Daily Brief Industrials: International Consolidated Airlines Group, Arcosa , Controladora Vuela Cia De-A, FedEx Corp, FuelCell Energy , HEICO Corp, Cintas Corp, Plug Power Inc, Sunrun Inc, United Rentals and more

• We are most ahead of consensus for IAG in 2024, and recognising Lufthansa’s highest-in-group double-digit capacity growth rate in 2024 may render its earnings most difficult to forecast/vulnerable to disappointment.
• For AF-KLM 2024 seems a crucial year to demonstrate it can grow earnings in more challenging conditions if it is to increase confidence it can reach near-€4bn EBIT by 2028.
• Delta reports 2023 results today, and its outlook commentary will be important to frame 1Q24 prospects on the Transatlantic, which should encourage that 2024 will prove resilient.

Key points (machine generated)

• Arcosa is a high-quality equity investment benefiting from secular trends and government spending, with underappreciated secondary businesses experiencing rapid growth.
• The IRA tax credits are expected to act as a significant catalyst for Arcosa, pushing its numbers higher than anticipated.
• Despite its strong balance sheet, excellent management, and successful capital allocation history, Arcosa has zero hedge fund ownership, making it an attractive opportunity.

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• Mexico’s Volaris has announced its 1Q24 and FY24 capacity is likely to be down 16-18% yoy due to GTF engine inspections grounding aircraft.
• However, on this reduced capacity, management anticipates a 31-33% EBITDAR margin, up from 26% in 2023, helped by fuel costs down c.9%. We model $1bn EBITDAR in 2024 (2023 $840m).
• This dynamic has read across for many short/medium haul markets around the world has capacity constraints are likely to drive up pricing/earnings for affected carriers and also competitors.

• FedEx Corporation delivered disappointing results as the company could not meet Wall Street’s revenue and earnings expectations.
• Despite a 3% decline in total revenue, the enterprise achieved a 17% improvement in adjusted operating income and a 110 basis points expansion in adjusted margin compared to the previous year.
• The Ground segment exhibited outstanding performance with a 57% increase in adjusted operating income and a remarkable 370 basis points expansion in adjusted margin.

• FuelCell Energy, Inc. delivered mixed results for the previous quarter, with revenues below the analyst consensus.
• In the recently disclosed fourth quarter and full-year results, the company celebrates substantial progress in major projects, the evolution of solid oxide power generation, and electrolysis hydrogen platforms.
• Collaborating with major corporations, such as ExxonMobil, Toyota, Pfizer, EDF Energy, and IBM, FuelCell has made substantial strides in carbon capture solutions, distributed hydrogen, microgrid development, and innovative collaborations using AI.

• HEICO Corporation delivered an all-around beat in the previous quarter, with operating income and net sales reaching unprecedented heights.
• The fourth quarter of fiscal ’23 witnessed a remarkable 29% surge in consolidated operating income and a 54% increase in net sales compared to the same period in fiscal ’22.
• The Flight Support Group achieved significant net sales of $601.7 million in the fourth quarter of fiscal year ’23, marking a 74% increase from the same period in fiscal year ’22.

• Cintas Corporation delivered a positive result and managed an all-around beat in the last quarter, reaching $2.38 billion compared to the previous year’s $2.1 billion.
• The gross margin for the quarter reached $1.14 billion, marking an 11.6% increase from the previous year.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Plug Power Inc.’s results were a major disappointment as the company failed to meet the revenue and earnings expectations both of Wall Street.
• Difficulties arose due to plant downtimes, notably at the Tennessee facility, causing temporary outages across the hydrogen network.
• Plug Power’s diversified business model is evident, with fourth-quarter revenue from new ventures expected to surpass traditional business revenue.

• Sunrun Inc. delivered a mixed result in the recent quarter, with revenues below market expectations but surpassed the analyst consensus regarding earnings.
• The storage attachment rate surged to over 33% of installations in Q3, a significant rise from 15% at the beginning of the year.
• Despite challenges in the Californian market due to policy changes, Sunrun launched its new add-on storage product for solar clients in California.

• United Rentals, Inc. delivered an all-around beat in the most recent quarterly result, witnessing a substantial 23% year-over-year surge in total revenue, reaching an unprecedented $3.8 billion.
• The company’s Adjusted EBITDA soared by 22%, achieving a third-quarter high of $1.85 billion, resulting in a margin exceeding 49%.
• The strategic addition of personnel is highlighted as a key factor in successfully assimilating companies into United Rentals.