What You Need To Know About The Lyft IPO

&l;p&g;&l;img class=&q;dam-image getty size-large wp-image-1134383577&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1134383577/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Photocredit: Getty

Sharing economy unicorn Lyft has turned to the public markets for growth capital. Its initial public offering is scheduled to price next week.

As long as Lyft was a private company, Lyft investors were limited to institutional investors, qualified (wealthy) individual investors, and employees. Following the IPO, the list of potential investors will broaden to include retail investors and a range of exchange-traded funds and mutual funds with environmental, social, or governance (ESG) themes. Accordingly, a wide range of investors will be able to purchase Lyft stock, which will trade on the Nasdaq, due to its strong overall ESG profile. The IPO is already oversubscribed.

&l;strong&g;Standing On The Shoulders of Giants: SASB and GRI&l;/strong&g;

Investors seeking to apply an ESG lens can use the frameworks that sustainability standards organizations like the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) have been developing since 2000 and 2011, respectively, as a starting point. For example, the SASB framework includes greenhouse gas emissions, air quality, employee health and safety, and critical incident management as material ESG factors. More broadly, applying an ESG lens entails understanding the business model, from revenue drivers to the structure of the market and from factors that could potentially impede successful operations to competitive differentiation. According to an ESG portfolio manager, in a world of consumer choice, customers typically choose value over values, but if the cost is similar, customers choose the company that they feel better about. Customers overall have reason to feel good about Lyft from an environmental and social perspective, and Lyft believes that as ridesharing becomes more mainstream, riders will increasing.

&l;strong&g;E &a;ndash; Ridesharing: Throwing&a;nbsp;A Hail Mary To Limit Climate Change?&l;/strong&g;

Broadly speaking, Lyft and other ridesharing services like UberPool represent carpooling.&a;nbsp;&l;a href=&q;https://www.bloomberg.com/news/features/2019-02-28/this-is-what-peak-car-looks-like?cmpid=BBD030619_GBIZ&a;amp;utm_medium=email&a;amp;utm_source=newsletter&a;amp;utm_term=190306&a;amp;utm_campaign=goodbiz&q; target=&q;_blank&q;&g;Auto sales in the US are declining this year&l;/a&g; as ridesharing and other new transportation options become more common in cities, environmental concerns lead Americans to reevaluate mass car ownership, and urbanization changes cars from a necessity to an expensive inconvenience for an increasing number of Americans. 46% of Lyft riders use their personal cars less because of Lyft, and 35% do not own or lease a car. This represents progress toward sustainability.

&l;img class=&q;dam-image getty size-large wp-image-1134383577&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1134383577/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; close up shot of block letters

Despite the environmental benefits of lower demand for automobiles, Lyft and other ride-hailing companies like Uber, have added to traffic congestion in the US&a;rsquo;s nine largest cities, according to a 2018 report authored by Bruce Schaller, former Deputy Commissioner for Traffic and Planning at the New York City Department of Transportation. The report elaborates that ride-hailing companies add 2.6 vehicle miles on the road for each mile of personal driving removed.

&l;strong&g;E - Lyft&a;rsquo;s Commitment To The Climate: More Than Hot Air&l;/strong&g;

Lyft&a;rsquo;s environmental credentials would appeal to climate-conscious consumers. Last year, Lyft established a new business unit focused on fighting climate change called Green Cities Initiative. More specifically, in April 2018, Lyft began making all Lyft rides carbon neutral by establishing a carbon offset program and became one of the top 10 purchasers of carbon credits globally. Lyft also committed to purchase enough renewable energy to power Lyft&a;rsquo;s offices, driver hubs, and electric vehicle miles.

Lyft&l;a href=&q;https://blog.lyft.com/posts/lyft-commits-to-full-carbon-neutrality-and-100-renewable-energy&q; target=&q;_blank&q;&g; also partnered&l;/a&g; with public transit agencies across the US, set a goal to achieve 50% shared rides by the end of 2020, purchased the largest bike sharing platform in the US, and launched a bikes and scooters program.

&l;strong&g;S &a;ndash; $10 Billion in Supplemental Earnings&l;/strong&g;

Most Lyft drivers drive in their free time to supplement their earnings. Lyft drivers have the right to work when they choose and have earned $10 billion so far.&l;strong&g;&a;nbsp;&l;/strong&g;91% drive fewer than 20 hours per week, and Lyft provides them with access to career coaches. The part-time nature of the vast majority of Lyft drivers is representative of the broader gig economy, which provides a lot of work, but only 3.8% of jobs, according to the Bureau of Labor Statistics.&l;strong&g;&a;nbsp;&l;/strong&g;Sustainable investing portfolio manager Jamie Odell expects the gig economy and benefits for gig economy workers to continue to grow in the medium term. Odell envisions the growth of autonomous driving to reverse any such gains for Lyft drivers in the long term.

&l;strong&g;S - A Labor Of Love - Employees vs. Contractors&l;/strong&g;

Lyft is disrupting the highly regulated taxi industry in part by taking regulatory risks that provide it with an advantage over taxis. For example, Lyft classifies the bulk of its drivers as independent contractors, rather than as employees, thereby saving the cost of benefits that typically come with full-time employment, such as drivers&a;rsquo; unemployment, retirement, and health insurance.

The question of whether Lyft drivers are independent contractors or employees has parallels with the question of whether FedEx drivers are independent contractors or employees. Last November, two Lyft drivers, one in Massachusetts and one in California, filed proposed class action lawsuits, alleging the company inadequately paid them and misclassified them as contractors. By classifying the bulk of its workforce as contractors, Lyft and other companies like it are saving millions of dollars per year in drivers&s; health insurance, retirement, unemployment, and other benefits that typically come with full-time employment. A good rule of thumb is that benefits cost 25% of the cost of salaries. Lyft&a;rsquo;s approach to driver classification has parallels to that of FedEx.&a;nbsp; FedEx long maintained that its drivers were independent contractors before settling in 2015 with California drivers for $228 million.

&l;strong&g;G &a;ndash; Dual Class Shares&l;/strong&g;

A group of asset managers, pensions, and unions wrote to Lyft&a;rsquo;s board to recommend against Lyft&a;rsquo;s plans for dual class shares, which involves a new share class for co-founders with 20 votes each. The &l;a href=&q;https://www.ft.com/content/7d26dca6-4747-11e9-b168-96a37d002cd3&q; target=&q;_blank&q;&g;investor letter&l;/a&g; called for Lyft to ideally adopt a one-share, one-vote governance structure and at a minimum include a sunset provision that phases out the extra voting rights over time to reduce the uncompensated risk that potential investors face. Lyft&a;rsquo;s response to the investor letter is pending.

&l;strong&g;Uber: Another Ride To Hail?&a;nbsp; &l;/strong&g;

There are a range of issues for an institutional investor contemplating a stake in Lyft to consider, and this article has touched on a handful. The good news for Lyft ESG analysts is that their work can be leveraged for the upcoming Uber IPO or for an investment decision on Yandex, the largest technology company in Russia and founder of Yandex Taxi. Just as today represents the early stages of the gig economy and the prevalence of autonomous driving, it also the early stages of ESG analysis on ride hailing.&l;/p&g;

Levi Strauss shares soar after company's second IPO — four experts react

Levi Strauss shares are on a tear after the company's initial public offering.

Shares of the 166-year-old denim company ended trading nearly 32 percent higher on Thursday following the company's second-ever IPO. Levi Strauss first went public in 1971 before going private for over three decades.

Here's what four Wall Street and retail industry experts think of the IPO:

Rick Helfenbein, CEO of the American Apparel and Footwear Association, says denim — Levi Strauss' claim to fame — has serious staying power:

"Denim's always in fashion. My mother-in-law says that all the time: Denim never goes out of fashion. So don't worry about the cycle. Worry about how they're addressing the business to deal with the millennial customer. That's where it's going."

Roxanne Meyer, senior research analyst at MKM, argued that Levi's other segments will likely also drive big returns:

"Here's a brand that is growing 20, 30, 40 percent, in some categories, in what is a very tough retail landscape. So this, to me, is one of the few standouts. [...] "It's doing that, I think, through two things: one, it's got a CEO that is laser-focused on brands, innovation and customer. ... Second, a real focus on innovation and using what they're calling a Eureka Lab to innovate and to shorten the supply chain. And it's growing in categories where it's been underpenetrated, whether that's tops, whether that's women's, whether that's through geographical mix, so there's really a large amount of opportunity here."

SW Retail Advisors President Stacey Widlitz also highlighted Levi's diversification story:

"If you look at the top line, and assuming that the momentum stays where it is, it's a reasonable valuation here. I think ... you can't just look at this as a jeans play because they have been able to diversify into other categories. They've been able to diversify away from men, [which] were 70 percent of the business, so that's clearly a growth runway here whereas other brands are a bit more mature and have had a tougher time diversifying."

But Steve Grasso, Stuart Frankel & Co.'s director of institutional sales, warned that the company's IPO could be more foreboding than people think:

"That IPO market is fuel for the rally. It does mean risk-on, but it also means that people want to get in here because they feel that [they want to lock in] valuations and toppiness of the market. ... So that could be a counterintuitive measure there and it could mean a top. Just watch [earnings per share], see how the market reacts with EPS going negative, see how it reacts with guidance, see where that comes in. GDP is falling, so buyer beware at this point."

Disclaimer

Buy Domino's Pizza For Fantastic Total Return And Steady Growth

This article is about Domino's Pizza (DPZ) and why it's a great buy for the total return investor that also wants some dividend income. Domino's Pizza is one of the largest fast food companies in the United States and foreign countries.

Domino's Pizza will be evaluated using The Good Business Portfolio guidelines, my IRA portfolio of good business companies that are balanced among all styles of investing. The company has steady growth and has cash it uses to increase the dividends each year and open new stores.

When I scanned the five-year chart, Domino's Pizza has a good chart going up and to the right on a strong upslope from 2015 through to date. This is the kind of chart I like showing the defensive nature of their business with straight line growth.

Data by YCharts

Fundamentals of Domino's Pizza will be reviewed on the following topics below.

The Good Business Portfolio Guidelines Total Return and Yearly Dividend Last Quarter's Earnings Company Business Takeaways Recent Portfolio Changes

I use a set of guidelines that I codified over the last few years to review the companies in The Good Business Portfolio (my portfolio) and other companies that I am reviewing. For a complete set of the guidelines, please see my article " The Good Business Portfolio: Update to Guidelines, August 2018". These guidelines provide me with a balanced portfolio of income, defensive, total return and growing companies that hopefully keeps me ahead of the Dow average.

Good Business Portfolio Guidelines

Domino's Pizza International passes 10 of 11 Good Business Portfolio Guidelines, a good score (a good score is 10 or 11). These guidelines are only used to filter companies to be considered in the portfolio. Some of the points brought out by the guidelines are shown below.

Domino's Pizza does not meet my dividend guideline of having dividends increase for 8 of the last ten years and having a minimum of 1% yield, with seven years of increasing dividends and a 1.1% yield. Domino's Pizza is, therefore, a good choice for the dividend income investor because the dividend growth is 22% over the past 5 years and next year should easily pass this guideline. The three-year average payout ratio is low at 25%. After paying the dividend, this leaves plenty of cash remaining for increasing the business by opening new stores. I have a capitalization guideline where the capitalization must be greater than $10 Billion. DPZ passes this guideline. DPZ is a mid-cap company with a capitalization of $10.1 Billion. Domino's Pizza 2019 projected cash flow at $400 Million is good allowing the company to have the means for company growth and increased dividends. I also require the CAGR going forward to be able to cover my yearly expenses and my RMD with a CAGR of 7%. My dividends provide 3.3% of the portfolio as income, and I need 1.9% more for a yearly distribution of 5.2% plus an inflation cushion of 1.8%. The three-year forward CAGR of 17% meets my guideline requirement. This good future growth for Domino's Pizza can continue its uptrend benefiting from the continued growth in the worldwide economy. My total return guideline is that total return must be greater than the Dow's total return over my test period. DPZ passes this guideline since their total return is 153.85%, much more than the Dow's total return of 44.04%. Looking back five years, $10,000 invested five years ago would now be worth over $32,400 today. This makes Domino's Pizza a good investment for the total return investor looking back, that has future growth as the economy continues to grow. One of my guidelines is that the S&P rating must be three stars or better. DPZ's S&P CFRA rating is three stars or hold with a target price to $275, passing the guideline. DPZ's price is presently 12% below the target. DPZ is under the target price at present and has a high PE of 25, making DPZ a fair buy at this entry point for the long term growth investor that wants good steady increasing dividends and future total return growth. One of my guidelines is would I buy the whole company if I could. The answer is yes. The total return is great, and the below average growing dividend makes DPZ a good business to own for income and growth. The Good Business Portfolio likes to embrace all kinds of investment styles but concentrates on buying businesses that can be understood, makes a fair profit, invests profits back into the business and also generates a good income stream. Most of all what makes DPZ interesting is the potential long-term growth of their business as the working population and the worldwide economy increases. Total Return and Yearly Dividend

The Good Business Portfolio Guidelines are just a screen to start with and not absolute rules. When I look at a company, the total return is a key parameter to see if it fits the objective of the Good Business Portfolio. Domino's Pizza passes this total return guideline against the Dow baseline in my 51-month test. I chose the 51 month test period (starting January 1, 2015, and ending to date) because it includes the great year of 2017, and other years that had fair and bad performance. The good total return of 153.85% makes Domino's Pizza a great investment for the total return investor that also wants a steadily increasing income. DPZ has a below average dividend yield of 1.1% and has had increases for seven years making DPZ also a fair choice for the dividend investor. The Dividend was increased February 2019 to $0.65/Qtr. from $0.55/Qtr. or an 18% increase.

DOW's 51 Month total return baseline is 44.04%

Company Name	51 Month total return	The difference from DOW baseline	Yearly Dividend percentage
Domino's Pizza	153.85%	+109.81%	1.1%

Click to enlarge

Last Quarter's Earnings

For the last quarter on February 21, 2019, Domino's Pizza reported earnings that missed expected by $0.07 at $2.62 and compared to last year at $2.09. Total revenue was higher at $1.09 Billion up more than a year ago by 21.38% year over year and missed expected revenue by $7.9 Million. This was a mixed report with the bottom line increasing over last year but missing expected earnings and the top line increasing. The next earnings report will be out late May 2019 and is expected to be $2.14 compared to last year at $2.00.

Business Overview

Domino's Pizza is one of the largest fast food companies in the United States and foreign countries.

As per excerpts from Reuters

Domino's Pizza is a pizza restaurant chain company. As of January 1, 2017, the Company operated in over 13,800 locations in over 85 markets around the world.

The Company operates through three segments: domestic stores, an international franchise, and supply chain. Its basic menu features pizza products in various sizes and crust types. Its stores also offer oven-baked sandwiches, pasta, boneless chicken and wings, bread side items, desserts, and soft drink products.

International markets vary toppings by country and culture, such as squid toppings in Japan or spicy cheese in India, and feature regional specialty items, such as a banana and cinnamon dessert pizza in Brazil."

Overall Domino's Pizza is a good business with 17% CAGR projected growth as the United States and foreign economies grow going forward, with the increasing demand for DPZ's fast food. The below average dividend income brings you cash as we continue to see further growth as the world economy grows.

The FED has kept interest rates low for some years, and on December 19, 2018, they raised the base rate of 0.25%, which was expected. I believe that they will go slow in 2019, which should help keep the economy on a growth path. If infrastructure spending can be increased, this will even increase the United States growth going forward with better economics for the consumer. At the March 20 meeting, the FED lowered United States GDP projection for 2019 which may mean they are getting to neutral on the economy, projecting no rate increases for 2019. The FED meeting Statement was a wait and see and a bit more dovish than the last meeting.

From February 21, 2019, earnings call Rich Allison (Chief Executive Officer and President) said

I'm pleased with what was a terrific fourth quarter, one that capped another outstanding year for Domino's. Our results continue to outpace the industry and our franchisees across the globe continue to make me extremely proud.

Retail sales growth matters, and once again we delivered. Our global retail sales growth reflected a strong balance, across our US and international businesses. For both businesses in Q4, our growth reflected a healthy blend of unit growth and traffic driven same-store sales. Looking first at our US business, double-digit retail sales growth in Q4 was comprised of a very healthy and order count driven 5.6% comp and 125 net new units.

Turning now to International, we delivered strong retail sales growth for the fourth quarter and a double-digit result for the whole year. Fourth quarter net unit openings were particularly strong and represented a significant acceleration over previous quarters. Same-store sales performance can certainly improve versus what we have all come to expect, but I'm pleased to see all of our comp coming from order growth.

During the quarter, we had two important milestones. First, we opened our 10,000 stores outside of the United States, a testament to the unit growth engine, this segment has provided to the business over a lengthy period of time. In addition, the fourth quarter was officially our 100th consecutive quarter of positive same-store sales growth. To think that we have grown sales in our international business for 25 straight years, and 100 straight quarters, still honestly blows my mind. And is a testament to us having the best international model in QSR."

This shows the feelings of top management for the continued growth of the Domino's Pizza business and shareholder return with an increase in future growth. DPZ has good growth and will continue as the foreign economies grow and demand for fast food increases. Domino opened 1058 new stores in 2018 with expectations of more to come in 2019.

The graphic below shows the global growth of Domino's Pizza over the years with increasing sales almost every year as stated by the CEO.

The fourth quarter marked our 31st consecutive quarter of positive US same-store sales growth and capped very strong top-line performance in 2018, above our three to five-year outlook range. And continually driven by focus, fundamentals, and execution. I'm so proud of our US franchisees and teams who continue to lead the Domino's system."

Source: March 8, 2019, Investment Conference Slides

Takeaways

Domino's Pizza is a great investment choice for the total return investor with it's above DOW average total return and the dividend growth investor for income. Domino's Pizza will be considered for The Good Business Portfolio as an addition to the McDonalds (MCD) position since they sell different products. If you want a growing dividend income and great total return in the fast food business, DPZ may be the right investment for you.

Recent Portfolio Changes

I intend to watch the earnings reports for the companies in the portfolio and may finally decide to trim my high flyers that are over 8% of the portfolio so I can invest in good companies on my buy list.

On March 13 increased position of Realty Income Corp. (O) to 0.85% of the portfolio, I could use a bit more steady monthly income. On March 12 the portfolio closed out the position of Arconic (ARNC) , I only have one more commodity play Freeport McMoRan (FCX) that I think will go up over time. On March 11 the portfolio reduced the position of Arconic (ARNC) from 0.4% of the portfolio to 0.3%. I will sell the rest of this position within the month. The dividend was just cut, and forward growth is under-par. On March 7 added to position of Simulation Plus (SLP) from 0.33% of the portfolio to 0.45%. I will add slowly to this position as available cash allows. On March 4, trimmed position of Hewlett Packard (HPQ) from 1.3% of the portfolio to 1.0%. The last earnings report was poor, and future growth looks weak at 2%, time to sell HPQ for a better business. On February 28, trimmed position of Boeing (BA) from 16.1% of the portfolio to 15.8%. I love Boeing, but you have to have diversification. On February 2 increased position of Realty Income Corp. to 0.7% of the portfolio, I could use a bit more steady monthly income. On January 30 increased the position of Simulations Plus from 0.2% of the portfolio to 0.4%. I think their product may be the product of the future for drug testing. On January 28 Bought a starter position of Realty Income Corp., I could use a bit more steady income and hope to add to this holding in the future. Realty Income Corp. is now 0.4% of the portfolio. On January 28 sold the remaining portion of Mondelez (MDLZ). The forward growth does not look good enough. On January 24 increased the position of Digital Reality Investors (DLR) from 3.1% of the portfolio to 3.6%. I want to get DLR up to a full position of 4%. On January 16 sold the remaining shares of 3M (MMM). I decided to sell this small position in order to reduce the number of positions with a new target number of 20 positions max from 25. On January 11 started a new position in Lockheed (LMT) at 0.65% of the portfolio.

The Good Business Portfolio trims a position when it gets above 8% of the portfolio. The five top percentage of the portfolio companies in the portfolio are, Johnson & Johnson (JNJ) is 8.3% of the portfolio, Eaton Vance Enhanced Equity Income Fund II is 8.0% of the portfolio, Home Depot (HD) is 8.8% of the portfolio, Omega Health Investors (OHI) and Boeing (BA) is 14.8% of the portfolio. Therefore BA, EOS, JNJ, OHI, and Home Depot are now in trim position, but I am letting them run a bit since they are great companies.

Boeing is going to be pressed to 15% of the portfolio because of it being cash positive on 787 deferred plane costs at $316 Million in the first quarter of 2017, an increase from the fourth quarter. The first quarter earnings for 2018 were unbelievable at $3.64 compared too expected at $2.64. Farnborough Air Show sales in dollar value just beat out Air-Bus by about $6 Billion, and both companies had a great number of orders. Boeing received an order for 18 more KC-46A planes. The second quarter 2018 earnings beat expectations by $0.06 at $3.33, but a good report was hurt by a write off expense on the KC-46 which has started delivery in 2019. Two KC-46A tankers were delivered in January 2019. As a result of the good fourth-quarter earnings, S&P CFRA raised the one-year price target to $500 for a possible 20% upside potential. Boeing has dropped in the last 2 weeks because of the second 737 Max-8 crash, and I look at this as an opportunity to buy BA at a reasonable price. This is just my opinion.

JNJ will be pressed to 9% of the portfolio because of its defensive nature in this post-BREXIT world. Earnings in the last quarter beat on the top and bottom line and Mr. Market did nothing. JNJ has an estimated dividend increase to $0.97/Qtr. in April 2019, which will be 57 years in a row of increases. JNJ is not a trading stock but a hold forever; it is now a strong buy as the healthcare sector remains under pressure.

For the total Good Business Portfolio, please see my article on The Good Business Portfolio: 2018 4 th Quarter Earnings and Performance Review for the complete portfolio list and performance. Become a real-time follower, and you will get each quarter's performance after the next earnings season is over.

Disclosure: I am/we are long BA, JNJ, HD, OHI, MO, IR, DLR, GE, PM, IR, EOS, TXN, ADP, FCX, MCD, O. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Of course, this is not a recommendation to buy or sell, and you should always do your own research and talk to your financial advisor before any purchase or sale. This is how I manage my IRA retirement account, and the opinions of the companies are my own.

Buy Electronic Arts To Play The Video Gaming Game

&l;p&g;For public video game makers, 2018 was the worst of times. Industry executives were blindsided by &q;Fortnite,&q; a free-to-play phenomenon from Epic Games.

&l;strong&g;Electronic Arts&l;/strong&g; saw its shares get cut in half from their 2018 highs, although those have rebounded this year.

&l;img class=&q;dam-image ap size-large wp-image-18be38d459de4e50961d14509aa8884a&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/18be38d459de4e50961d14509aa8884a/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; In this Wednesday, March 6, 2019, photo a gamer plays Electronic Arts&s; &q;Apex Legends&q; in Jersey City, N.J. (AP Photo/Jenny Kane)

The stock is a buy at current levels. Let me explain why.

It&s;s important to remember that, beneath all the mystery in the mainstream about games and gaming culture, the industry functions much like the Hollywood studio system.

Like feature films, games are pitched and financed. They are meticulously produced and promoted. The goal is to create engrossing narratives and lasting franchises.

&q;Madden Football,&q; an EA Sports game that mirrors the NFL, debuted in 1988. It&s;s now a vibrant ecosystem. It even spawned a&a;nbsp;&l;a href=&q;http://em.weisspublishinginc.com/hH77S0U00N000dvD3030N5n&q; target=&q;_blank&q; rel=&q;noopener noreferrer&q; target=&q;_blank&q;&g;professional gaming league&l;/a&g;, where eSport athletes compete for six-figure prize money.

Wall Street analysts think &q;Fortnite&q; has the potential to be bigger. Set in a post-apocalyptic world, the cross-platform battle royale has players band together in groups of four to rebuild the homeland with elaborate forts.

They fend off monsters with exotic imaginary weapons, that players buy while the game is underway. The $2.4 billion the company raked in during 2018 via these virtual trinket sales made &q;Fortnite&q; the top free-to-play game by revenue.

According to a&a;nbsp;&l;em&g;Business Insider&l;/em&g;&a;nbsp;&l;a href=&q;http://em.weisspublishinginc.com/I070TNn0H0763v3d0D0UN00&q; target=&q;_blank&q; rel=&q;noopener noreferrer&q; target=&q;_blank&q;&g;story&l;/a&g;, registered players topped 200 million in December 2018, up from 75 million members in June. And 60% of players were in the key 18- to 24-year-old demographic.

The problem is young people get bored easily.&a;nbsp;They move on. And there are some signs of &q;Fortnite&q; fatigue.

Epic Games staged an&a;nbsp;&l;a href=&q;http://em.weisspublishinginc.com/y7DNnd730v0HNUU00700030&q; target=&q;_blank&q; rel=&q;noopener noreferrer&q; target=&q;_blank&q;&g;in-game concert&a;nbsp;&l;/a&g;earlier in February with Marshmello, a popular electronic music DJ. Last week,&a;nbsp;Variety&a;nbsp;&l;a href=&q;http://em.weisspublishinginc.com/O0D070dN03003NHV080v7nU&q; target=&q;_blank&q; rel=&q;noopener noreferrer&q; target=&q;_blank&q;&g;reported&l;/a&g;&a;nbsp;the company plans to offer $100 million competitive prize pool money during 2019.

These moves come against the backdrop of escalating competition.

Electronic Arts released &q;Apex Legends&q; on Feb. 4. Only three days later, this free-to-play battle royale&a;nbsp;&l;a href=&q;http://em.weisspublishinginc.com/jd9U073HN000n073NvW0D00&q; target=&q;_blank&q; rel=&q;noopener noreferrer&q; target=&q;_blank&q;&g;reached 10 million players&l;/a&g;. By the end of the first week, the number of players jumped to 25 million.

I&s;m not claiming &q;Apex Legends&q; will be the next &q;Fortnite.&q; As fast as the franchise has grown, it is still a newcomer.

The more compelling story is about sentiment &a;hellip;

Video game stocks got walloped in 2018 because investors bet &q;Fortnite&q; might be a multiyear story, a la &q;Madden&q; or&a;nbsp;&l;strong&g;Activision Blizzard&s;s&l;/strong&g;&a;nbsp; &q;Call of Duty.&q; Any data that shatters this perception will lead to a revaluation of the entire sector.

Electronic Arts is especially attractive because it owns Apex Legends.

Gaming is a great business.&a;nbsp;The industry grew 10% to $116 billion in sales during 2018.

That was more than TV ($105 billion), Film Box Office ($41 billion) and Digital Music ($17 billion).

Electronic Arts shares trade at 24x forward earnings. The market capitalization is $28.7 billion.

The company is the second-largest gaming franchise in the world. The opportunity for investors is that video game stocks will likely return to favor.

Given the industry is the fastest growing media segment, it is a good bet.&a;nbsp;My target is $200 by the end of 2022.&l;/p&g;

KNOT Offshore Partners LP (KNOP) Q4 2018 Earnings Conference Call Transcript

Image source: The Motley Fool.

KNOT Offshore Partners LP  (NYSE:KNOP)Q4 2018 Earnings Conference CallMarch 14, 2019, 12:00 p.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Operator

Good afternoon and welcome to the KNOT Offshore Partners LP Earnings Release Fourth Quarter 2018 Conference Call. All participants will be in listen-only mode.

After today's presentation there will be an opportunity to ask questions. (Operator Instructions)

Please note, this event is being recorded.

I would like to now turn the conference over to John Costain. Please go ahead.

John Costain -- Chief Executive officer & Chief Financial Officer

Thank you. If any of you have not read the earnings release or slide presentation, they're both available on Investors section of our website.

On today's call, our review will include non-US GAAP measures, such as distributable cash flow and adjusted earnings before interest, taxation, depreciation, amortization, the EBITDA.

The earnings release includes a reconciliation of these non-US GAAP measures to the most directly comparable GAAP financial measures. A quick reminder that any forward-looking statements made during today's call are subject to risks and uncertainties, and these are discussed at length in our annual and quarterly SEC filings. As you know, actual events and results can differ materially from those forward-looking statements. The partnership does not undertake a duty to update any forward-looking statements.

So, introduction. KNOT Offshore Partners, focuses on the shuttle tanker segment. Tthe individual tanker is field-specific and an integral component in the offshore value production chain. Shuttle tankers operate in a niche space and under non-volume-based contracts to transport oil from a offshore production units to shoreside. Being built to the charterers' requirements, the tankers are generally used on specific oil fields, enabling the partnership to yield both sustainable and stable revenue, longer term. Oil production continues to move further offshore, so shuttle tankers operate in a space which will see substantial growth in the coming years.

Our sponsors are very experienced operator, having been involved in the design and construction of this type of vessel, growing its fleet organically for more than 30 years and is part of one of the largest shipping groups in the world, Nippon Yusen or NYK. NYK is a member of the Mitsubishi Keiretsu.

Now, the presentation slide three. For the fourth quarter 2018, the partnership generated another very solid set of results. Total revenues of $70.9 million, operating income of $33 million, net cash flow of $8.8 million and adjusted EBITDA of $55.4 million. The partnership generated distributable cash flow at $27.3 million, after declining a cash distribution of $0.52 per unit, this gives a coverage of $1.51 for the quarter. During the quarter, the fleet operates with 99.7% utilization, for scheduled operations and 98.3% utilization, taking into account, the scheduled drydocking of the Ingrid Knutsen, which was off-hire for 20 days in Q4.

Since our initial public offering in 2013, we declared and paid common unit distributions of $11.34 and our current distribution has remained unchanged since 2015, at over 11% from the current unit price. On 17, December 2018, the partnership and the subsidiary of Royal Dutch Shell agreed to suspend Windsor Knutsen contract for a minimum of 12 months and a maximum of -- sorry, minimum of 10 months and a maximum of 12 months. The suspension period commenced March 4, 2019, and the vessel now operates under a time charter with a subsidiary of NYK, Knutsen on the same terms as the existing time charter contract with Shell.

The remaining period of the original extension is then reinstated at the end of this period. A new CEO, has been appointed. Gary Chapman has many years of experience in shipping. He will bring a fresh new perspective for the partnership and further strengthen ties with NYK, having worked with them for many years in various senior roles.

Slide four, the income statement. Total revenues were $70.9 million for the three months ended 31st December Q4, this compares to $70.7 million for the three months ended 30th, September Q3. The increase in revenues was -- due to increased earnings from the Hilda Knutsen, Torill Knutsen, as the vessels completed their first scheduled as we said, the drydock completed by the beginning of the fourth quarter. This increase was partly offset by reduced revenues from the Ingrid Knutsen, due to the off-hire period for the vessel, as a result of its first scheduled, survey drydocking which commenced in the fourth quarter.

Vessel operating expenses for the fourth quarter of 2018 were $14.2 million, a decrease of $1.1 million from the third quarter. The increase was due to the position of bunker cost, scheduled dry docking of Hilda and Torill Knutsen which took place in Q3. Lower operating costs on average are also due to the strengthening of the US dollar against the Norwegian kroner. The decrease was partially offset by increased costs for the Ingrid Knutsen, which went offhire in the fourth quarter due to its scheduled drydocking. G&A expenses were $1.3 million in Q4 as Q3. Depreciation was $22.5 million for Q4, an increase of $0.1 million from Q3, mainly due to increased depreciation for Ingrid and Torill Knutsen due to drydock additions.

As a result, operating income for the Q4 of 2018 was $33 million compared to $31.7 million in Q3. Interest expense for Q4 was $13.4 million, which is a decrease of $0.1 million from Q3. Realized and unrealized gain-- sorry losses on derivative instruments was $10.9 million in the fourth quarter, compared to a gain of $3 million in the third quarter. The unrealized non-cash element of the mark-to-market loss was $11.3 million compared to the gain of $2.1 million in Q3. Of the unrealized losses for Q4, $9.9 million related to interest rate swaps and $1.4 million to foreign currency contracts. Net income for Q4 was therefore reduced to $8.8 million compared to $20.9 million for Q3.

Slide five, adjusted EBITDA. In Q4, the partnership generated EBITDA of $55.4 million compared to $54.1 million in Q3. Adjusted EBITDA refers to earnings before interest, taxation, depreciation and amortization and other financial items, that provides a proxy for cash flow. Adjusted EBITDA of course is a non-US GAAP measure used by our investors to measure partnership performance. With a wasting asset like a vessel, younger fleets tend to produce lower EBITDAs for every dollar invested. The annuity effect reduces the annual loss in the early years, which is factored into the replacement CapEx calculation for the distributable cash flow.

Slide six, distributable cash flow. Another non-US GAAP measure scrutinized by investors to establish distribution sustainability. Distributable Cash Flow or DCF represents a net income adjusted for depreciation on realized gains and losses from derivatives. Distributions in a Series A preference units, under the non-cash items and maintenance and replacement capital for drydocking and capital expenses, which are required to maintain long-term operating capacity of and therefore the revenue generated by the partnership capital assets.

DCF was $27.2 million in Q4 in comparison to $26.3 million in Q3. We maintained our distribution level for Q4 at $0.52 per unit, equivalent to an annual distribution of $2.08. The distribution coverage ratio was a healthy, our highest ever 1.51 times for Q4. Impacting the calculation, this quarter was also drydocking of Hilda and Torill Knutsen, first special survey, drydocking -- vessel operating MLP. The average coverage ratio was 1.50 times for the full-year 2018, which compares to 1.26 times for 2017. The distribution in excess of 11% of the current unit price today are largely invested (ph) Knutsen NYK would prefer increased coverage through investments and secondly deleveraging rather than increasing dividends.

The growing coverage ratio gives the partnership more flexibility, regarding both capital base and distributions going forward. Slide seven. At the end of Q4, the partnership had $70.4 million in available liquidity, which consisted of cash and cash equivalents of $41.7 million and $28.7 million of capacity under its revolving credit facilities. The revolving credit facility mature in August 2019, September 2023. We have a predictable cash flow and a healthy liquidity position.

The partnership's total interest bearing debt outstanding as of December 31st, 2018 was $1,087 million or $1,077 million net of debt issuance costs. The average margin paid on the partnership's outstanding debt in Q4 was approximately 2.1% over LIBOR. In Q4, the partnership interest rate swap agreements totaling $556 million, of which the partnership received interest based on LIBOR and paid at an average interest rate of 1.86%. These have an average maturity of approximately 4.9 years, while the partnership's net income is impacted by changes in the mark-to-market swap valuations, the cash flow is stabilized, mitigating the interest rate rise impact from the distributable cash flow. We also see rising interest rates in the US in 2018 and together with increased replacement CapEx in 2019, as the vessels gets older, our coverage will slightly be impacted this year, but overall 2019 again looks very solid.

Slide eight, long term contracts. The Bodil Knutsen, our largest shuttle tanker operating in the North Sea, is ice class and on charter to Statoil until May 2020. Following the end of that charter, there are four further annual extension options. Torill and Hilda operates on the Goliat, the first field to be developed in the Barents Sea, and it currently represents the world's most northerly offshore development. After initial five year term, both vessels, the Hilda time charter was extended for four more years, and in October the first of five one year annual extensions was exercised on the Torill. Four of our vessels are on long-term bareboat charter through to 2023 with Petrobras Transpetro. Dan Sabia and Dan Cisne are a unique size and Fortaleza and Recife shallow drafts with lots of thruster capacity.

Delivered in 2013, Carmen Knutsen is on charter to Repsol Sinopec until 2023. The Ingrid was delivered in 2013, and is operating in the North Sea on a time charter for Standard Marine Tonsberg. This will expire in the first quarter of 2024. The charter has options to extend the charter by up to five-one year periods. Raquel Knutsen was delivered in March 2015 and operates under a charter that will expires in the first quarter of 2025 to Repsol Sinopec in Brasil. There are options to extend until 2030. Tordis, Vigdis and Lena Knutsen are on five-year time charters to Brazil Shipping I, a subsidiary of Shell. These will expire in 2022, the charter has options to extend with two additional five-year options, totaling 15 years. The Brasil and Anna Knutsen are on charter to Galp Energia until 2022 with options to extend until 2028.

The KNOT fleet has an average remaining fixed contract duration of 3.7 years and additional 4.4 years on average in charterers option. Whilst we currently have two drop-down candidates, which means the near-term equity requirement is very limited, given the market outlook, we expect to grow the MLP significantly in coming years.

In summary, KNOT Offshore Partners should be considered as a mobile pipeline business with fully contracted revenue streams. KNOT has an elevated yield compared to most MLPs and is focused on building coverage and deleveraging. As of today, it is not making accretive investments. This quarter report another very strong quarterly performance, record revenues EBITDA and distributable cash flow.

For the full year, we set records for all the key financial measures revenue, EBITDA, distributable cash flow, unit distribution coverage and net income. KNOT has well-placed to complete in future tenders and currently two vessels are in order. We have a solid and profitable contract base generated by our modern fleet, which by the end of December, has an average age of around 5.75 years. Since the formation of KNOP, we have a very high levels of vessel utilization, on average about 99.6%, which financially translates into high and increasingly predictable revenues, adjusted EBITDA, and discounted cash flow as more vessels are added to the fleet. No one has more expertise in operating these sophisticated shuttle tankers of KNOT Offshore Partners and we operate these vessels with real expertise.

Today, supply is tightening and the market is expanding and with tenders backed, the sponsor expects to go a further drop-down inventory. We have a large and financially strong and supportive sponsor who knows his market as well as anyone. Thank you.

And that concludes the narrative for the slides. If anyone have any questions, I'll be happy to take them.

Questions and Answers:

Operator

We will now begin the question-and-answer session. (Operator Instructions) The first question comes from Hillary Cacanando of Wells Fargo Securities. Please go ahead.

Hillary Cacanando -- Wells Fargo Securities -- Analyst

Hi, John. Thanks for taking my call. Quick question. Why was Windsor Knutsen charter are suspended with just one-off, get an idea of what is the view of --.

John Costain -- Chief Executive officer & Chief Financial Officer

They actually show approaches about -- a few months ago, and said, they had a bit of the surplus capacity in Brazil on the shell tankers, and they were asking, if we were interested in chartering a ship from them. And we obviously needed a vessel in West Africa, there weren't and actually prepared to give us a Windsor, but they said, OK, we ask them for one of our ships if we're going to do that. In the end, they agreed to let us have the Windsor back.

So we have good news in West Africa on a contract, we have there for eight to 10 months, probably the sponsors using it. So -- and he's paying back-to-back rate, which is the same as what was on the CP with Shell and effectively, that means that the MLP will see rather than the next as we're kicking in, they will continue with that charter at the back end of the substitution period. So effectively it extends the firm period on the vessel for the partnership and that's really what's happened. Shell, obviously, production hasn't quite been enough to (inaudible) vessel and it has just been -- bit more efficient than the process, if we needed the shipment that would take one of our back.

Hillary Cacanando -- Wells Fargo Securities -- Analyst

Okay, got it. And so -- so there's no -- so this isn't a situation where like they could -- the suspension could continue after the --.

John Costain -- Chief Executive officer & Chief Financial Officer

No, no. They've got a firm period on that. They wanted the ship, they are happy with the Windsor Knutsen could be, but we thought if we're going to charter the ship, back to one of us, that's why we got four ships on charter to shell in Brazil and we'd rather have one of our ships to somebody else's logically.

Hillary Cacanando -- Wells Fargo Securities -- Analyst

Okay, and then Bodil Knutsen, the extension options. Are they --?

John Costain -- Chief Executive officer & Chief Financial Officer

Yeah.

Hillary Cacanando -- Wells Fargo Securities -- Analyst

I think the last one was at a lower rate, the last extent?

John Costain -- Chief Executive officer & Chief Financial Officer

Yes it is. Yeah. That's correct.

Hillary Cacanando -- Wells Fargo Securities -- Analyst

So the remaining ones, are they going to be above the lower rate?

John Costain -- Chief Executive officer & Chief Financial Officer

They ask us an escalator on for the lower rate is increased. So basically, it stops at a lower level, but it escalates every year..

Hillary Cacanando -- Wells Fargo Securities -- Analyst

So like for the next one, that would be higher than the current pay.

John Costain -- Chief Executive officer & Chief Financial Officer

Now, the current rate is the old charter rate and then the new rate, the first new rate is lower and then the next new rate is still lower, but it's higher than the lower -- the other rates, so there's an escalator on the option periods basically.

Hillary Cacanando -- Wells Fargo Securities -- Analyst

Okay, so it will higher than the previous one. Okay, got it.

John Costain -- Chief Executive officer & Chief Financial Officer

Yes, but not. Yeah, yeah.

Hillary Cacanando -- Wells Fargo Securities -- Analyst

Okay, got it. That's it for me. Thanks, John.

John Costain -- Chief Executive officer & Chief Financial Officer

Okay. Thanks, Hillery.

Operator

(Operator Instructions) Our next question comes from Ben Brownlow of Raymond James. Please go ahead.

Ben Brownlow -- Raymond James -- Analyst

HI, John. Just as a follow up on the Windsor Knutsen. Just a few months around the timing, there -- what's -- any specific variables or that will influence the recommencement of that charter with Shell?

John Costain -- Chief Executive officer & Chief Financial Officer

No, it's basically start on the 4th of March, between 10 and 12 months and then Shell take the ship back to -- down the remainder of the one year option and then the other options kick-in the enrollment.

Ben Brownlow -- Raymond James -- Analyst

Okay. And you said they were back-to-back. So, there is absolutely no cash impact from --..

John Costain -- Chief Executive officer & Chief Financial Officer

There's no difference on the rate.

Ben Brownlow -- Raymond James -- Analyst

-- repositioning or anything like that?

John Costain -- Chief Executive officer & Chief Financial Officer

No.

Ben Brownlow -- Raymond James -- Analyst

Okay. And -- on the Bodil Knutsen, can you just give some color around, kind of the demand backdrop you're seeing there around you looking cash per field?

John Costain -- Chief Executive officer & Chief Financial Officer

Well, I mean, I'm not sure that the things with the Bodil, it's always been 1 million barrel ships, slightly more than that. And generally in the North Sea, most of the vessels are aframax size, starts to trying with the idea on moving the ship. They might move it to Brazil. They might repay, and we're working in the Barents Sea. I mean, I don't -- we don't know exactly what their plans are at this stage. I mean, I would like (inaudible) from much longer, but I think that's an open discussion. We'll start update, definitely ship long term, just how they deploy the assets. It's has always been a bit of a tough story, had a bit of a heck on the rate, you know, because it's always been a bit of a non-standard ship like the Windsor as well.

These two vessels were not really built specifically for the fields that they're operating on now. The Windsor is an ice class tankers working in Brazil and the Bodil is a Suezmax tanker, which, was built with the idea of the Barents Sea in mind, because it's ice class, but it's -- it haven't been helpful at development yet in the Barents Sea, and at the moment most ships are being built of aframax size. We just think, the voyagers are shorter, really. And so, I don't know what at the moment, start to locate the ship anyway. I have no doubt about the rates. The rates, they're happy with the rate and they want to keep the ship long-term. And there's not that many shell tanks around the country, the demand is quite tight.

So, -- it's an issue that is just the case is what they want to do with the ship longer-term.

Ben Brownlow -- Raymond James -- Analyst

That's make sense. Thanks for the color and enjoyed working with you past few years.

John Costain -- Chief Executive officer & Chief Financial Officer

Yes, I knew Ben, thanks.

Ben Brownlow -- Raymond James -- Analyst

Thanks.

Operator

This concludes our question-and-answer session. I would now like to now turn the conference back over to John Costain for any closing remarks.

John Costain -- Chief Executive officer & Chief Financial Officer

I'd just like to say thank you and probably my second person this call -- probably we'll do on end of May.

Operator

Pardon me, Mr. Costine, a couple of questioner's just came in. Would you like to accept?

John Costain -- Chief Executive officer & Chief Financial Officer

Okay. I'll take them, line open.

Operator

Okay. Our next question comes from Robert Silvera of R.E. Silvera and Associates. Please go ahead.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

Hi, John, and thank you very much for doing such a good job and I'm sorry to see you leave, but obviously you have future plans and that's good. My question is this, right now you have a coverage ratio of 1.51. Do you have an upper target in mind or anything like that for the future that if you reach that, you would increase the dividend? Is there anything kind of I expect (inaudible).

John Costain -- Chief Executive officer & Chief Financial Officer

I mean, it's to say, (inaudible) because I'm not strategically involved anymore with the business. But I think, you've always got look at how the capital market is because this is an MLP and you use the distribution as a means to sell the MLP and whether being a shipping company as well. If you're not adding vessels, you increase the distribution, you weaken the MLP in a way, because today it's obviously got a lot stronger because -- with added assets, without pushing the distribution. And, if the equity markets closed, it's hard to burn too much equity, now you don't want to do it in terms of the sponsor. Obviously, you're not hold the likes to receive cash, but, it's -- that's the balance you've got to strike with -- I mean at the end of the day, we are at the moment a very -- we've got a decent yield and the numbers look fine. So, I mean, I don't think they'll change anything. I think -- also Knutsen, NYK does a -- it's under the units. So they don't want to damage their own stake.

And that's also healthy for the individual unit holders, because I can see the sponsor has real investment in the MLP. That's really what I tried to emphasize, but I wouldn't like to comment too much on it because obviously -- my might -- things, my assumption is end of May, so, I don't really have a lot of input from the -- on the distribution policy, really. But I think, what they're doing is very sensible, today.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

Okay, what is troubled me is if the distribution as past conference call says, is going to be pretty much fixed at the $0.52 a quarter and $2.08 per the year. If it stay fixed like that, the stock price has seemed to been depreciating and just as the assets of the ships are depreciating. So I guess.

John Costain -- Chief Executive officer & Chief Financial Officer

(Multiple Speakers) something by the market.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

Yeah. It have to using that new ships, that's the thing, that's the key, because obviously these vessels deleverage, that's basically what we do with the excess cash we just patented. So we end up with less depth on the ships.

John Costain -- Chief Executive officer & Chief Financial Officer

Right. And then you, as the assets come along, you try and buy two leverage rather than approaching the market for equity. And that's the way you deal with it. Or at least take a portion of the vessel through deleveraging. That's how we built in the last two or three ships. So -- and if the more you save on distributions, from more you can do that in the longer run, it's a long game, it's better, because obviously if you can invest at a decent rates and you have to bear in mind as well as the sponsors of the business, and they have to buy ships.

And then they have to raise equity and they have to trade the vessels. And accordingly, the MLP market is closed to a lot smaller MLP, I would say, the mid-stream space not with this -- and you have to conserve a bit of equity, where you can. So we're in the market, we opens again, you can be a lot more optimistic and you can really push the distribution and nice capital.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

Well, what do you see in the strategy that's now being carried out that would at least keep the prices stocks steady in that range?

John Costain -- Chief Executive officer & Chief Financial Officer

Well, I mean, obviously good to see -- I think, the changes in management doesn't really help. I think when you ever, see our results every quarter, you see our results, from the commitment of footprint down, people can be more comfortable with it. It sends out a message and over time, the history and the quality of the continued quality of the balance sheet, it helps building a distribution is fine, in the short term, but it's a short term fix if you are not having assets, then you're not going to raise equity. It's more difficult. So you have to balance it. But it's a definite balancing act, always was.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

Yes.

John Costain -- Chief Executive officer & Chief Financial Officer

And requirement to MLP today in a way, we'd been trading for six years now. But yeah, I know, where we are coming from, and my preferences today in the current market is to be conservative really. I mean, I think, it's a sensible approach. At the end of the day, it got my mind as well as -- lot of people. And have got lot of players invest in this business. And a lot of the sponsors that they come to me, so it's important to keep stability and keep good footprint in a good trading history.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

All right. Well, that's what is concerned, as a company is investing in you as a company, love the dividends. But if the price is eroding on the stock at the same rate that the dividends are being paid, the net is not a good number.

John Costain -- Chief Executive officer & Chief Financial Officer

Because, something happened last two, three months and you, shouldn't start question too much and as long as the earnings come out well and you've got a good distribution is fine and we know -- trend the balance sheet.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

But we're in a -- long game, but we want to be comfortable that the stability of the stock prices is there and the strategy on you guys should be such that you maintain that price of the stock, is 20 to 22, somewhere in that neighborhood and not down at 17.5, 18, in effect for this last year we've lost the total of the distribution.

John Costain -- Chief Executive officer & Chief Financial Officer

Well, yes, that's -- you know it's a book loss, I mean, it will go back.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

Okay. Well, thanks, John, and good luck in your new activities.

John Costain -- Chief Executive officer & Chief Financial Officer

Yes. Thank you.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

God bless you.

John Costain -- Chief Executive officer & Chief Financial Officer

Thank you.

Robert Silvera -- R.E. Silvera and Associates -- Analyst

Bye, bye. Thanks.

Operator

(Operator Instructions) Our next question comes from David Starkey of Morgan Stanley. Please go ahead.

David Starkey -- Morgan Stanley -- Analyst

Hey, John, congratulations on your job and situation it's been nice working with you over the years.

John Costain -- Chief Executive officer & Chief Financial Officer

Yes, thank you, David.

David Starkey -- Morgan Stanley -- Analyst

I have a question on the -- obviously, the stock prices are little frustrating, but we've seen this before and today we're getting a good reaction to the consistent with strong numbers you've been putting up. The question I have -- you talked about the strategy is not -- not raising the distribution, but starting to paydown some of that debt and I was wondered what kind of goal's you have in mind of -- you know, over the years and to do that and to clean the balance sheet up or get it even stronger.

John Costain -- Chief Executive officer & Chief Financial Officer

Well, it's -- I mean lot of us, I mean, shipping has been quite volatile in terms of asset values and it's difficult to gauge how the you know also , we've seen a team move into the market as well. So the market is growing quite rapidly but another competitor coming in, changing the mix of all that and you don't really know how things are going to settle down.

So it's an interesting environment and it's good to have in the current environment, it's good to have the flexibility on capital that we do have by having a bit stronger balance sheet. So, well, I mean, it's best if you can avoid having too many (inaudible) bonds in the balance sheet is always helpful because you keep the equity still we going in more strongly and that's quite important.

The response is very important because he's got a large amount of common units and really that's probably been the strategy behind what's driving the policy of a stable state environment. We haven't add a lot of ships to the MLP in the last two to three years that's been good in one way because it hasn't been the equity out that even build don't want to put into midstream, understandably, but on the other hand, for us, it can be quite frustrating because we haven't grown in scale, which would have allowed the normal pattern of an MLP. So it's -- it's a little bit of a trap. I mean investors are contrary at the moment. They want to see growth, they just don't want to see it now and they don't need to -- they don't want the best for equity now, but they want to see this in the future. So as you know, yourself, it must be very difficult running a firm today midstream. It's not a best place to be. But I mean, I think, this shows where we are as a solid company.

David Starkey -- Morgan Stanley -- Analyst

But, as you mentioned, the consistency of the long-term results have been good and that should be -- you were something over time. Are you comfortable with AGM strategy going forward with your replacement here ?

John Costain -- Chief Executive officer & Chief Financial Officer

Yeah, I mean, I think it's a safe. I don't really know the guy to be honest. I think, the nice thing is he's got good backgrounded within NYK, which shows and luckily very committed to the MLP and that's very good. That's by the way.

David Starkey -- Morgan Stanley -- Analyst

Still -- never running or hedging, are they going to be remaining in place?

John Costain -- Chief Executive officer & Chief Financial Officer

Sorry?

David Starkey -- Morgan Stanley -- Analyst

The people that are actually, the hedge trading and things to keep the balance sheet --.

John Costain -- Chief Executive officer & Chief Financial Officer

Yeah, yeah. I mean, opportunistically, I mean, obviously it's not cheap (inaudible) hedges, it was when we did those hedges. We would like to keep between about 50% to 70% of the interest charge hedge, because I mean you try to match up when you fix the charters with the interest rates at the time. So obviously, it makes sense to produce a stable income at the level of hedging, but you look at it today and it's not what it was in terms of pricing and it's come off a lot, admittedly this quarter as you can see from our losses on our portfolio, but we generally just ignore the day-to-day movements and we just try and take it opportunistically we have done in the past and it's been good. I mean last two years, obviously, hedging has not always been a great story.

David Starkey -- Morgan Stanley -- Analyst

They stabilized now and we won't see too much more of the wage increases on the lifetime?

John Costain -- Chief Executive officer & Chief Financial Officer

No, I think you're right and I'm just hoping to stabilize. But no, much of it out there either way, whether you buy hedge or not today, I think, the game is over, isn't it.

David Starkey -- Morgan Stanley -- Analyst

All right. Best of luck going forward, appreciate all of your time and energy and wish you the best going forward.

John Costain -- Chief Executive officer & Chief Financial Officer

Thanks, David. I appreciate working with you has been fun at times. bit of bit. There you go. Best of luck.

David Starkey -- Morgan Stanley -- Analyst

Thank you.

John Costain -- Chief Executive officer & Chief Financial Officer

All right.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to John Costain for any closing remarks.

John Costain -- Chief Executive officer & Chief Financial Officer

Okay, thank you. I just have to say thanks for all your interest and time on this call, and it's been interesting asking some, answering some other questions you put forward and I'll speak to one last time -- next time and hopefully, some of you got there by the end. Thank you.

Operator

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Duration: 32 minutes

Call participants:

John Costain -- Chief Executive officer & Chief Financial Officer

Hillary Cacanando -- Wells Fargo Securities -- Analyst

Ben Brownlow -- Raymond James -- Analyst

Robert Silvera -- R.E. Silvera and Associates -- Analyst

David Starkey -- Morgan Stanley -- Analyst

More KNOP analysis

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Younger generations are struggling more

Millennials (ages 23 to 38) and Generation Xers (ages 39 to 53) are having a harder time saving than their elders, according to the study. They're more likely to have saved nothing, or to be putting away less than 10% of their income. Those 55 and older were the most likely to be saving more than 10%, which makes sense, since by that point, people may have paid off their homes and student loans, and completed the expensive life events that make it more difficult for younger folks to set money aside.

If you're not saving -- or just not saving enough -- one of the best ways to change that is to make the decision to do it once, and then arrange matters to take your ongoing willpower out of the equation.

"The most effective method to save more money is to do so automatically," explained Bankrate Chief Financial Analyst Greg McBride in a press release. "Set up payroll deductions that go directly from your paycheck into a dedicated online savings account for emergency savings and a workplace retirement plan or an IRA for retirement savings."

Quite simply, he advises, "Save it before you get the chance to spend it."

High expenses were named by 38% of working Americans as the top reason they weren't saving. This was the most-cited excuse across all age groups and income levels. If it's yours too, you have two choices: You can cut your expenses, or you can make more money.

To figure out which one makes more sense for you, it's important to understand your financial situation. Examine your past few months of expenditures, and compare them to your income. Map out your actual budget. Are there obvious areas where you can cut? If there aren't -- and especially if you're running at a deficit -- then you need to either make some tough choices (like moving someplace cheaper) or taking on added work, or hunting for a higher-paying job.

You need a safety net

Would you skydive without a backup parachute? Do you drive without fastening your seat belt? Failing to save leaves you financially vulnerable should the unexpected happen -- and while the particulars may be impossible to predict, we all know that "unexpected" problems are inevitable in our lives.

You may not be able to immediately jump to saving 15% from each paycheck, but if you're at 0%, just start somewhere. Setting aside even a small amount is better than saving nothing, and once you've begun, you can set increasingly higher goals for yourself over time. Eventually, those steady, gradually boosts to your savings rate will get your financial cushion to where it needs to be, and remove a big threat to your long-term ability to live your life the way you hope to.

Here are 5 fundamental picks from Centrum Broking to tap mispricing opportunities

A strong rally on D-Street pushed benchmark indices above their crucial resistance levels, but the big question remains where should investors deploy their money?

Investors' focus should be on stocks that are fundamentally sound, are displaying earnings momentum, have a margin of safety and good corporate governance standards.

Keeping the above parameters in mind, Centrum Broking has come out with its top five high conviction ideas to highlight favourable mispricing opportunities for investors.

Needless to mention, these long ideas continue to be consistent with the investment philosophy of recommending sound businesses characterized by high operating and free cash flow generation coupled with a good return on equity (ROEs) and high dividend payout ratios, the brokerage added in its note.

related news Here are 30 stocks that fund managers bought & sold in February Investor wealth up Rs 8 lk cr in March as FII inflows get a boost, Street expects Modi return L&T may attempt a hostile takeover of Mindtree at Rs 950-1,000/share

All the five ideas that we showcase in our current top picks note are a reflection of our investment philosophy and we remain confident in their value creation capability from a medium to long-term perspective, Centrum added.

Here are top five stock picks and rationale behind each pick as given by Centrum Broking:

ACC: Buy | Target: Rs 1,820

We like ACC owing to its attractive valuations amid healthy cash flow generation and return ratios. The recent announcement for a major capacity increase of 6 MTPA after a long pause of almost a decade affirms the promoters focus on growing India business.

Rising industry utilisation should bolster pricing power, recent material supply agreement with Ambuja and sustenance of recent correction in diesel and petcoke prices should further provide profit tailwinds.

We estimate ACC to deliver 11.5 percent/15.8 percent EBITDA/PAT CAGRs during CY17-20E and its RoE to firm up to 12 percent in CY20E from 10 percent in CY17.

DCB Bank: Buy | Target: Rs 230

DCB bank with the well-defined product portfolio and customer segment stand to gain from the under-penetrated and under-served retail (self-employed) and SME segment, which is its key area of presence.

Strong capital position and deeper product understanding augur well for a sturdy 24 percent CAGR in loans over FY18-21E. Centrum Broking calculation suggests that the newly added branches have started to break-even and will aid in containing overall cost/asset ratio.

While we see risk to margins, the operating leverage benefit and limited asset quality risk will translate into an improved RoA of 1 percent and ~14 percent RoE by end-FY21E. The stock trades at 1.7x FY21E ABV.

The consistency in earnings has seen stock trade at a valuation premium to its peers and the trend is likely to continue in the near future.

Federal Bank: Buy | Target: Rs 135

Federal Bank is evolving to a more prolific private banking franchise on the back of its balance sheet size, quality growth trajectory, pan India expansion strategy, branch light–distribution heavy model, digital architecture and senior management pedigree.

The talent arbitrage that earlier existed between larger private banks and its regional peers no longer holds for Federal Bank, since in the recent past, it has hired several senior persons across various businesses.

Productivity in network-2 locations will enhance overall operating efficiency. Capital adequacy is at healthy levels (CAR-13 percent). Stressed asset ratio has substantially declined over FY14-Q3FY19 (best among regional peers) and we expect the credit costs to recede over FY18-21. Valuation at 1.1x FY21E ABV looks attractive.

Mindtree: Buy| Target: Rs 1,030

Mindtree has a well spread vertical mix with a strong presence in technology, media, travel and retail CPG vertical. With revenues almost reaching $1 bn for FY19E, the company is well poised to break into the big league.

We expect Mindtree's US dollar revenues to grow by 17.8 percent/14.1 percent/14.3 percent for FY19/FY20E/FY21E. The EPS estimates are Rs 54.5/64.5 for FY20/FY21E.

Mindtree trades at 14.4x FY21E EPS (LTI trading at 16x FY21E EPS). The domestic brokerage firm values the stock at 16x FY21E EPS.

Tata Metaliks: Buy| Target: Rs 865

We like Tata Metaliks (TML) as its DI pipe business boasts of an industry-leading cost structure, solid demand drivers and strong entry barriers.

With commissioning of PCI project by Q4FY19E coupled with several other productivity improvement initiatives, TML is expected to deliver steady earnings growth of 12 percent CAGR over FY19-21E.

The recent announcement of DI pipe capacity expansion and equity infusion will provide a growth trajectory, in turn, improving margin profile and substantially lowering TML's debt.

We find attractive valuations at FY21E P/E of 9x with reasonable scope for a re-rating given the strong balance sheet and attractive return rations.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. First Published on Mar 13, 2019 01:58 pm

Better Buy: Abbott Laboratories vs. Johnson & Johnson

You won't find many if any blue-chip healthcare stocks that are "bluer" than Abbott Laboratories (NYSE:ABT) and Johnson & Johnson (NYSE:JNJ). Both companies have been around since the late 19th century. Both are Dividend Aristocrats with decades of consecutive dividend increases. 

But Abbott Labs and Johnson & Johnson have different business dynamics at work. Which of these two healthcare stocks is the better pick for investors? Here's how Abbott Labs and J&J compare in three key areas.

Image source: Getty Images.

Growth prospects

Abbott Labs has been the bigger winner by far when it comes to revenue and earnings growth in recent quarters. The company's momentum has been boosted by its super-successful Freestyle Libre continuous glucose monitoring (CGM) system and other new product launches. These new products should continue to drive Abbott's revenue and earnings higher in the future.

Sales for Freestyle Libre are picking up momentum. This growth is likely to accelerate once Abbott wins U.S. approval to market its second version of the system, which includes optional alarms to warn patients when glucose levels are out of range. Abbott is also poised to benefit as its continues to extend the functionality of its Alinity laboratory diagnostics products.

On the other hand, Johnson & Johnson's growth is slowing. The company's Q4 sales increased by only 1% year over year. J&J's top-selling drug, Remicade, faces competition from biosimilars. Its consumer healthcare business has struggled in international markets. 

J&J does have products that should fuel future growth. Cancer drugs Imbruvica and Darzalex are high on that list. The company also is taking the robotic surgical systems opportunity seriously, recently announcing that it's buying Auris Health for $3.4 billion.

Wall Street analysts project that Abbott will grow earnings at a significantly faster rate than Johnson & Johnson will over the next five years. That's probably an accurate assessment. However, it's possible that strategic acquisitions by either company could impact growth prospects.

Dividends

There are two key things you need to look at when it comes to dividends -- yield and sustainability. Johnson & Johnson is the clear winner over Abbott Labs in the former category. The healthcare giant's dividend currently yields 2.6% compared to Abbott's yield of only 1.65%.

Both Abbott and J&J have great track records of paying and increasing their dividends. Abbott has boosted its dividend for 47 consecutive years. J&J has increased its quarterly dividend for 56 years in a row.

Abbott Labs' payout ratio of 85% is higher than J&J's payout ratio of 63%. However, neither company appears to be in any danger of ending its streak of dividend increases. 

Valuation

By several metrics, Abbott Labs is significantly more expensive than Johnson & Johnson. Abbott stock trades at nearly 22 times expected earnings, while J&J's shares trade at only 15 times expected earnings. On one of the best valuation metrics, enterprise value-to-EBITDA, Johnson & Johnson is much more attractive than Abbott with multiples of 13 and 21, respectively.

However, when growth is factored in, the two healthcare stocks are basically tied. J&J's price-to-earnings-to-growth (PEG) ratio is 2.33 compared to Abbott's PEG ratio of 2.28.

Better buy

If you've been keeping score, Abbott clearly won in one category (growth prospects) while Johnson & Johnson clearly won in another (dividends) and appears to also have an advantage in valuation. So is J&J the better stock? It depends on what's most important to you.

Value investors probably won't be enamored of either stock. While neither Abbott Labs nor J&J are extremely expensive, they're not exactly cheap, either.

For investors primarily seeking income, Johnson & Johnson is the better pick. I don't think that Abbott will catch up with J&J on dividend yield anytime soon. 

Growth investors will probably prefer Abbott Labs. The company's Freestyle Libre CGM system and other new products appear to give the company a clear advantage over J&J, especially as it continues to face falling sales for Remicade.

What about the overall best pick? I'd go with Abbott. Its growth prospects combined with a respectable dividend yield should enable the stock to deliver total returns in excess of Johnson & Johnson over the next few years. That being said, I think that conservative long-term investors would be in good shape going with either of these blue-chip healthcare stocks.

Townsquare Capital LLC Buys New Position in Invesco QQQ Trust (QQQ)

Townsquare Capital LLC bought a new position in shares of Invesco QQQ Trust (NASDAQ:QQQ) in the 4th quarter, Holdings Channel reports. The firm bought 7,527 shares of the exchange traded fund’s stock, valued at approximately $1,284,000.

A number of other hedge funds have also bought and sold shares of the stock. CX Institutional increased its holdings in shares of Invesco QQQ Trust by 1,811.1% in the fourth quarter. CX Institutional now owns 344 shares of the exchange traded fund’s stock valued at $53,000 after purchasing an additional 326 shares during the period. LS Investment Advisors LLC increased its holdings in shares of Invesco QQQ Trust by 25.0% in the fourth quarter. LS Investment Advisors LLC now owns 375 shares of the exchange traded fund’s stock valued at $58,000 after purchasing an additional 75 shares during the period. Delta Asset Management LLC TN increased its holdings in shares of Invesco QQQ Trust by 149.1% in the fourth quarter. Delta Asset Management LLC TN now owns 436 shares of the exchange traded fund’s stock valued at $67,000 after purchasing an additional 261 shares during the period. Bruderman Asset Management LLC acquired a new position in shares of Invesco QQQ Trust in the fourth quarter valued at approximately $74,000. Finally, Lenox Wealth Management Inc. increased its holdings in shares of Invesco QQQ Trust by 848.8% in the fourth quarter. Lenox Wealth Management Inc. now owns 1,167 shares of the exchange traded fund’s stock valued at $87,000 after purchasing an additional 1,044 shares during the period. Hedge funds and other institutional investors own 42.47% of the company’s stock.

Get Invesco QQQ Trust alerts:

NASDAQ:QQQ opened at $171.17 on Friday. Invesco QQQ Trust has a 12-month low of $143.46 and a 12-month high of $187.53.

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Invesco QQQ Trust Company Profile

PowerShares QQQ Trust, Series 1 is a unit investment trust that issues securities called Nasdaq-100 Index Tracking Stock. The Trust’s investment objective is to provide investment results that generally correspond to the price and yield performance of the Nasdaq-100 Index. The Trust provides investors with the opportunity to purchase units of beneficial interest in the Trust representing proportionate undivided interests in the portfolio of securities held by the Trust, which consists of substantially all of the securities, in substantially the same weighting, as the component securities of the Nasdaq-100 Index.

Further Reading: Analyzing a company's cash flow statement

Want to see what other hedge funds are holding QQQ? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Invesco QQQ Trust (NASDAQ:QQQ).

FlorinCoin (FLO) Market Cap Reaches $7.63 Million

FlorinCoin (CURRENCY:FLO) traded down 1.3% against the U.S. dollar during the 24 hour period ending at 19:00 PM E.T. on March 7th. FlorinCoin has a market capitalization of $7.63 million and approximately $541,837.00 worth of FlorinCoin was traded on exchanges in the last day. In the last seven days, FlorinCoin has traded 67.9% higher against the U.S. dollar. One FlorinCoin coin can currently be purchased for about $0.0524 or 0.00000839 BTC on cryptocurrency exchanges including Trade By Trade and Bittrex.

Here’s how related cryptocurrencies have performed in the last day:

Get FlorinCoin alerts: Litecoin (LTC) traded 2.5% higher against the dollar and now trades at $57.23 or 0.01463408 BTC. Dogecoin (DOGE) traded up 0.4% against the dollar and now trades at $0.0020 or 0.00000051 BTC. Verge (XVG) traded up 0.7% against the dollar and now trades at $0.0063 or 0.00000161 BTC. Bytom (BTM) traded 2.1% higher against the dollar and now trades at $0.0891 or 0.00002278 BTC. Linkey (LKY) traded up 0.6% against the dollar and now trades at $0.83 or 0.00021128 BTC. Polymath (POLY) traded 3.2% higher against the dollar and now trades at $0.0927 or 0.00002373 BTC. Syscoin (SYS) traded 1.1% lower against the dollar and now trades at $0.0547 or 0.00001399 BTC. Einsteinium (EMC2) traded 37.8% higher against the dollar and now trades at $0.0820 or 0.00002100 BTC. Matrix AI Network (MAN) traded down 2.6% against the dollar and now trades at $0.0894 or 0.00002288 BTC. BridgeCoin (BCO) traded 9.9% higher against the dollar and now trades at $0.34 or 0.00008688 BTC.

About FlorinCoin

FlorinCoin (CRYPTO:FLO) is a proof-of-work (PoW) coin that uses the Scrypt hashing algorithm. Its genesis date was July 17th, 2013. FlorinCoin’s total supply is 145,710,081 coins. The Reddit community for FlorinCoin is /r/floblockchain and the currency’s Github account can be viewed here. FlorinCoin’s official Twitter account is @FLOblockchain and its Facebook page is accessible here. The official website for FlorinCoin is flo.cash.

Buying and Selling FlorinCoin

FlorinCoin can be purchased on these cryptocurrency exchanges: Bittrex and Trade By Trade. It is usually not presently possible to purchase alternative cryptocurrencies such as FlorinCoin directly using U.S. dollars. Investors seeking to acquire FlorinCoin should first purchase Bitcoin or Ethereum using an exchange that deals in U.S. dollars such as Coinbase, Changelly or GDAX. Investors can then use their newly-acquired Bitcoin or Ethereum to purchase FlorinCoin using one of the exchanges listed above.

new TradingView.widget({ “height”: 400, “width”: 650, “symbol”: “FLOUSD”, “interval”: “D”, “timezone”: “Etc/UTC”, “theme”: “White”, “style”: “1”, “locale”: “en”, “toolbar_bg”: “#f1f3f6”, “enable_publishing”: false, “hideideas”: true, “referral_id”: “2588”});

Loma Negra Compañía Industrial Argentina Sociedad Anónima (LOMA) Q4 2018 Earnings Conference Call

Image source: The Motley Fool.

Loma Negra Compañía Industrial Argentina Sociedad Anónima  (NYSE:LOMA)Q4 2018 Earnings Conference CallMarch 08, 2019, 10:00 a.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Operator

Good day, and welcome to the Loma Negra Fourth Quarter 2018 Earnings Conference Call. All participants will be in a listen-only mode.

(Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Mr. Gaston Pinnel, Head of Investor Relations. Please go ahead sir.

Gaston Pinnel -- Investor Relations Manager

Thank you. Good morning everyone and thank you for joining us today. We appreciate everyone's participation. By now, everyone should have access to our earnings press release and the presentation for today's call.

Speaking during today's call will be Sergio Faifman, our CEO and Vice President of the Board of Directors and Marcos Gradin, our CFO. Both will be available for the Q&A session.

Before we proceed, I would like to make the following Safe Harbor statements. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filing with the SEC.

We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. I would also like to remind you that the following recent categorization of Argentina as a hyperinflationary economy in accordance with IFRS standards starting in this fourth quarter of 2018, we began applying IFRS rules IAS 29.

For comparison purposes and a better understanding of our underlying performance, in addition to presenting as reported results. We're also disclosing selected figures as previously reported excluding rule IAS 29. Additional information in connection with the application of rule IAS 29 can be found in our earnings reports.

Now, I would like to turn the call over to our CEO Sergio Faifman.

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

Thank you, Gaston. Hello everyone and thank you for showing up today. It's a pleasure to welcome you to Loma Negra fourth quarter and full year 2018 earnings conference call. As we begin my presentation with a discussion of the highlights of the quarter, and then Marcos will take you through our market review and financial result, afterwards I will provide our outlook for 2019. We will then open the call to your questions.

Starting with Slide 3, we closed the year with another solid quarter in what has been a challenging year for our industry in Argentina. Importantly, we achieved despite a 16.3% year-on-year contraction in industry cement demand during the quarter.

Our top line for the quarter increased by 2.8% year-on-year to almost ARS7 billion, while 2018 turned out to be completely (ph) different on the macro and FX fronts than what we expect at this time last year. We delivered increase in adjusted EBITDA of around 21%, achieving a margin expansion of 459 basis points. This is a testament to our continued effort on balance sheet growth and profitability. Our core Argentine Cement business remains the main driver behind this strong result, further supported by our operation in Paraguay.

Let me also highlight the strong performance of our concrete segment which posted another quarter of record high volume, achieving in 2018 the record volume of more than 1 million cubic meters. Year-on-year however, our bottom line fell 29%, impacted by a negative variance in the income tax line, resulting from the tax reform approved in 2017.

As you can see on the slide, measured in US dollar and (inaudible) in this quarter we achieved an adjusted EBITDA of $58 million, down only 15% year-on-year, despite the 18% contraction in the cement volume and the sharp peso depreciation. And Net majority income of $34 million versus $38 million a year ago, despite the strong devaluation experienced in 2018.

Additionally our robust balance sheet with net debt to last 12 months EBITDA of 0.43 times provide us with a solid position to face the current volatility of the local financial markets. The Expansion of our L'Amali plant is on schedule and continue to be a key element of our long-term strategy, which will continue to support production efficiency and profitability along with additional capacity when demand recovers.

I will now hand off the call to Marcos Gradin. Please Marcos, go ahead.

Marcos Isabelino Gradin -- Chief Financial Officer

Thank you, Sergio. Good day everyone. Turning to Slide 4, let me start by providing a quick overview of the macro environment and industry trends. We ended the year with an expected GDP for 2018 declining by 2.4%, slightly below consensus expectation at the time of our prior earnings call. Economist expectation and ours now call for a 1.3% contraction in GDP for this year, recovering gradually, reaching growth of 2.5% in 2020.

Against this backdrop, and as anticipated we saw contraction in overall private construction activity in the quarter, particularly in November and December. This brought about in a 15.3% decline in industry segment sales for the quarter and a 2.6% year-on-year of construction for the full year. By contrast, bulk cement demand continues to gain traction during the quarter, supported by public infrastructure works, gaining share over total cement sales.

Looking into 2019, we expect a negative cycle that began in the second quarter of 2018 to turn around by mid-year following consensus expectation of an overall macroeconomic recovery in Argentina. We see industry is having demand following these macro trends. While current public works are expected to continue moving ahead, particularly in the Buenos Aires metropolitan area, although facing tougher comps. For the full year, we expect an industry decline of a low single-digit.

Now please turn to Slide 5 for a review of our top line performance by segment. Consolidated revenues were up 2.8% in the quarter and 7.9% for the full year, despite softer cement sales volumes. For the quarter, cement sales volumes in Argentina dropped 18% year-on-year impacted by overall weaker demand, thus revenue fell only by 6% year-on-year, partially offset by the healthy pricing environment.

In Paraguay, revenues were up 57%, driven by the strong recovery in sales volume experienced in the quarter, up 13% and the Guarani appreciation against the Argentine peso.

We are particularly pleased with the results achieved in our concrete business that reached record high volume levels in October and November, driven by the sustained execution of current public infrastructure works in the Buenos Aires metropolitan area coupled with healthy pricing dynamics. With our new crusher up and running, our aggregate business reached record high sales volume in October, mainly driven by higher dispatches to the concrete segment which resulted in a 9% year-on-year increase during the quarter, driving revenues up 20%.

Lastly, revenue from our railroad segment decreased 3% year-on-year. While we continue to benefit from strong prices, transported volumes of cement and aggregates were impacted by the slowdown in the construction activity, partially offset by higher growth of frac sand transportation for the Vaca Muerta oil and gas basin.

Moving on to Slide 6, consolidated gross profit for the quarter was up slightly over 13% year-on-year with a margin expansion of almost 270 basis points reaching 29.5% in the quarter. This was mainly driven by our core cement operation in Argentina and further supported by our cement business in Paraguay and our concrete segment.

The application of IAS 29 impacted in a reduction of 380 basis points in the consolidated gross margin during the quarter affected mainly by an increase in depreciation and amortization by the inflation adjustment of fixed assets. For the full year, gross profit was up 8% with gross margin remaining stable at almost 26%.

SG&A expenses as a percentage of revenues decline over 80 basis points to 7% in the fourth quarter and 71 basis point to 7.2% for the full year of 2018, driven by successful cost management and a lower effective sales tax rate.

Please turn to Slide 7, despite weak industry demand, we achieved consolidated adjusted EBITDA growth of 21% in the quarter, reaching nearly ARS2.2 billion or $58 million with margin expanding 459 basis points to 31%. Mainly driven by the seven segments in Argentina and Paraguay and further supported by growth across all other segments.

The application of IAS 29 impacted in a reduction of 75 basis points in the consolidated EBITDA margin in this quarter. When excluding the application of inflation accounting, adjusted EBITDA for the cement segment in Argentina increased almost 70% year-over-year and the margin expanded by 554 basis points to 34.6%, while Paraguay posted around 120% growth in adjusted EBITDA, with the margin remaining almost flat at 40.3%.

Adjusted EBITDA margin for our concrete segment expanded over 210 basis compared to the year-ago quarter, mainly driven by sales volume growth. We continue to post margin expansion in our railroad segment with adjusted EBITDA margin up almost 380 basis points year-on-year benefiting from higher revenues and lower fixed cost.

Lastly our aggregates segment's adjusted EBITDA margin show a strong recovery to 12% on the back of higher sales volume and favorable pricing environment. Importantly, despite the strong devaluation of the Argentine pesos in the fourth quarter year-over-year around 111%, our seven business in Argentina remained relatively stable in terms of EBITDA per ton measured in dollars, at $32 per ton when compared to the year ago quarter and improving from $26 per ton in the third quarter of 2018.

For the full year, consolidated adjusted EBITDA reach ARS7.1 billion. Measured in US dollars, consolidated adjusted EBITDA reached $220 million, down 7.9% year-on-year with adjusted EBITDA margin expanding by 204 basis points from 25.8% to 27.8%.

Moving on to the bottom line on Slide 8, Net Majority income for the quarter were impacted by not recovering the sales from previous year, resulting in a 29% year-on-year decline reaching ARS1.1 billion. In addition to adjusted EBITDA growth, much of the income benefited from higher total net financial gains. This however was more than offset by a positive income impact of the tax reform approved at the end of 2017, in the 2017 deferred tax provision.

Measured in US dollars and excluding the obligation of a IAS 29, our net majority income decreased 10% to $34 million in the quarter from ARS38 million in the year ago quarter. For the full year 2018, net majority income declined 49% to ARS1.8 billion or 23% when measured in US dollars, impacted mainly by exchange rate difference and income tax expenses.

Moving onto the balance sheet, as you can see on Slide 9, our robust balance sheet provide us with a solid position to face the current volatility of the local financial markets or more flexibility around the funding of our meaningful investments done. We've closed the year with a net debt to adjusted EBITDA ratio of 0.43 times compared to 0.28 times in December 2017.

For the full year 2018, we generated cash flow from operating activities of ARS4.2 billion pesos compared to ARS5.1 billion in 2017. This was mainly explained by higher income taxes paid. We continue to make progress in our capital expenditure plan with investments for the full year reaching ARS4.2 billion or approximately $124 million.

Of the total amount in pesos, around 35% was invested in the second production line at our at our L'Amali plant. During the quarter, we continue to move ahead with civil works and many equipment are under the delivery-to-site process. We are moving according to our schedule and within budget. As of December, we were at 47% (ph) of the execution of this project. We foresee savings in dollars, mainly impacted by costs tied to Argentine pesos.

I'll now hand the call back to Sergio.

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

Thanks Marcos. Now please turn to Slide 10. To wrap up this presentation, I would like to make a few final remarks. Despite the challenging macroeconomic environment in Argentina, we closed the year with another solid quarter. In particularly, our core Argentine cement business delivered both adjusted EBITDA growth and margin expansion, even with weaker volume demand in the country and we are also pleased to see that our concrete operation continuing to deliver a strong result, reaching record quarterly and annual volumes.

Looking into 2019, we expect a turnaround in cement demand in Argentina and starting midyear following the economy environment, which is anticipated to begin to recover in the second half of the year. In this context, we remain focused on managing the business to deliver a strong result despite the macro environment. Our history and leadership position provide us with strong base to continue balance sheet growth and profitability.

And part of our strategy is the expansion in L'Amali plant, which will allow us to continue delivering production efficiency and profitability, while will provide much needed capacity when demand recovers. This is the end of our prepared remarks. We are now ready to take questions.

Operator, please open the call for questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. (Operator Instructions) And our first question today comes from Dan McGoey with Citigroup. Please go ahead.

Dan McGoey -- Citigroup -- Analyst

Thank you. Good morning gentlemen, congratulations on the results. First question I have is basically on the EBITDA margin expansion. I understand IAS 29 mostly affect the depreciation, so therefore -- not EBITDA, but given the strength of the margin expansion, I'm wondering if you could comment whether the accounting change helped at all that margin, and assuming that the answer is quite little, I wonder if you could talk a little bit about how much of that expansion is related to the cost side of the equation. It should have cash cost per ton coming down either on the energy side or not or if it is mostly pricing? Let me stop there. Thanks.

Marcos Isabelino Gradin -- Chief Financial Officer

Hi Dan, this is Marcos. The IAS 29 impacted negatively in our margins. Yes, it's impacted by 75 basis points, reducing our margin for the quarter on a consolidated basis.

Dan McGoey -- Citigroup -- Analyst

Got it. So that margin expansion is primarily on the price front, the price increases. On cash cost production, is there anything that helped lower cash cost production in the period?

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

Good morning Dan. So, for the quarter, we have a double impact. On one hand the increase in prices and on the other, the price -- the cost control for the company. So regarding cost, as we were talking in the previous calls, the lower volume has a benefit on the better logistics and the way we operate our plants.

So another point is that in Argentina, we are having some improvements in tariffs both for electrical energy and thermal energy. Also the high volatility inflation and FX led us negotiate in a better way the other costs. So we have an enhancement of our labor cost, both in amount and also in quantity of headcount. And the drop in volume and let us be more efficient in terms of logistics costs.

Dan McGoey -- Citigroup -- Analyst

Great thank you. And one last follow up. I don't have it at hand, but cash cost of production per ton, was it stable year-on-year or was it up but just considerably less than the price increase?

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

The cash cost year-over-year it -- there is reduction in dollars terms. The cost of our inputs, those are in dollars, they were reduced and of course the ones that are in pesos, they were also reduced, measured in dollars. And regarding the EBITDA per ton in US dollars, it remained practically the same compared to the last year.

Dan McGoey -- Citigroup -- Analyst

Understood. Great, thank you very much.

Operator

(Operator Instructions) And our next question comes from Alejandra Obregon from Morgan Stanley. Please go ahead.

Alejandra Obregon -- Morgan Stanley -- Analyst

Hi, good morning, and thank you for the call. My question is related to cement volumes in Argentina. Looks like your figures for the quarter came slightly below the industry average. So I was just trying to understand if this could be related to market share losses maybe or just exposure to an under-performing region. So any color on your granular performance by province perhaps would be great. Thank you.

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

Good morning Alejandra. Thank you for your questions. So last year when we take a look to the volumes of Loma Negra, It is important to bear in mind the price movements that we did. As we always mentioned, we are always the first mover and our competitors, they follow us a few days afterwards. That leads to the premium price to increase during that time where the competitors (technical difficulty) prices.

So during those periods we tend to lose (technical difficulty] that we afterwards tend to recover. So with high inflation price increases are more often they tend to be every month and that (technical difficulty) this effect in market share is more permanent. There are other factors and it's also -- there is also a difference within regions in the country. But our market share values for current and from last year make us feel comfortable in terms of our short, medium and long term.

Alejandra Obregon -- Morgan Stanley -- Analyst

Thank you this is very helpful. And a follow up if I may. In terms of demand could you give us some color on what you've been seeing so far into the second quarter -- into the first quarter, I'm sorry?

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

(technical difficulty) observing we need to keep in mind that last year until April, the demand was rather high. So it could be expected that until April the volumes should have a drop. However since mid-January the volumes that we are observing, they are slightly better than what previously expected.

So as you could see from today's release, the February figures, they remain almost flat compared to last year. Therefore this value make us feel more confident that our expectation for the whole year should be something like a drop compared to -- a slow drop compared to the previous year, for the full year.

Alejandra Obregon -- Morgan Stanley -- Analyst

Thank you very much. This was very helpful and congratulations on the results.

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

Thank you, Alejandra.

Operator

(Operator Instructions) And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Gaston Pinnel for any closing remarks.

Gaston Pinnel -- Investor Relations Manager

Thank you for joining us today. We appreciate your interest in our Company and we look forward to meeting more of you over the coming months and providing financial and business updates next quarter. In the interim, the team remains available to answer any questions you may have. Thank you and enjoy the rest of your day.

Operator

The conference is now concluded. Thank you for attending today's presentation you may now disconnect.

Duration: 29 minutes

Call participants:

Gaston Pinnel -- Investor Relations Manager

Sergio Damian Faifman -- Chief Executive Officer and Vice-President of the Board

Marcos Isabelino Gradin -- Chief Financial Officer

Dan McGoey -- Citigroup -- Analyst

Alejandra Obregon -- Morgan Stanley -- Analyst

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