarter of last year due to sharply lower prices for all metals produced by the Company, partially offset by increased quantities of silver and gold sold during the current quarter. During the quarter, Pan American's average realized price per silver and gold ounce sold was $19.99 and $1,283, respectively, which was significantly lower than the $30.11 per silver ounce and $1,630 per gold ounce realized during the first quarter of last year.
The Company generated $6.8 million in net earnings during the first quarter of 2014, or $0.05 per share, compared to $20.1 million during the first quarter of 2013. The decline was a result of the negative effect of lower metals prices on revenue, higher costs of sales due to greater quantities of metals sold, including a $2.3 million negative adjustment on the value of inventories at Dolores, as well as a $5.5 million foreign exchange loss, predominantly on cash balances held in Canadian dollars.
Adjusted earnings for the reporting quarter were $8.6 million or $0.06 per share, compared to $40.0 million in the first quarter of 2013.
Mine operating earnings during the first three months of 2014 fell 58% from the same period of 2013 to $31.6 million. Again, this decline was a direct result of lower metals prices and higher depreciation on increased volumes sold.
During the first three months of 2014, the Company generated $36.1 million in cash flow from operations, 12% more than in the comparable period of 2013. The increase resulted from lower income taxes paid and changes in non-cash operating working capital, partially offset by lower mine operating earnings.
During the first quarter of 2014, Pan American paid $18.9 million in cash dividends to common shareholders.
Pan American maintains one of the strongest balance sheets in the industry. At March 31, 2014, the Company had $394.4 million in cash and short-term investments, and working capital of $680.3 million, a decrease of $28.3 million and $8.7 million, respectively as compared to the fourth quarter of 2013. Long-term debt was relatively unchanged at $40.3 million.
Operating Results
During the first quarter of 2014, Pan American produced a total of 6.61 million ounces of silver, 5% more than was produced during the first quarter of 2013. The increase was achieved due to production gains at all of the Company's operations, except for Alamo Dorado. Substantial production increases at Dolores, La Colorada and Manantial Espejo were more than enough to offset the decline at Alamo Dorado.
Consolidated gold production for the first quarter of 2014 climbed to 45,900 ounces, a 43% increase as compared to the first quarter of 2013. The increase was attributable to a 13% rise in gold production at Dolores, which contributed 16,400 ounces, and an 88% rise in gold ounces from Manantial Espejo, where production increased to 24,500 ounces due to higher grades and higher throughput.
Quarterly consolidated zinc, lead and copper production was also higher compared to a year ago as a result of higher throughput rates and grades at La Colorada, Morococha, Huaron and San Vicente. Zinc production rose 18% to 11,400 tonnes, lead production rose 16% to 3,600 tonnes and copper production rose 55% to 1,700 tonnes.
Mexico
La Colorada had a record first quarter, producing 1.2 million ounces of silver, 8% higher than a year ago. The mine achieved higher throughput and processed higher grades as accelerated mine development for the mine expansion project begins to provide more access to higher grade sulphide ore, deeper in the mine. Grades for all base metals are also improving as mining operations progress to lower levels.
Quarterly silver production at Dolores rose 23% from the first quarter of 2013 to 1.01 million ounces, a quarterly record for the mine. The increase was achieved on higher throughput rates and a marked improvement in recovery rates due to longer primary leach cycle times obtained with the commissioning of Pad 3 in late 2013. In addition, incremental production was achieved by bringing a staged leaching sequence into operation on Pad 2 and Pad 3 during the quarter. Overall recovery rates are expected to trend downwards over the coming months as the benefits of staged leaching begin to decrease and recoveries fall to the mine's modelled recovery rates towards year-end.
Alamo Dorado's silver production during the first three months of 2014 fell short of management's expectations at 0.91 million ounces of silver, 28% lower than in the first quarter of 2013. The production decline resulted from the combination of an unscheduled 15-day stoppage to repair a failed mill motor and expected lower head grades as the plant begins to process lower grade ore being mined and a higher proportion of lower grade stockpiled ore.
Peru
Huaron produced 0.83 million ounces of silver during the first quarter, a 10% increase from the first quarter of 2013, as the mine sustained the higher throughput rates achieved last year in addition to benefitting from better recoveries, which more than compensated for slightly lower than expected grades.
Quarterly silver production at Morococha rose to 0.59 million ounces from 0.52 million ounces a year ago. The increase was due to higher grades obtained through mine development initiatives put into place last year.
Bolivia
San Vicente's quarterly silver production rose to 1.0 million ounces, 7% more than in the first quarter of 2013. The increase was due to encountering higher-than-expected silver grades, which made up for slightly lower recoveries as compared to a year ago.
Argentina
Manantial Espejo's silver production rose significantly to 1.03 million ounces, 25% higher than in the first quarter of 2013. The production increase was achieved with higher throughput, higher grades, and a drawdown of in-process inventories while the processing plant was down for scheduled maintenance work. Throughput increased as the relaxation of importation restrictions greatly improved the supply of critical spare parts, which are starting to catch up to operational needs. Higher grades were achieved from the open pit mine sequencing that accessed the final benches of the Phase 1 Maria open pit, which was mined out in the quarter. We do not anticipate seeing similar high grade ores from the open pit until year-end, as pre-stripping of the Phase 2 Maria open pit will advance through the next two quarters.
All-in Sustaining Costs Per Silver Ounce Sold
AISCSOS for the first quarter of 2014 was reduced 20% to $15.54 from $19.47 in the first quarter of 2013. The decline was attributable to significantly higher by-product credits due to more quantities of metals sold, more favourable treatment and refining terms for the Company and the continuation of cost-cutting measures implemented last year. More importantly, continuing the trend established last year, AISCSOS for the first quarter of this year fell 9% as compared to the fourth quarter of 2013. For a full reconciliation of AISCSOS calculation, please refer to the section "Alternative Performance (Non-GAAP) Measures" of the Company's MD&A for the period ended March 31, 2014.
Consolidated Cash Costs
Pan American's cost-cutting and productivity enhancement initiatives introduced last year continue to reduce the Company's unit operating costs. For the first quarter of 2014, Pan American's seven mining operations reported consolidated cash costs of $8.25 per ounce of silver, net of by-product credits, a 27% decrease from cash costs reported during the first quarter of 2013 and 14% lower than cash costs recorded in the fourth quarter of 2013. The cost reduction was achieved due to the positive effect of higher by-product credits on more quantities of by-products sold, which were partly offset by lower by-product prices, and lower operating costs mostly attributable to lower smelting costs and royalties. Please refer to the section "Alternative Performance (Non-GAAP) Measures" of the Company's MD&A for the period ended March 31, 2014 for a full description of this non-GAAP measure.
Sustaining Capital
During the first quarter of 2014, Pan American spent $24.7 million in sustaining capital at its seven operating mines. The largest expenditures were incurred at: Manantial Espejo, where $8.4 million was spent mainly on pre-stripping of the Maria Phase 2 open pit and an expansion of the tailings dam; at Dolores, where $6.4 million was spent mainly on pre-stripping, access road construction and exploration; at Huaron, where $3.1 million was spent on upgrades to the ventilation systems and equipment, camp infrastructure, exploration, and roads; and at La Colorada, where $2.9 million was spent on development drilling, equipment replacement and near-mine exploration. In addition, $1.8 million was spent primarily on mine development at Morococha and $0.8 million was spent at San Vicente for equipment and infrastructure upgrades.
Projects
La Colorada Expansion
The La Colorada expansion project was initiated in January 2014. During the first quarter of 2014, work progressed as planned with expenditures of $3.6 million, predominantly on lateral and ramp underground development, underground equipment purchases, and construction related to raising the tailings dam. We continue to pre-qualify contractors, and expect to award contracts for the new shaft development and the plant expansion within the upcoming months.
Dolores
Work on phase two of Dolores' leach Pad 3 development advanced as planned during the first quarter of 2014, with ore stacking and leaching in the lower portions of the pad progressing concurrently with the lining of benches 3, 4, and 5. The new solution pumping system was commissioned early in the year, allowing solution flow from Pad 2 to Pad 3, thus enriching the leachate solution with metals prior to being pumped to the Merrill Crowe plant for gold and silver recovery. We expect to complete lining up to bench 5 prior to year-end, thereby providing sufficient stacking capacity for ore storage and leaching on Pad 3 until the middle of 2017.
In addition, the design of the new power line to connect the operation with Chihuahua's grid power was approved, and the Company is now engaged in negotiations for right of way agreements with land owners, as well as working on an environmental assessment for the new 108 km power line.
Work continued to determine the benefits of a milling and pulp agglomeration option and underground mine at Dolores. A review of the initial plant design was completed during the first quarter of 2014, with work currently focusing on updating the capital and operating costs estimates, conducting a thorough review of mine plan alternatives to optimize the overall mineral resource, and the evaluation of whether there are any economic benefits to adding an underground option which would access existing resources below the ultimate pit floor.
Commenting on the Company's operational performance, Steve Busby, Chief Operating Officer, said, "Our first quarter performance has given us a solid start to the year, with production on target, costs below expectations and our exciting La Colorada expansion project already well underway. We continue to focus on finding sustainable ways to further bolster our business in the current metal price environment through identifying additional cost-cutting and productivity enhancing initiatives, advancing on our high-return mine-site projects and investigating a host of other mine-site expansion opportunities. This is an exciting time for Pan American as our teams are extremely energized and focused on expanding on our recent successes at unlocking additional value for our stakeholders."
Pan American Recognized as a Leader in Sustainability
Pan American is pleased to announce that it has been ranked 19(th) out of over 200 Canadian companies in Corporate Knights: The Future 40 Responsible Corporate Leaders in Canada. This ranking acknowledges the many years of effort that the Company has dedicated to sustainable development through its social, economic and environmental programs.
"Sustainable development has always been one of Pan American's core values. It is rewarding to see that our hard work has been recognized by the Corporate Knights organization. Creating a sustainable future is a goal we share with our employees, our local communities, governments, industry groups, and non-government partners who are instrumental in our success." said Geoff Burns, President and CEO of Pan American Silver.
The Company recently released its fifth annual Sustainability Report, based on the Global Reporting Initiative - G4 guidelines. Copies of Pan American's 2013 Sustainability Report are available at www.panamericansilver.com
For more information on Corporate Knights and "The Future 40 Responsible Corporate Leaders in Canada" ranking, visit www.corporateknights.com/report/2014-future-40-ranking
Outlook
With silver and gold production during the first quarter of 2014 at, or above Company expectations and with costs that were lower than expected, the Company remains confident that it will achieve or surpass its forecast for precious metals production (particularly gold), as well as likely be closer to the low end of annual guidance for AISCSOS and cash costs (provided metal prices remain near current levels). Pan American confirms guidance of annual consolidated production of 25.75 to 26.75 million ounces of silver and 155,000 to 165,000 ounces of gold at AISCSOS of $17.00 to $18.00 and cash costs of $11.70 to $12.70 per silver ounce, net of by-product credits.
The Company also confirms its forecast for 2014 annual sustaining capital of $95.5 million and project investment capital of $67.0 million.
About Pan American
Pan American Silver's mission is to be the world's pre-eminent silver producer, with a reputation for excellence in discovery, engineering, innovation and sustainable development. The Company has seven operating mines in Mexico, Peru, Argentina and Bolivia. Pan American also owns several development projects in the USA, Mexico, Peru and Argentina.
Technical information contained in this news release with respect to Pan American has been reviewed by Michael Steinmann, P.Geo., Executive VP Corporate Development & Geology, and Martin Wafforn, P.Eng., VP Technical Services, who are the Company's Qualified Persons for the purposes of NI 43-101.
Pan American will host a conference call to discuss these results on Friday,
May 9, 2014 at 10:00 am EST (7:00 am PST). To participate in the conference
please dial toll number 1+ 604-638-5340. A live audio webcast and
presentation will be available at
http://services.choruscall.ca/links/pan140509.html. The call and webcast will
also be available for replay for one week after the call by dialing
1-604-638-9010 and entering code # 6218 followed by the # sign.
Non-GaAP Measure - Cash costs per ounce, NET OF BY-PRODUCT CREDITS
THIS NEWS RELEASE PRESENTS INFORMATION ABOUT OUR CASH COSTS OF PRODUCTION OF AN OUNCE OF SILVER FOR OUR OPERATING MINES. CASH COSTS PER OUNCE PRODUCED, NET OF BY-PRODUCT CREDITS IS CALCULATED AS FOLLOWS:
-- EXCEPT AS OTHERWISE NOTED, CASH COSTS PER OUNCE PRODUCED IS CALCULATED BY
DIVIDING TOTAL CASH COSTS, NET OF BY-PRODUCT CREDITS BY TOTAL SILVER
OUNCES PRODUCED AT THE RELEVANT MINE OR MINES.
-- TOTAL CASH COSTS INCLUDE MINE OPERATING COSTS SUCH AS MINING, PROCESSING,
ADMINISTRATION, ROYALTIES AND OPERATING TAXES, BUT EXCLUDE AMORTIZATION,
RECLAMATION COSTS, FINANCING COSTS AND CAPITAL DEVELOPMENT AND
EXPLORATION. CERTAIN AMOUNTS OF STOCK-BASED COMPENSATION ARE EXCLUDED AS
WELL.
CASH COST PER OUNCE OF SILVER PRODUCED, NET OF BY-PRODUCT CREDITS IS INCLUDED IN THIS NEWS RELEASE BECAUSE CERTAIN INVESTORS USE THIS INFORMATION TO ASSESS OUR PERFORMANCE AND ALSO TO DETERMINE OUR ABILITY TO GENERATE CASH FLOW FOR USE IN INVESTING AND OTHER ACTIVITIES. THE INCLUSION OF CASH COSTS PER OUNCE PRODUCED MAY ENABLE INVESTORS TO BETTER UNDERSTAND YEAR-OVER-YEAR CHANGES IN OUR PRODUCTION COSTS, WHICH IN TURN AFFECT PROFITABILITY AND CASH FLOW. CASH COSTS PER OUNCE, NET OF BY-PRODUCT CREDITS DOES NOT HAVE A STANDARDIZED MEANING OR A CONSISTENT BASIS OF CALCULATION PRESCRIBED BY CANADIAN ACCOUNTING STANDARDS. INVESTORS ARE CAUTIONED THAT CASH COSTS PER OUNCE PRODUCED, NET OF BY-PRODUCT CREDITS SHOULD NOT BE CONSIDERED IN ISOLATION OR CONSTRUED AS A SUBSTITUTE TO COSTS DETERMINED IN ACCORDANCE WITH CANADIAN ACCOUNTING STANDARDS AS PRESCRIBED UNDER IFRS AS AN INDICATOR OF PERFORMANCE. OUR METHOD OF CALCULATING CASH COSTS PER OUNCE PRODUCED, NET OF BY-PRODUCT CREDITS MAY DIFFER FROM THE METHODS USED BY OTHER ENTITIES AND, ACCORDINGLY, OUR CASH COSTS PER OUNCE PRODUCED MAY NOT BE COMPARABLE TO SIMILARLY TITLED MEASURED USED BY OTHER ENTITIES.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN OF THE STATEMENTS AND INFORMATION IN THIS NEWS RELEASE CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND "FORWARD-LOOKING INFORMATION" WITHIN THE MEANING OF APPLICABLE CANADIAN PROVINCIAL SECURITIES LAWS. ALL STATEMENTS, OTHER THAN STATEMENTS OF HISTORICAL FACT, ARE FORWARD-LOOKING STATEMENTS OR INFORMATION. FORWARD-LOOKING STATEMENTS OR INFORMATION IN THIS NEWS RELEASE RELATE TO, AMONG OTHER THINGS: OUR ESTIMATED PRODUCTION OF SILVER, GOLD AND OTHER METALS IN 2014; OUR FORECAST CASH COSTS PER OUNCE OF SILVER IN 2014; OUR ESTIMATED AISCSOS FOR 2014; OUR ANTICIPATED CAPITAL INVESTMENTS FOR 2014; THE ABILITY OF THE COMPANY TO SUCCESSFULLY COMPLETE ANY CAPITAL INVESTMENT PROGRAMS AND PROJECTS AND THE IMPACTS OF ANY SUCH PROGRAMS AND PROJECTS ON THE COMPANY; THE COMPLETION AND ANTICIPATED RESULTS OF ANY TECHNICAL REPORTS OR OTHER EVALUATIONS; AND ANY ANTICIPATED LEVEL OF FINANCIAL AND OPERATIONAL SUCCESS IN 2014.
THESE STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE NECESSARILY BASED UPON A NUMBER OF ASSUMPTIONS THAT, WHILE CONSIDERED REASONABLE BY THE COMPANY, ARE INHERENTLY SUBJECT TO SIGNIFICANT OPERATIONAL, BUSINESS, ECONOMIC AND REGULATORY UNCERTAINTIES AND CONTINGENCIES. THESE ASSUMPTIONS INCLUDE: TONNAGE OF ORE TO BE MINED AND PROCESSED; ORE GRADES AND RECOVERIES; PRICES FOR SILVER, GOLD AND BASE METALS; CAPITAL, DECOMMISSIONING AND RECLAMATION ESTIMATES; OUR MINERAL RESERVE AND RESOURCE ESTIMATES AND THE ASSUMPTIONS UPON WHICH THEY ARE BASED; PRICES FOR ENERGY INPUTS, LABOUR, MATERIALS, SUPPLIES AND SERVICES (INCLUDING TRANSPORTATION); NO LABOUR-RELATED DISRUPTIONS AT ANY OF OUR OPERATIONS: NO UNPLANNED DELAYS IN OR INTERRUPTIONS IN SCHEDULED PRODUCTION; ALL NECESSARY PERMITS, LICENCES AND REGULATORY APPROVALS FOR OUR OPERATIONS ARE RECEIVED IN A TIMELY MANNER; AND OUR ABILITY TO COMPLY WITH ENVIRONMENTAL, HEALTH AND SAFETY LAWS. THE FOREGOING LIST OF ASSUMPTIONS IS NOT EXHAUSTIVE.
THE COMPANY CAUTIONS THE READER THAT FORWARD-LOOKING STATEMENTS AND INFORMATION INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL RESULTS AND DEVELOPMENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS OR INFORMATION CONTAINED IN THIS NEWS RELEASE AND THE COMPANY HAS MADE ASSUMPTIONS AND ESTIMATES BASED ON OR RELATED TO MANY OF THESE FACTORS. SUCH FACTORS INCLUDE, WITHOUT LIMITATION: FLUCTUATIONS IN SILVER, GOLD AND BASE METALS PRICES; FLUCTUATIONS IN PRICES FOR ENERGY INPUTS, LABOUR, MATERIALS, SUPPLIES AND SERVICES (INCLUDING TRANSPORTATION); FLUCTUATIONS IN CURRENCY MARKETS (SUCH AS THE CANADIAN DOLLAR, PERUVIAN SOL, MEXICAN PESO AND BOLIVIAN BOLIVIANO VERSUS THE U.S. DOLLAR); OPERATIONAL RISKS AND HAZARDS INHERENT WITH THE BUSINESS OF MINING (INCLUDING ENVIRONMENTAL ACCIDENTS AND HAZARDS, INDUSTRIAL ACCIDENTS, EQUIPMENT BREAKDOWN, UNUSUAL OR UNEXPECTED GEOLOGICAL OR STRUCTURAL FORMATIONS, CAVE-INS, FLOODING AND SEVERE WEATHER); RISKS RELATING TO THE CREDIT WORTHINESS OR FINANCIAL CONDITION OF SUPPLIERS, REFINERS AND OTHER PARTIES WITH WHOM THE COMPANY DOES BUSINESS; INADEQUATE INSURANCE, OR INABILITY TO OBTAIN INSURANCE, TO COVER THESE RISKS AND HAZARDS; EMPLOYEE RELATIONS; RELATIONSHIPS WITH, AND CLAIMS BY, LOCAL COMMUNITIES AND INDIGENOUS POPULATIONS; OUR ABILITY TO OBTAIN ALL NECESSARY PERMITS, LICENSES AND REGULATORY APPROVALS IN A TIMELY MANNER;CHANGES IN LAWS, REGULATIONS AND GOVERNMENT PRACTICES IN THE JURISDICTIONS WHERE WE OPERATE, INCLUDING ENVIRONMENTAL, EXPORT AND IMPORT LAWS AND REGULATIONS; DIMINISHING QUANTITIES OR GRADES OF MINERAL RESERVES AS PROPERTIES ARE MINED; INCREASED COMPETITION IN THE MINING INDUSTRY FOR EQUIPMENT AND QUALIFIED PERSONNEL; AND THOSE FACTORS IDENTIFIED UNDER THE CAPTION "RISKS RELATED TO PAN AMERICAN'S BUSINESS" IN THE COMPANY'S MOST RECENT FORM 40-F AND ANNUAL INFORMATION FORM FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION AND CANADIAN PROVINCIAL SECURITIES REGULATORY AUTHORITIES. ALTHOUGH THE COMPANY HAS ATTEMPTED TO IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY, THERE MAY BE OTHER FACTORS THAT CAUSE RESULTS NOT TO BE AS ANTICIPATED, ESTIMATED, DESCRIBED OR INTENDED. INVESTORS ARE CAUTIONED AGAINST UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS AND INFORMATION. FORWARD-LOOKING STATEMENTS AND INFORMATION ARE DESIGNED TO HELP READERS UNDERSTAND MANAGEMENT'S CURRENT VIEWS OF OUR NEAR AND LONGER TERM PROSPECTS AND MAY NOT BE APPROPRIATE FOR OTHER PURPOSES. THE COMPANY DOES NOT INTEND, NOR DOES IT ASSUME ANY OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS AND INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, CHANGES IN ASSUMPTIONS, FUTURE EVENTS OR OTHERWISE, EXCEPT TO THE EXTENT REQUIRED BY APPLICABLE LAW.
Pan American Silver Corp.
Financial & Operating Highlights
Three months ended March 31,
2014 2013
Consolidated Financial Highlights
(Unaudited in thousands of U.S. Dollars)
Net earnings for the period $ 6,760 $ 20,076
Earnings per share attributable to common
shareholders (basic) $ 0.05 $ 0.13
Adjusted earnings for the period(1) $ 8,554 $ 39,972
Adjusted earnings per share (basic)(1) $ 0.06 $ 0.26
Mine operating earnings $ 31,576 $ 74,816
Net cash generated from operating
activities $ 36,125 $ 32,251
Operating cash flows before changes in
non-cash operating working capital(3) $ 36,122 $ 45,297
Capital spending $ 36,811 $ 39,693
Dividends paid $ 18,940 $ 19,021
Shares repurchased $ - $ 5,442
Cash and short-term investments $ 394,381 $ 490,146
Working capital(2) $ 680,318 $ 738,379
Consolidated Metals Recovered
Silver metal - million ounces 6.61 6.28
Gold metal - thousand ounces 45.9 32.1
Zinc metal - thousand tonnes 11.4 9.7
Lead metal - thousand tonnes 3.6 3.1
Copper metal - thousand tonnes 1.7 1.1
Average Realized Price
Silver metal ($/oz) $ 19.99 $ 30.11
Gold metal ($/oz) $ 1,283 $ 1,630
Consolidated Cost per Ounce of Silver (net of by-product
credits)(3)
Cash cost per ounce $ 8.25 $ 11.33
Total production cost per ounce $ 14.93 $ 17.29
Millions of Payable ounces of silver (used
in cost per ounce calculations) 6.26 5.96
All-in Sustaining Cost per Silver Ounce
Sold (net of by-product credits)(4) $ 15.54 $ 19.47
(1) Adjusted earnings and adjusted earnings per share attributable to common
shareholders are non-GAAP measures. Adjusted earnings is calculated as
net (loss) earnings for the period adjusting for the gains or losses
recorded on fair market value adjustments on the Company's outstanding
derivative instruments, impairment of mineral property, unrealized
foreign exchange gains or losses, unrealized gain or loss on commodity
contracts, realized and unrealized losses on silver and gold forward
contracts, severance expense, the transaction costs arising from the
Minefinders transaction, gain or loss on sale of assets, and the effect
for taxes on the above items. The Company considers this measure to
better reflect normalized earnings as it does not include items which may
be volatile from period to period.
Three months ended March 31,
Adjusted Earnings Reconciliation 2014 2013
Net earnings for the period $ 6,760 $ 20,076
Adjust derivative losses 99 2,649
Adjust unrealized foreign exchange
losses 1,704 4,327
Adjust realized and unrealized on
commodity contracts - (1,268)
Adjust gain on sale of mineral
properties (6) (4,068)
Adjust write-down of mining assets - 19,339
Adjust for effect of taxes on above
items (3) (1,083)
Adjusted earnings for the period $ 8,554 $ 39,972
Weighted average shares for the period 151,500 151,760
Adjusted earnings per share for the
period $ 0.06 $ 0.26
(1) Adjusted earnings and adjusted earnings per share attributable to common
shareholders are non-GAAP measures. Adjusted earnings is calculated as
net (loss) earnings for the period adjusting for the gains or losses
recorded on fair market value adjustments on the Company's outstanding
derivative instruments, impairment of mineral property, unrealized
foreign exchange gains or losses, unrealized gain or loss on commodity
contracts, realized and unrealized losses on silver and gold forward
contracts, severance expense, the transaction costs arising from the
Minefinders transaction, gain or loss on sale of assets, and the effect
for taxes on the above items. The Company considers this measure to
better reflect normalized earnings as it does not include items which may
be volatile from period to period.
(2) Working capital is a non-GAAP measure calculated as current assets less
current liabilities. The Company and certain investors use this
information to evaluate whether the Company is able to meet its current
obligations using its current assets.
(3) Consolidated cash cost per ounce of silver is a non-GAAP measure. The
Company believes that in addition to production costs, depreciation and
amortization, and royalties, cash cost per ounce is a useful and
complementary benchmark that investors use to evaluate the Company's
performance and ability to generate cash flows and is well understood and
widely reported in the silver mining industry. However, cash cost per
ounce does not have a standardized meaning prescribed by IFRS as an
indicator of performance. Investors are cautioned that cash costs per
ounce should not be construed as an alternative to production costs,
depreciation and amortization, and royalties determined in accordance
with IFRS as an indicator of performance. The Company's method of
calculating cash costs per ounce may differ from the methods used by
other entities.
(4) The Company has adopted the reporting of All-In Sustaining Costs per
Silver Ounce Sold ("AISCSOS") as a measure of a silver mining company's
consolidated operating performance and the ability to generate cash flow
from all operations collectively. We believe it is a more comprehensive
measure of the cost of operating our consolidated business than
traditional cash and total costs per ounce as it includes the cost of
replacing ounces through exploration, the cost of ongoing capital
investments (sustaining capital), general and administrative expenses, as
well as other items that affect the Company's consolidated earnings and
cash flow.
SOURCE Pan American Silver Corp.
/CONTACT: Kettina Cordero
Manager, Investor Relations
(604) 684-1175
ir@panamericansilver.com
www.panamericansilver.com
Copyright CNW Group 2014
December 24, $39 strike price call options available for $2.75 (too expensive for now)..on watch if the stock price falls a little, this may be the right one to go after as we'll have 2 more quarterly report to help the stock price to move up. :)
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targeting a strong ramp up in production to the 40,000 barrel per day facility capacity by the end of 2014.
We will continue to focus on execution and capital discipline to deliver on our defined growth plan. This prudent
development of our diverse asset base enables us to generate increasing free cash flow to allocate to resource
development, sustainable dividends, share purchases, opportunistic acquisitions, and debt repayment.”
Canadian Natural’s Chief Financial Officer, Corey Bieber, continued, “The solid production growth this quarter
combined with strong crude oil and natural gas pricing, led to an increase in cash flow by 20% over the fourth quarter of
2013.
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cash flow generation. This increase in cash flow enables us to maximize returns to our shareholders in the form of
sustainable dividends and share purchases. During the first quarter of 2014 we increased our quarterly dividend to
$0.225 per common share from $0.20 per common share. This is our fourteenth consecutive year of quarterly dividend
increases and represents a year over year increase of 80% in the quarterly dividend. Subsequent to the quarter, we
renewed our Normal Course Issuer Bid. In 2014, year to date, we have purchased 2,105,000 common shares at an
average price of $37.86 per common share.
Our disciplined strategy and financial strength will enable us to continue to execute on the significant growth
opportunities which we have in the near, mid and long-term.”
http://www.cnrl.com/upload/media_element/774/03/0508_q114.pdf
Gap, Inc. (NYSE: GPS) reported that April net sales increased 10 percent to $1.33 billion for the four-week period ended May 3, 2014 versus $1.21 billion last year. Gap Inc.’s comparable sales for April 2014 were up 9 percent versus a 7 percent increase last year.
For the first quarter of fiscal year 2014, Gap Inc.’s net sales increased 1 percent to $3.77 billion versus $3.73 billion last year. The company’s comparable sales for the first quarter of fiscal year 2014 decreased 1 percent versus a 2 percent increase last year.
“We are pleased with our execution overall in April, especially at Old Navy,” said Glenn Murphy, chairman and chief executive officer, Gap Inc.
April Comparable Sales Results
Comparable sales by global brand for April 2014 were as follows:
Gap Global: positive 3 percent versus positive 8 percent last year
Banana Republic Global: positive 7 percent versus positive 1 percent last year
Old Navy Global: positive 18 percent versus positive 9 percent last year
First Quarter Comparable Sales Results
Comparable sales by global brand for the first quarter of fiscal year 2014 were as follows:
Gap Global: negative 5 percent versus positive 3 percent last year
Banana Republic Global: negative 1 percent versus flat last year
Old Navy Global: positive 1 percent versus positive 3 percent last year
First Quarter Guidance
The company expects diluted earnings per share for the first quarter of fiscal year 2014 to be in the range of $0.56 to $0.57.
*** The Street sees EPS of $0.53.
The company expects that for the first quarter of fiscal year 2014, gross margins will decline less than the year-over-year decline in the fourth quarter of fiscal year 2013. In addition, the company expects first quarter fiscal year 2014 operating expenses to be slightly above last year.
Additional insight into Gap Inc.’s sales performance is available by calling 1-800-GAP-NEWS (1-800-427-6397). International callers may call 706-902-4949. The recording will be available at approximately 1:00 p.m. Pacific Time on May 8, 2014 and available for replay until 1:00 p.m. Pacific Time on May 16, 2014.
First Quarter Earnings
Gap Inc. will release its first quarter earnings results via press release on May 22, 2014 at 1:00 p.m. Pacific Time. In addition, the company will host a summary of Gap Inc.’s first quarter results during a live conference call and webcast on May 22, 2014 from approximately 2:00 p.m. – 2:45 p.m. Pacific Time. During the first, second and third quarters, these calls will be approximately 45 minutes in duration, and the fourth quarter conference call will remain one hour in length.
http://www.streetinsider.com/Guidance/Gap,+Inc.+(GPS)+April+Comps+Rose+9%25%3B+Guides+Q1+EPS+Above+Views/9463133.html
12-month stock price chart is very impressive..
In the first quarter of 2014, Vestas generated revenue of € 1,283 million, an increase of 17 per cent to the year-earlier period. EBIT before special items increased by € 148 million to € 40 million due to improved project margins, higher revenue, lower fixed capacity costs and lower depreciation.
The EBIT margin before special items was 3.1 per cent and the free cash flow increased by € 36 million to € (24) million compared to the first quarter of 2013. During the last 12 months, Vestas has generated a free cash flow of € 1,045 million. The intake of firm and unconditional wind turbine orders was 1,188MW in the first quarter of 2014. The value of the wind turbine backlog amounted to € 6.9 billion at 31 March 2014. In addition to the wind turbine order backlog, Vestas had service agreements with contractual future revenue of € 6.9 billion at the end of March 2014. Thus, the value of the combined backlog of wind turbine orders and service agreements stood at € 13.8 billion, an improvement of € 1.4 billion compared to the year-earlier period.
http://www.congoo.com/logarticleclicks.aspx?chid=-1&catid=-1&url=http://c.moreover.com/click/here.pl?z11850126259&z=1650249697
Thanks for the reply. I was only sharing the news that I found through my google alert. Will be buying call options on Monday. :)
Bought GPS MAY 17 2014 40.50 C for 50 cents
Bought CNQ MAY 17 2014 40.00 C @ 60 cents per guess. Currently available for 20 cents..opps
Bought GPS May 17 $40.5 - 10 calls at 50 cents
AAPL intra-day call options ended up well.
good long term value here..I know of a person who uses wix to promote whatever she does and she's a free user.
However, as this commentator mentions on S/A -- also holds true..
"Anyone who is willing to pay money for a website each month is willing to shop around .... which is why Wix has converted so few of the registered accounts into paid accounts. When you shop around - you realize there are better values and better options than Wix. Period. Wix is for beginners - and when those beginners get a little more advanced, they move to another provider or just use the site for free."
Conclusion - They must find a way to 'glue' their users - hooked with Wix. But with so many users..they should find a way or 2 to make money out of their service -either through advertisement or through regular subscription.
LYNNWOOD, WA--(Marketwired - May 7, 2014) - Zumiez Inc. (NASDAQ: ZUMZ), a leading specialty retailer of action sports related apparel, footwear, equipment and accessories, today announced that total net sales for the four-week period ended May 3, 2014 increased 17.6% to $50.6 million, compared to $43.0 million for the four-week period ended May 4, 2013. The Company's comparable store sales increased 8.2% for the four-week period compared to a comparable store sales increase of 4.6% in the year ago period.
To hear the Zumiez prerecorded April sales message, please dial (201) 689-8483 or (877) 523-5612, followed by the passcode # 986439 (ZUMIEZ).
About Zumiez Inc.
Zumiez is a leading multi-channel specialty retailer of action sports related apparel, footwear, equipment and accessories, focusing on skateboarding, snowboarding, surfing, motocross and BMX for young men and women. As of May 3, 2014 we operated 558 stores including 515 in the United States, 29 in Canada, and 14 in Europe. We operate under the name Zumiez and Blue Tomato. Additionally, we operate ecommerce web sites at www.zumiez.com and www.blue-tomato.com.
OUSTON, May 7, 2014 /PRNewswire/ -- Omega Protein Corporation OME +15.62% , a nutritional product company and a leading integrated producer of omega-3 fish oil and specialty protein products, today reported financial results for the first quarter ended March 31, 2014.
First Quarter Highlights
Revenues: $63.5 million for the quarter, compared to $48.9 million in the same period a year ago
Gross profit margin: 32.3% for the quarter, compared to 24.7% in the same period a year ago
Net income: $8.0 million, or $9.0 million excluding plant closure charges and loss on disposal of assets for the quarter, compared to $2.8 million, or $3.1 million excluding the loss on disposal of assets, in the same period a year ago
Earnings per diluted share: $0.37, or $0.42 excluding plant closure charges and loss on disposal of assets for the quarter, compared to $0.14, or $0.15 excluding the loss on disposal of assets, in the same period a year ago
Adjusted EBITDA: $19.1 million for the quarter, compared to $10.0 million in the same period a year ago
"We continue to see strong momentum in both our animal and human nutrition segments. These results helped us generate yet another quarter of year-over-year margin and earnings growth," commented Bret Scholtes, Omega Protein's President and Chief Executive Officer. "Our business continues to benefit from favorable animal nutrition supply and demand dynamics and we are increasingly pleased with our improved human nutrition results as we further execute on our strategic initiatives to expand our value-added product offerings for consumers."
First Quarter 2014 Results
The Company's revenues increased 30% from $48.9 million in the same period last year to $63.5 million. This increase was due to a $12.9 million increase in animal nutrition revenues and a $1.6 million increase in human nutrition revenues. The increase in animal nutrition revenues was primarily due to increased sales prices of 15% and 1% for the Company's fish meal and fish oil, respectively, and increased sales volumes for the Company's fish oil of 88%, partially offset by decreased sales volumes of 9% for the Company's fish meal. The increase in human nutrition revenues was primarily due to sales of protein products from Wisconsin Specialty Protein ("WSP"), a business acquired by the Company in the first quarter of 2013. The composition of revenue by nutritional product line for the first quarter of 2014 was 45% fish meal, 40% fish oil, 13% dietary supplements and food, and 2% fish solubles and other.
First quarter of 2014 revenues decreased 4% from $66.0 million in the fourth quarter of 2013 to $63.5 million. This decrease was due to a decrease in animal nutrition and human nutrition revenues of $1.4 million and $1.1 million, respectively. The decrease in animal nutrition revenues was primarily due to 29% lower fish meal sales volumes and 24% lower fish oil sales prices, partially offset by 4% higher fish meal sales prices and 94% higher fish oil sales volumes. The decrease in fish oil sales prices was due to a change in the product mix of higher priced refined and lower priced crude oils, and lower prices on those products. The decrease in human nutrition revenues was primarily due to lower revenues from other nutraceuticals and third party tolling.
The Company reported gross profit of $20.5 million, or 32.3% as a percentage of revenues, for the first quarter of 2014, versus $12.1 million, or 24.7% as a percentage of revenues, in the first quarter of 2013. The increase was primarily due to an increase in the animal nutrition segment gross profit as a percentage of revenues from 26.6% to 34.6% as a result of increased fish meal and fish oil sales prices. Human nutrition gross profit also increased as a percentage of revenues from 13.0% to 16.9%, due primarily to improved results from Omega-3 fish oil ingredients, partially offset by a decrease in gross profit as a percentage of revenue in the protein products business.
Compared to the fourth quarter of 2013, first quarter gross profit decreased from $28.0 million, or 42.4% as a percentage of revenues, to $20.5 million, or 32.3% as a percentage of revenues. The decrease in gross profit as a percentage of revenues was due to a decrease in animal nutrition gross profit as a percentage of revenues from 47.1% to 34.6%, primarily as a result of greater than anticipated fish catch in the fourth quarter, which resulted in additional profit related to prior period sales of 2013 inventory production, and the decreased fish oil sales prices in the first quarter. This decrease was partially offset by an increase in human nutrition segment gross profit as a percentage of revenues from 13.6% to 16.9% primarily due to improved gross profit as a percentage of revenues for other nutraceuticals.
Selling, general and administrative expenses for the first quarter decreased $0.4 million to $6.1 million compared to the first quarter of 2013, primarily as a result of lower acquisition-related professional expenses. Selling, general and administrative expenses increased $0.2 million from $5.9 million for the fourth quarter of 2013.
In the fourth quarter of 2013, the Company closed its menhaden fish processing plant located in Cameron, Louisiana and re-deployed certain vessels from that facility to the Company's other Gulf Coast facilities located in Abbeville, Louisiana and Moss Point, Mississippi, as previously announced. In conjunction with the closure, the Company incurred charges of $1.3 million in the first quarter of 2014 and $6.6 million in the fourth quarter of 2013.
The first quarter of 2014 effective tax rate was 33.9% compared to 33.2% in the first quarter of 2013 and 31.9% in the fourth quarter of 2013.
Net income for the first quarter of 2014 was $8.0 million ($0.37 per diluted share) compared to $2.8 million ($0.14 per diluted share) in the same period last year and $9.7 million ($0.45 per diluted share) for the fourth quarter of 2013. Excluding plant closure charges and gain/loss on disposal of assets, net income for the first quarter of 2014 would have been $9.0 million ($0.42 per diluted share), compared to $3.1 million ($0.15 per diluted share) in the same period last year and $14.2 million ($0.66 per diluted share) for the fourth quarter of 2013.
Adjusted EBITDA totaled $19.1 million for the first quarter of 2014, compared to $10.0 million for the same period last year and $26.7 million for the fourth quarter of 2013.
Balance Sheet
The Company's March 31, 2014 cash balance increased $7.1 million from December 31, 2013 to $41.2 million. Total debt decreased $1.2 million from December 31, 2013 to $23.0 million on March 31, 2014. Stockholders' equity increased $8.5 million to $255.7 million as of March 31, 2014 compared to $247.2 million as of December 31, 2013.
Conference Call Information
Omega Protein will host a conference call on its first quarter 2014 financial results at 8:30 a.m., Eastern Time, on Thursday, May 8, 2014. The Company's senior management team will be available to discuss recent financial results and current business trends as well as respond to questions.
Please dial (877) 407-3982 domestically or (201) 493-6780 internationally to join the call. Interested parties may also listen to the webcast live over the Internet at www.omegaprotein.com .
A webcast replay of the conference call will be available beginning shortly after the conclusion of the call at www.omegaprotein.com and will be available for 30 days. A telephonic replay of the conference call will be available through May 22, 2014. Domestic listeners can dial (877) 870-5176, and international listeners may dial (858) 384-5517. The replay access code is 13580483.
About Omega Protein
Omega Protein Corporation OME +15.62% is a century old nutritional company that develops, produces and delivers healthy products throughout the world to improve the nutritional integrity of functional foods, dietary supplements and animal feeds. Omega Protein's mission is to help people lead healthier lives with better nutrition through sustainably sourced ingredients such as highly-refined omega-3 rich fish oil, specialty proteins and nutraceuticals.
http://www.marketwatch.com/story/omega-protein-announces-first-quarter-2014-financial-results-2014-05-07?reflink=MW_news_stmp
globalscape To Announce First Quarter 2014 Financial Results
Date: Tuesday, May 13, 2014
Time: 3:30 p.m. Central Time
Phone: 1-877-941-4775
Conference ID: 4682884
great buy and hold. :)
Different board but GPRE, Valero, all had great results..so, it made sense to buy..:)
need the formula to reincarnate myself..lol
u talking to me..said di nero
Just now, lots of options bought for 5 cents..for which I paid 95 cents..lol..I hope peix comes back soon enough..
and someone tweeted -- Group of nervous Twitter managers eyeing each other over lunch break... tapping new sell orders on their phones under the table.
Below are the three companies in the Oil & Gas Refining & Marketing industry with the highest operating margin. A healthy operating margin is required for a company to pay for its fixed costs and generate cash.Longwei Petroleum ranks highest with a an operating margin of 18.4%. Following is Pacific Ethanol with a an operating margin of 8.0%. Calumet Specialty Products ranks third highest with a an operating margin of 2.3%.
CVR Energy follows with a an operating margin of 1.6%, and Western Refining rounds out the top five with a an operating margin of 1.1%.
SmarTrend recommended that its subscribers protect gains by selling shares of Longwei Petroleum on January 3rd, 2013 by issuing a Downtrend alert when the shares were trading at $1.39. Since that call, shares of Longwei Petroleum have fallen 55.2%. We are now looking for when a new Uptrend will commence and will alert SmarTrend subscribers in real time.
http://world.einnews.com/article/203450815/VrwLLhRTEBObTZYX
Sad story of coffee farmers
When coffee rust attacked the farms clinging to the volcanic slopes above this Mayan town, the disease was unsparing, reducing mountainside rows of coffee trees to lattices of gray twigs.
During last year’s harvest, Román Lec, who grows coffee on a few acres here, lost half his crop. This year, he borrowed about $2,000 for fertilizer and fungicide to protect the plants, as he did last year. But the disease returned and he lost even more.
“There are nights when you cannot sleep, thinking how to pay back the money,” said Mr. Lec, 65.
A plant-choking fungus called coffee rust, or la roya, has swept across Central America, withering trees and slashing production everywhere. As exports have plunged over the last two years, the effects have rippled through the local economies.
Big farmers hire fewer workers to pick the ripe coffee cherries that enclose the beans. Smaller farmers go into debt and sell livestock or tools to make up for the lost income. Sales fall at local merchants. Teenagers leave school to work on the farm because their parents can no longer hire outside help. At the very end of the chain are the landless migrant workers who earn just a few dollars a day.
“If you frame this in terms of everyone that is connected to the economics of coffee, it’s a very serious problem,” said Roberto de Michele, a specialist at the Inter-American Development Bank who is based in Guatemala City.
The coffee rust has spread far and fast, driven by higher temperatures in the region that have allowed the fungus to thrive at higher altitudes. Many experts say climate change is largely to blame for the shifting weather patterns.
The economics of the business have added to the farmers’ plight. After years of low coffee prices, smaller farmers could not afford to replace aging coffee plants, which have proved more vulnerable to the rust’s attack.
“There was nothing to hold it back because the farms were in very poor shape,” said Maja Wallengren, a coffee expert based in Mexico.
The trouble here is just one of several factors that are pushing up prices in the global commodity market, increases that may carry over to supermarket shelves and the specialty coffee houses that sell the high-grade arabica coffee for which Central America is known. Market prices have risen 70 to 80 percent since November, driven mostly by drought in Brazil, the world’s largest producer.
In Central America, the pain is acute. Four million people there and in southern Mexico rely on coffee for their living, according to the Inter-American Development Bank. Twenty percent of the half-million jobs in Guatemala directly tied to the crop have already disappeared, estimated Nils Leporowski, the president of Anacafé, the country’s coffee board.
The rust outbreak has pushed many families to the edge of survival.
“Roya has exposed the depth of the social and economic problems in terms of people’s vulnerability to the market and to climate change,” said Peter Loach, the Guatemala director of Mercy Corps, an aid agency. “What makes it different and complicated is that it’s a slow-onset natural disaster over two to three years.”
Even in good years, José Obispo Tax Talé, 34, had to scrimp to feed his eight children. In the past, his work as a day laborer on coffee farms would give him just enough money to rent land, buy fertilizer and grow corn for food.
Since the coffee rust hit, farmers are hiring fewer workers and paying less. So Mr. Tax had to borrow about $1,300 to grow corn. “Sometimes, you get desperate,” he said. “You want to work, but there is none.”
This year, the lean season, when food supplies run out for the poorest farmers, started two months early, according to the Famine Early Warning Systems Network, a monitoring service, because of falling coffee earnings and reduced corn yields over the last couple of years. Forecasts of irregular rainfall this summer raise additional concern.
“Year after year, these families are confronted by layers of vulnerability,” said Anne Valand of the World Food Programme, who estimated that as many as 300,000 Guatemalans could need emergency food aid later this year. “Bit by bit, the layers are becoming thinner.”
As the coffee rust has taken hold, farmers have been spending much of their time and money trying to fight the disease by spraying fungicide, replacing or cutting back old plants, and managing the shade trees that filter sunlight and appear to reduce the spread of the rust.
“People are scared of the roya,” said Nicolás Leja, who farms about seven acres in plots in San Antonio Palopó, a nearby municipality. He pruned his trees and sprayed fungicide, but it proved futile. He has lost as much as 60 percent of his production over the last two years.
Instead of hiring four workers for the harvest as he usually does, he relied on extra labor from his 18-year-old son, who put off plans to study medicine.
The changing fortunes of Guatemala’s small farmers raise the question of whether some of them should continue to grow coffee at all or instead should switch to food crops. Some say they could not make the change even if they wanted to.
“Beans and corn don’t grow well here,” Mr. Leja said, pointing at the steep hillside. “The coffee income is very important. It pays for corn and beans.”
The latest epidemic of coffee rust began in Central America three years ago. It spread rapidly last year, prompting most governments to declare states of emergency. Last year’s harvest fell 15 percent in Guatemala, and neighboring countries had losses as big and even bigger. Export figures suggest that Guatemala’s harvest this year has fallen an additional 10 percent.
Nobody has escaped. Guillermo Ríos, a midsize producer who grows coffee on 37 acres near the Mexican border in Huehuetenango, said he had sprayed fungicide four times and managed to limit the outbreak to just 10 percent of the plantation.
“My priority is to rescue what I invested,” he said in a telephone interview. But his profit was minimal, and the higher costs have halted his plans to add plants on additional land he owns. He will hire fewer workers than he expected.
While rust hit Central America in the 1970s and 1980s, the outbreaks were contained at lower altitudes. This rust outbreak has advanced to the highest altitudes, including the steep slopes here around Lake Atitlán. Rising temperatures and extreme weather, like flooding, have encouraged roya’s spread, said Ana R. Ríos, a climate change specialist at the Inter-American Development Bank.
With the changing conditions, the industry is intensifying efforts to breed varieties that are resistant to rust and heat stress while maintaining their quality. But the research is only beginning, and it may take 25 or 30 years before resistant hybrids reach farmers, said Leonardo Lombardini, the deputy director of World Coffee Research at Texas A&M University.
“The problem is that farmers are struggling and also the climate is changing rapidly,” Mr. Lombardini said. “The window of climate conditions for arabica is relatively narrow.”
Researchers are also growing plants from seeds collected all over the world and sending them to different countries for field trials to see where they thrive. That should give farmers who do not have much money to invest some assurances that when they replace their old trees, the new ones will be productive.
In the meantime, the priority is returning the farms to health.
Guatemala’s agriculture ministry provided small farmers with fungicide last year, although many complained that it reached them too late or that it was not enough. Others simply sold it. The government has increased the amount of money in a fund to provide low-interest loans to $100 million and extended it to 2026. The fund had only $28 million when the measure was approved last fall.
“The coffee here is positioned for its quality like the wines of France,” said José Sebastián Marcucci, Guatemala’s vice minister of agriculture. “The majority of coffee comes from the small producers. I hope that they can be motivated.”
With help from Anacafé, the government is showing farmers how to prune and replace their trees. They also plant beans and vegetables between the coffee seedlings to provide food while they wait three years for them to start producing.
More and more farmers are listening. Servando Santos, 56, the manager at the San Miguel Integrated Agricultural Cooperative in Tzampetey, said he fought off the rust by spraying fungicide, using fertilizer and controlling the shade over his plants. “You have to adapt to the roya,” he said. “You have to make friends with it.”
http://www.truthabouttrade.org/2014/05/06/a-coffee-crop-withers-fungus-cripples-coffee-production-across-central-america/
Hope it becomes profitable for you first and then interesting..:)
At this market cap, TWTR is cheaper than What's Apps
Someone tweeted - "House Prices up 11.1% Year-over-year in March as young, first-time buyers sell $TWTR shares to pay all-cash in SF Bay Area."
3 insiders bought @ 4.25/@4.26. Better watch out :). Only $4.1 today
http://www.filing4.com/company/1323648/transaction/
Sounds good as well. Have a good weekend- RB. See you next week!
Bought some September 20 $9 options few days ago..so far so good. Give me the reason to sell and I'll follow but $10 looks 50 cents away from your prediction..that's all. My comment was specific to your own prediction. And yes, you also were a buyer for dividend..so that's even better.
it's getting there and it has 8 more months to do so