Asmus Puhl Finance Blog

Markel Corp. (NYSE: MKL) released excellent FY 2014 numbers!
(The transcript of the conference call as always has been published by Seeking Alpa)

What was arguably the most important information of this earnings release?
The integration of the acquired Alterra group has been successfully completed!

This reflects in certain key numbers:
Total operating revenues grew 19%, surpassing the $5 billion threshold for the first time.
„The most significant drivers of this increase continue to be the inclusion of a full-year of underwriting revenues from legacy Alterra product offerings in 2014, higher revenue from the Hagerty business, and higher investment income due to our larger investment portfolio“ as CFO Anne Waleski explained on the call.

Net written premiums for 2014 were approximately $3.9 billion, up 21% from the prior year.
Markel’s consolidated combined ratio improved to 95% compared to 97% in 2013.
Book value per share, the most important metric in the insurance industry rose 14% to $543.96 at December 31, 2014.

Excellent results, aren’t they? … but wait, have a look at the investment results:

„In our equity portfolio we earned 18.1% in 2014 compared to the 13.7% return on the S&P 500.
In our fixed income operations, we earned 6.5% and fulfilled our goals from fixed income investment of earning a positive spread on the insurance funds we hold and protecting the balance sheet against credit losses, as well as the possibility of rising interest rates“ CIO Thomas Gayner explained. „More important in the returns of anyone here though is the fact that over the last 25 years we’ve earned over 200 basis points more than the S&P 500“.

The only still difficult beast is Markel Ventures, their rather new private equity unit.
Total revenue from the division climbed 22% to $838 million, while EBITDA hit $95 million
The profitability could be higher but perhaps we just have to give them more time to develop this division.

Until today Markel’ share price rose more than 6% to $ 749.
This translates into a price/FY 2014 book ratio of 1.4 which is slightly over the long term price range of Markel.
Patient investors could wait for a correction in order to buy a part of this high quality insurance company!

Markel Corp. (NYSE: MKL) reports Q 4 and FY 2014 results. Have a look!

Book value per common share outstanding improves 14% from $477.16 at December 31, 2013 to $543.96 at December 31, 2014!

Colfax Corp. (NYSE: CFX) reported Q4 2014 net sales of just over $1.2 billion, an increase of 3% over the same period last year.

13% growth came from acquisitions offset by a negative 7% impact from foreign exchange and a 3% organic decline in revenues.

Adjusted EPS for the 2014 fourth quarter was $0.72 per share which represents an 18% increase versus the $0.61 per share reported last year.

The Conference Call Transcript as always is provided by Seeking Alpha.

There were positive news as p.e. the improved operating margin of 13.7% in the gas and fluid handling segment, but at the same time in their largest gas and fluid handling end market, power generation, revenues for the quarter decreased by 10% organically, while orders were off by 16% organically.

Better news came from the general industrial end market, where sales increased 7% organically and orders increased by 4% organically.

As CEO Steve Simms pointed out: „while the fourth quarter results included excellent execution and working capital management and strong margins in gas and fluid handling, we were again hampered by a sluggish demand environment resulting in an organic revenue decline for the full-year of 2014.“

And they „expect 2015 to be another year without revenue growth, but with continued margin improvement.

But the most interesting point came at the end of the prepared remarks: Steve Simms gave a clear hint that Colfax is already examining acquisition candidates. Only the due diligence process takes more time than anticipated: „we expect to announce a number of strategically compelling and financially attractive situations in the late second quarter or early third quarter of 2015.“

That’s Colfax!

Don’t forget that part of their business model is to grow by the successful integration of acquired companies.

So let’s hope that this will not be in the heavy industries segment where they always will depend of a few large orders.

Colfax stock at this price level remains a buy!

Colfax Corp. (NYSE: CFX) the industrial manufacturing and fluid handling company today reported Q4 and FY 2014 results.

Adjusted EPS came in at $0.72, 8 cents better than analyst expectations. Revenue came in slightly lower than expected.

We will have a look at the conference call transcript to get more information, especially about the “acquisition pipeline” mentioned 3 months ago!