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For some reason, some investment managers do not bother reading the quarterly Analyst Conferences.
I was skimming through Agility’s which was published today and came across a few interesting quotes:
1. On the cancellation of dividends:
“… the board has decided to shift from an annual dividend to an interim dividend, where the board, every quarter, would look at the environment, look at the situation of the company, and then decide if they are going to distribute dividends or not, and how much that dividend is going to be and the form of that dividend as well.”
It’s clear we will not see a multi-year dividend commitment anytime soon.
But…
“It doesn’t mean that the board has decided to cancel the dividends all together, but it meant that the board wanted to have more flexibility in the way they distribute dividends over the next year.”
I keep getting the feeling that they WILL distribute something… and perhaps soon.
2. On the collar:
“The proceeds from the funded collar gives us flexibility, so it’ll definitely reduce our net debt position. And we are exploring the optimal use of the cash for the time being…”
Since they are still ‘exploring the optimal use’, it seems it’s more of a hedging transaction, rather than a financing one.
They did say that “the main objective of it is to provide some hedge to part of our stake in DSV.”
Why hedge?
DSV is listed under FVTOCI, so there’s no immediate risk of losses hitting the P/L. But Agility’s stockholders’ equity took a significant hit in 2022, we’re talking hundreds of millions, surely they don’t want a repeat in 2023.
Fair enough, but why now? The stock already went down significantly, why hedge now and forego any rebounds?
Well, maybe because the hit on their equity was too large for comfort… were they close to breaching covenants?
I don’t know.
And, for the sake of the poor investment managers who did not read the transcript, I really hope not.
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