The Santos Ltd (ASX: STO) share price is pushing higher on Thursday after the release of its quarterly update.

At the time of writing the energy producer’s shares are up 1.5% to $5.55.

How did Santos perform in the second quarter?

According to the release, Santos delivered second quarter production of 20.6 mmboe. This was 15% higher than the prior quarter and a company record.

Management advised that the strong production result was driven by higher domestic gas production in Western Australia, continued strong onshore production, and a higher equity interest in Bayu-Undan following completion of the ConocoPhillips acquisition.

Quarterly sales revenue came in at US$785 million, which was 11% lower than the prior quarter. This was primarily due to lower prices, which was partially offset by higher domestic gas and LNG sales revenues.

First half update.

For the first half of FY 2020, production was up 4% to a record 38.5 mmboe. Management notes that its disciplined operating model continues to drive strong onshore performance, with first half Cooper Basin and Queensland equity gas production up 18% and 5%, respectively.

This ultimately led to half year sales revenue of US$1.7 billion, down 16% on the prior corresponding period.

Pleasingly, despite the sharp decline in prices, Santos is still generating strong free cash flows. It reported US$431 million of free cash flow in the first half.

This left Santos with liquidity of over US$3 billion at the end of the quarter. This comprises US$1.3 billion in cash and US$1.9 billion in committed undrawn debt facilities.

Santos Managing Director and Chief Executive Officer Kevin Gallagher, commented: “Our disciplined, low-cost operating model continues to drive strong performance across our diversified asset portfolio and completion of the ConocoPhillips acquisition in late-May further boosted our production and cash flows.”

Outlook.

Santos has updated its production guidance to 83 mmboe to 88 mmboe and its sales volume guidance to 101 mmboe to 107 mmboe.  

This compares to previous guidance of 81 mmboe to 89 mmboe and 101 mmboe to 109 mmboe, respectively.

Santos’ guidance includes the ConocoPhillips acquisition from the completion date of 28 May 2020, when its interest in Bayu-Undan and Darwin LNG increased from 11.5% to 68.4%.

Management advised that the company is targeting a FY 2020 free cash flow breakeven oil price of US$25 per barrel. It notes that approximately 60% of production volumes for the remainder of 2020 are either fixed-price domestic gas contracts or oil hedged at an average floor price of US$38 per barrel.

Mr Gallagher spoke positively about the future. He said: “By maintaining our sustaining activities, production levels from our core assets are expected to remain relatively steady for the next five or six years, allowing us to continue to progress our major capital projects while maintaining capital discipline and flexibility in commitment timing.”

As COVID-19 and the lower oil price continue to challenge us, we have remained resilient and kept production going, meaning our revenues have continued to flow. Our balance sheet is strong and we remain well positioned to leverage our growth opportunities when business conditions improve,” Mr Gallagher concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Mount Gibson Iron Limited (ASX: MGX) share price has is up 0.70% this morning, after the iron ore minor reported improved performance in the quarter ended June 2020. Iron ore sales for the quarter totalled 1.2 million wet metric tonnes, giving group cash flow of $24 million for the quarter. 

What does Mount Gibson Iron do? 

Mount Gibson Iron is an Australian producer of iron ore products. It operates the Koolan mine located in the Kimberley and the Extension Hill mine site in the mid-west region of Western Australia. Koolan Island is Mount Gibson’s flagship operation. A former BHP Group Ltd (ASX: BHP) mine, Koolan Island boasts Australia’s highest grade hematite ore reserves. 

What did Mount Gibson Iron report? 

Mount Gibson delivered its report for the quarter ending 30 June 2020 this morning. The miner made total sales of 1.2 million wet metric tonnes (Mwmt) over the quarter. This included 0.52 Mwmt from Koolan Island and 0.64 Mwmt from Extension Hill.

Group cash flow for the quarter was $24 million with $9 million incurred in constructing an airstrip at Koolan. Over the financial year, group cash flow was $72 million before Koolan airstrip construction costs of $14 million. 

Commenting on the update, CEO Peter Kerr said, “Mount Gibson achieved an improved performance in the June quarter despite substantial operating challenges related to COVID-19 restrictions, and the business ended the first full year since Koolan Island’s restart in solid shape.

Mount Gibson reported cash and liquid investments of $423 million at 30 June 2020, and no borrowings. This compares to $402 million cash and liquid investments at the end of March 2020 and $385 million at the end of June 2019. 

What is the outlook for Mount Gibson Iron? 

The iron ore price soared this month due to supply concerns and rising demand from China. Iron ore reached US$110 a tonne in July, a level not since August 2019. This has lifted the Mount Gibson share price, which is up 16% since the end of June. The miner successfully added to its cash and investment reserves over the year, leaving it well positioned as it enters FY21. 

In the year ahead, Mount Gibson is focused on increasing mining movements at Koolan Island to substantially complete open pit waste stripping. Ore shipment volumes for Koolan Island are expected to dip slightly in FY21 but then increase significantly from FY22 onwards. Mount Gibson confirmed that production and costs guidance for FY21 will be delivered with the release of annual results. 

At the time of writing, the Mount Gibson share price is up 0.70% in early trade to 72 cents per share.

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Motley Fool contributor Kate O’Brien owns shares of BHP Billiton Limited and Mount Gibson Iron Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Inghams Group Ltd (ASX: ING) share price fell 5.1% yesterday with the chicken producer announcing the closure of a processing plant following positive COVID-19 tests. The Thomastown Further Processing Plant in Victoria has been temporarily closed after five employees at the plant tested positive for coronavirus. 

Ingham’s advised that it has had contingency plans in place for plant closures for some months. Other sites across Australia remain in operation. The temporary closure is not expected to materially impact the businesses results in FY21. Although the company is yet to announce FY20 results, in May it reported it was on track for 2H FY20 underlying EBITDA to exceed 1H FY20. Nonetheless, Ingham’s warned at the time that it would be premature to draw conclusions as to the trading results for the final weeks of FY20 given changes in volume and channel mix across the business. 

Impact of coronavirus 

COVID-19 restrictions created a temporary surge in retail sales in March and early April but as consumer behaviour normalised, store traffic subsided. Ingham’s has advised that out of home consumption of poultry products has been negatively impacted by the pandemic. Major customers have been resilient but their operations have been restricted to drive through and home delivery. Customers supplying hospitality and tourism industries have reduced purchases leading to weaker conditions in the food service and wholesale markets. 

Ingham’s CEO and Managing Director, Jim Leighton, said in early May, “COVID-19 has presented unprecedented challenges and we have executed a swift realignment of our supply chain and operations in order to manage any substantial operational issues created by required social distancing protocols in our facilities. This has created additional complexity, inefficiency, and cost and the temporary suspension of the production of some value enhanced products.”

Inghams share price outlook 

The Ingham’s share price remained fairly resilient in the March downturn, falling 18% from its February high of $3.76 to its March low of $3.06. It has now partially recovered to trade at $3.34. Ingham’s says it has a strong balance sheet with good access to liquidity and funding. There is significant headroom in debt covenants and the company says it is well supported by its lenders. Measures have been implemented to manage costs including reducing discretionary spend and capital expenditure. As a food business, demand for Ingham’s products is less variable than for more discretionary purchases. Demand from the hospitality industry is currently subdued, but this should lift with the easing of restrictions. 

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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Catapult Group International Ltd (ASX: CAT) share price has surged 33% in the last 3 days. The positive price action follows a FY20 results preview that the company released to the market earlier this week.

So, can the Catapult share price go higher, and is now the time to invest?

Positive results preview

Earlier this week, Catapult released a preview of its unaudited earnings. The results were highlighted by the company generating net free cash of $9.0 million in FY20 and achieving cash flow positivity a year earlier than forecast.   

Despite professional sports being postponed due to the coronavirus pandemic, Catapult was able to grow group revenue and earnings before interest, tax, depreciation and amortisation (EBITDA), which was fuelled by the company’s scalable, subscription-based business model. Catapult expects total revenue for FY20 to be between $100 million to $101 million and EBITDA between $11.5 million and $12.5 million. Catapult also acknowledged the company’s strong financial position, boasting $27.5 million cash on hand.

How has Catapult performed during the pandemic?

As indicated by the company’s provisional results, Catapult has managed the pandemic relatively well. The company attributed this resilience to its subscription-based business model, which contributes approximately 75% to its revenue, along with the early implementation of cost control measures.

Although professional sporting leagues were postponed during the pandemic, Catapult managed to retain existing customers whilst also winning new clients. In an earlier update, the company noted that customers continued to purchase Catapult solutions during the height of the lockdown in order to prepare athletes for when competitions recommence.

Should you buy?

Catapult are world leaders in sports analytics and solutions, providing sports teams and athletes with technology that tracks and measures performance and recovery. The company’s solutions cover 3 divisions: elite video, wearables, and prosumer products, which provide elite performers and teams with metrics and information they can use to tailor strategy, training and recovery regimes.

Catapult has more than 3,000 elite clients, including soccer giants Chelsea Football Club and Real Madrid FC. In Australia, the company also has long-term contracts with the National Rugby League (NRL), Australian Football League (AFL) and the National Basketball League (NBL). With the majority of these sports having resumed the season, the short -term outlook for Catapult looks appealing.

In the long-term, a higher percentage of Catapult’s revenue is generated through subscription and recurring sales, which is also appealing. In addition, the company is in a global leader in athlete tracking solutions, giving Catapult great potential for growth in a relatively unpenetrated market.

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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Coca-Cola Amatil Ltd (ASX: CCL) share price is pushing higher on Thursday after the release of an update.

In morning trade the beverage giant’s shares are up 2.5% to $8.72.

What did Coca-Cola Amatil announce?

Coca-Cola Amatil has been finalising its first half financial results and is currently assessing the carrying value of each of its businesses.

In light of the adverse impact of COVID-19 on its trading performance and the prescribed approach to assessing carrying values, management advised that it expects to incur non-cash impairments in the range of $160 million to $190 million post tax in its half year accounts.

Management revealed that these impairments relate predominantly to its Indonesian business and will not impact its debt facilities. This is because these facilities do not have any financial covenants.

The final outcome of the impairment review is subject to external audit review and final board approval.

The company’s Group Managing Director, Alison Watkins, commented: “These expected impairments are non-cash accounting adjustments and we remain very confident about the long-term prospects for our Indonesian business”.

Trading update.

Coca-Cola Amatil revealed that it has experienced an improvement in trading conditions in its major markets during June. This reflects the gradual easing of COVID-19 related restrictions.

Trading volumes across the group in June 2020 were down approximately 9% compared to June 2019. This resulted in a second quarter 2020 volume decline of approximately 23% compared to the prior corresponding period.

How are its businesses performing?

Management advised that the rate of improvement has varied across different markets.

In New Zealand June volumes increased approximately 4% on June 2019 and in Australia monthly volumes declined approximately 3% year on year.

Over in Indonesia things haven’t been as positive. This market, where COVID-19 infection rates remain high, monthly volumes declined approximately 23% on June 2019.

Ms Watkins said, “It is encouraging to see the improvement in our Volumes as the pandemic restrictions were lifted across a number of our markets. It has also been pleasing to see that the strength of our brands and strong sales capabilities continue to drive market share gains in Australia and New Zealand. We nevertheless remain cautious, given the reinstatement of lockdown measures from July in Melbourne and the rising COVID19 infection rate in Indonesia.”

“The impacts of the pandemic are continuing to evolve with the situation fluid across all of our markets. I am proud of the way the Amatil team has responded to the unprecedented challenges we have faced and am confident that we have a clear path forward, which coupled with our ample liquidity, strong balance sheet and solid credit ratings, positions us well, to emerge from the pandemic as a stronger, better business,” she concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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