Glacier Bancorp Acquisition Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

On why the bank GBCI acquired decided to sell:

“I think that it’s just like so many other banks, I mean, especially the smaller community banks. I think that the regulatory burden, Jeff, is — and these are some very, very smart people. I think they recognize that that was not going to get any better. I mean, they’ve seen as even the $350 million bank, the challenges that this regulatory environment creates, the expenses, the resources that it absorbs, and I think that was definitely one of the keys. I think the other one was that if we can partner with a company that gives us the best of both worlds, I mean, gives us that ability to still be a community bank, still be looked upon as a community bank but bring some resource to the table that we would not have had otherwise, especially like when it comes to lending limits, technology, the ability to reduce their regulatory [ph] — those were the probably 3 key issues. Probably, as a secondary issue, don’t think it affects this bank as much as most other community banks, and that is the interest rate environment. I mean, with where they’re located and the types of business they’ve done, they’ve been able to maintain a very healthy margin in that. But to some degree, I think all banks, Jeff, are looking at the fact that if we’re down here 2 or 3 more years in this rate environment, it’s just going to continue to whittle away at that net interest income. I don’t think that was the major issue for them, though, because — again, because of where they are located, because of a lower level of local competition, they just don’t have as many local competitors as other markets. Their ability to keep their margins intact has been very, very good, so I don’t think that was the main driver. I think it was more just as they look at the tea leaves, Jeff, they saw that the regulatory environment was not going to get better. The fact that they had some real opportunities to grow and growing independently was going to be a much, much slower process, and bringing the types of technology and services to their customer base was going to be a slower, slower goal than if they partnered with us. So we’re just thrilled they did and we really, really like the transaction and like the bank and like the people. So I think it’s going to be good.”

Best First Quarters in Dow History

The first quarter of 2013 is officially in the books, and amazingly it was even better than last year’s Q1.  The Dow was up 11.25% excluding dividends which was the 11th best 1st quarter in 114 years.  Given that the $DJIA was up 8% to start the 2012 and 6% to start 2011, huge first quarters are starting to feel routine; however, these type of returns are anything but.  2012 was the 20th best Q1 of all time and 2011 was the 29th.  2010 was relatively strong too, ranking #41 on the list.

Below is some data on how the Dow did in other years with strong Q1’s.  On average the top 10 Q1’s were followed by decent Q2’s, with an average rise of 2.8%.  For the rest of the year the market averaged an 8% rise in these years, which worked out to an average full year gain of 24%.

Perhaps coincidentally, it’s not uncommon to have good starts in consecutive years.  1986, 1987, 1975 and 1976 are the four best years on the list.  In each of those instances the Dow didn’t do much after the first quarter in the second year though.  Also included in this list is the best year in Dow history, 1915, when the index rose by 81%.

Best 1st Quarters

Company Notes Digest 3.28.13

Throughout the week I spend a lot of time reading conference calls, SEC filings, etc and leave summaries of quotes in the company notes section which can be found here.  Below is a digest of some of the best insights that I’ve gathered from the calls during the last week.

Tiffany Earnings Call:

Weakness in the middle class?

  • “We saw a pronounced softness in sales of entry-level-priced silver jewelry.”

Darden Earnings Call:

Still seeing frugality

  • “for many guests, affordability is a particularly important need.”

But business improving

  • “the turn in March has been significant.”

Dollar General Earnings Call:

Making excuses already for the upcoming quarter?

  • “We’re up against our stiffest quarter of the year last year in terms of sales comp. And my chief merchant was reminding me just this morning that last week (sic) [year] the temperatures in United States were about 70 degrees, and this year they’re about 38.”

Retailers use Tobacco to drive traffic

  • “tobacco is a low margin and then that’ll get into the consumable overall margin.”

Thomson Reuters Analyst Day:

Complexity is a headache

  • “we had 13 — we were going to market with 13 platforms. 13 platforms. As you know, our competitors go to market with 1, maybe 2. 13 platforms, clearly not a recipe for success”

When all else fails hire Google alums…

  • “My name is Philip Brittan, and I am the Global Head of our Desktop Platform. I joined Thomson Reuters a little under 2 years ago…I was previously at Google, where I was the Global Head of Google Finance. And before that, I was at Bloomberg for a number of years”

…because they are fanatical about making good products

  • “Delighting our customers is the absolute core thing that we’re all about”

Focus Media Earnings Call:

Near term uncertainty in China:

  • “given the change in the government, in China for the most part, we believe that there will be a transition phase in terms of when a lot of the policy that’s been talked about will start to take in”

General Cable Analyst Day:

Making cables is a tough business:

  • “we’re in a fast-moving local business,” “[we’re] in a very tough business.” (some form of this statement showed up about a dozen times)

If you’re going to be good in a bad business you have to be tenacious:

  • “lean was one of the big legs that help carry us through that ’02, ’03 timeframe”
  • “We’re not going to run away from businesses that are thought as commoditized.”
  • “we want those problems to surface, because those are opportunities”
  • “Lean is not a plug-and-play model.”

And be viewed as a partner

  • “the long-standing relationships, we’re tough on each other because we’ve got to be successful in a tough business. So this is nothing taken for granted. But we really know these folks well. We meet at the highest levels, at my level to be sure we’re pointing the right direction together. If we have issues, we need to get them out on the table, as well as integrate right through it operationally. And this isn’t just about lowest price. This is about can you run the material? What’s the quality of the material, or how is the supply chain running?”

The Chinese are evolving

  • “I think the Chinese are getting serious about standards and quality, and doing business the right way.”

Merrill Lynch Auto Summit:

The Chinese are evolving:

  • “Chinese domestic companies are going to get stronger and better and better, and I think they’re going to get a lot of support for that” (Borg Warner)

Be viewed as a partner:

  • “The way we interact with the customer is almost always as a system-type approach…what leads us to the solution with the automaker is our system know-how” (Borg Warner)
  • “We believe the role of the Tier 1 supplier is becoming increasingly more important. OEMs rely on system integrators like ourselves. And there are only a few Tier 1 suppliers like us that are focused on innovation” (Delphi)

Can tech companies crack the auto market?:

  • “being able to make that technology, automotive grade and make it work in a car, then that’s a different story, and that’s where we come in at Delphi. Those companies don’t know cars like we do, so we work very closely with companies like Microsoft, NVIDIA and Google” (Delphi)

Zillow Analyst Day:

There’s more to life than making money

  • “We’re not focused yet on monetization in the rentals marketplace, as we continue to improve the set of free apps that we provide to both consumers and to suppliers.”
  • “Zillow Digs is still an infant. And today, our focus for Zillow Digs is on building out the product to be the best it can be for consumers.”

But we do know there is potential to make money:

  • “a reasonable estimate for what these industries spend on an annual basis in advertising alone is $34 billion.”

Accenture Earnings Call:

It might be worthing keeping an eye on Japan:

  • “Q2 included a decline in Japan, which was primarily in CMT [communications, media and technology], where certain clients in the high tech industry there in particular have significant challenges in their businesses right now.”

The holy trinity of tech is still driving business:

  • a convergence of social media, mobile computing, analytics and the cloud…is transforming the way businesses operate”

Gamestop:

Maybe consoles aren’t totally dead?:

  • “the real benchmark is the fact that our PowerUp members are saying that they’re much, much more likely, and more excited about buying a PlayStation 4, even than around getting a new smartphone, a new tablet, a new laptop, all the other things they could buy.”

It might not be in developers’ best interest to kill the trade in model:

  • “Don’t forget that trade credits make video gaming a billion-dollars bigger business, because we provide that trade credit back.”

WiiU has had a rough go, but there’s still value at Nintendo:

  • “And don’t forget, Nintendo has a massive IP” <—-Note to Disney

Gamestop 4Q12 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$GME 4Q12 Conference Call Notes

“Without question, a very challenging year for the console gaming industry. NPD data for the industry indicates a 21% decline in software and a 25% decline in hardware in the past year in the United States, with similar numbers in our other geographies. GameStop outperformed the industry globally, confirming once again the unique nature of our business model and position in the market.”

“We have returned over 100% of our significant cash flow for the last 3 years to shareholders, and expect that strategy to continue.”

“Comparable store sales for the year were down 8%, with U.S. comps down 8.7% and international comps down 6.4%”

“we expect the first half of the year to be very difficult, as we wait for the next console cycle to begin, and face the declining demand that typically occurs after new consoles are announced. With Grand Theft Auto V, Battlefield IV releasing in the third quarter, and the PlayStation 4 launching in the fourth quarter, we expect a return to growth for the back half of the year.”

“Our consumer research shows extremely strong consumer interest in the new consoles.”

“purchase interest for the new PlayStation 4 is very strong. In fact, across a wide range of products, including new smartphones, new tablets, laptops, et cetera, the PlayStation 4 is by far the top scoring item.”

“There’s been a lot of talk about how it was the end of the console era, there would never be another console, and that now has become, will these consoles be as compelling? What we believe is, that there’s been a lack of innovation because of the length of the cycle. And we’re in a Tablet business where we see innovation really rapid-fire, and in the Phone business, we see a lot of innovation. So to us, the most exciting part of what’s coming is the fact that we’re reintroducing innovation to a massive install base. And Mike Hogan’s intent to purchase data would tell you, there’s a lot of pent-up demand.”

“the power that the new consoles have are really driving a whole new wave of developer innovation. So based on early games that we’ve seen running on the new platform, the physics are absolutely amazing. I mean, it — the games are getting to be so realistic and movie-like, it’s absolutely amazing. Social, the tie-in of social features is very strong, the ability to share the game, the kill shot that you just executed, and to share that with your friends immediately is amazing. And then the connectivity, I think, has come a long way. Gaming, as you know, is incredibly social. I think the new platforms add to that, and that connectivity will be easier than it’s ever been. And those are definitely the key things. I think that the controller that Sony has rolled out, the proprietary controller, the new controllers that they have, is very clever and I think it’s very — it will make gaming a whole new experience.”

“all the feedback from developers is, [playstation 4] is a tremendously friendly device to code for, and to really create innovation for. So they’ve — they’re really making a big push around making it a developer-friendly gaming device.”

“consumers have a very strong point of view around this. They want portability of their games, and they like trade credits, et cetera. So that’s been clear, that’s not a debate, that’s obvious.”

“60% of consumers have serious concerns that there is no transferability on games”

“Don’t forget that trade credits make video gaming a billion-dollars bigger business, because we provide that trade credit back.”

“The amount of customers who will bring us electronics to buy a PS4 is going to be a big number. And all of our console partners want a part of that, and they see the benefits of that.”

“I think, for me, the real benchmark is the fact that our PowerUp members are saying that they’re much, much more likely, and more excited about buying a PlayStation 4, even than around getting a new smartphone, a new tablet, a new laptop, all the other things they could buy.”

“I think where you’re really going to see Wii U take off is when there is a strong first-party title, that’s what we’ve always seen. And the fact that we really did launch without a strong first-party title, I think we’re seeing the ramifications of that today”

“And don’t forget, Nintendo has a massive IP.”

Accenture F2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$ACN F2Q13 Conference Call Notes

“In management consulting, bookings were strong in the United States as well as in Asia Pacific and also in parts of Europe. We continue to see client demand for transformational projects in operations, customer relationship management and talent and organization, as well as a pickup in demand for risk management.

Our bookings in technology consulting moderated this quarter, and they primarily reflected projects to drive cost reduction in the data center network and desktop infrastructures of our clients. We see lots of opportunity ahead and have strengthened our leadership focus on the technology transformation agendas at our clients.

System integration bookings reflected strong continued demand to modernize and upgrade installed ERP systems, as well as an increasing demand for industry-specific systems across the major platforms. Emerging technologies are often part of the mix, as we are doing more and more to help our clients integrate Software as a Service, cloud platforms, mobile applications and digital solutions.”

“BPO bookings in Q2 reflected continued demand for our cross-industry offerings, especially finance and accounting, and for our industry-specific solutions in communications and banking.”

“Asia Pacific grew less this quarter, and we expect this trend to continue. Q2 included a decline in Japan, which was primarily in CMT [communications, media and technology], where certain clients in the high tech industry there in particular have significant challenges in their businesses right now.”

“We ended the quarter with a global headcount of about 261,000 people, and we now have approximately 170,000 people in our Global Delivery Network. In Q2, our utilization was 88%, consistent with Q1.”

“Our latest technology vision report identifies the trends that are having a big impact across different industries and explores how companies can use technology to improve business results. One of these trends is a convergence of social media, mobile computing, analytics and the cloud, which is transforming the way businesses operate. And this is driving demand for our services.”

“I have made the decision to turn over the CFO reins to my successor in a few months, effective July 1, and to retire from Accenture at the end of the fiscal year to pursue some new things.”

Zillow Analyst Day Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$Z Zillow

General Comments:

“our Zillow leadership team, much of this team is the team that led this revolution in the travel industry when we started Expedia back in 1996”

“we have tens of millions of professionals as real estate agents, mortgage providers, rental professionals and landlords, and all kinds of home services related professionals and products…a reasonable estimate for what these industries spend on an annual basis in advertising alone is $34 billion.”

“the biggest chunk of identifiable TM for Zillow in the U.S. is actually the agent commission dollars. So the U.S., to scale, it’s a relative scale, looks like this: $59 billion in agent commissions”

“It’s been just 20 months since we IPO-ed, but we’re really a different company today than we were at the time of the IPO Back then at the IPO, we had our core real estate marketplace and a growing but small mortgage business Today we have 4 marketplaces: real estate, mortgages, rentals and home improvement…these marketplaces are not disparate. We’re planting seeds across these emerging marketplaces, but they’re all tied to the database of homes and they’re all connected with one another.”

“We went from 23 million uniques at the time of the IPO to more than twice that today”

Real Estate:

“can we drive enough folks, through exceptional product development and marketing, into the funnel, so to speak? Can we become the primary shopping experience? Can we connect them with exceptional world-class real estate agents? And can we train those real estate agents to be really, really exceptional in lead conversion? And that’s the only limiting factor on the business.”

“we king, make teams. We king make real estate agents in their zip codes. We give them the awareness, right? So the people, when they run to them in the gym, shake their hand, we give them the reviews to set them apart. And then most importantly, we give them enough business with the conversion tools that we really can king make them.”

“Century 21, the largest franchise network in the country. Rick was sharing that his top quadrant of agents, so his top 10% of agents, virtually none of them have been in the business 5 years ago. Virtually every single one of — and I think they have 100,000 agents or something massive like that, every single one of the top quadrant have been in the business less than 5 years”

“We’re not a real estate brokerage, we don’t intend to be a real estate brokerage. We’re not a transaction company. We needed to understand that and we need to say that for 6 years to make the industry comfortable with us. We’re a more efficient way for them to invest there marketing dollars or their sales promotion dollars than any medium they’ve ever had in their history.”

Rentals:

“43 million rentals on the supply side of the market. The vacancy rate in rentals is about 9%. So we estimate the total available number of listings at any given time to be about 4 million on the rentals side of things”

“We’re not focused yet on monetization in the rentals marketplace, as we continue to improve the set of free apps that we provide to both consumers and to suppliers.”

Home Improvement:

“Zillow Digs is still an infant. And today, our focus for Zillow Digs is on building out the product to be the best it can be for consumers.”

Q&A:

“our listings count. We’re north of 600,000 now. That’s almost double what was last year. We think that the opportunity’s incredibly large. Obviously, there’s a leader in this space with craigslist that we think has 700-some odd thousand listings by a little north of that. And we’re already sort of a majority of the way there, having been there less than half the way there last year. So we want to sort of race past that on our way to the 4 million at some point”

Loan Growth Decelerated in Q1

With the quarter nearly over, earnings season begins again in April.  As usual, banks will be some of the first major companies to report, and in the current environment, loan growth will likely be a major focus for analysts.  The nice thing about following the banking industry is that there’s plenty of near real time data reported by the Fed.  If you don’t want to wait two weeks, you can alway get an early read on loan growth from the Fed H.8 report.

The report shows that after growing by 4.8% in 2012, loan growth slowed to 3.6% y/y as of mid March.  Therefore, not only has growth decelerated, but it remains at historically depressed levels.  To the extent that the strength of the economy still matters to securities markets, the banking system isn’t exactly painting a picture of robust growth.

Loan Growth

Nothing’s Quite Like US Equities

I alluded to this in a post last week, but it’s worth expanding on the gap in performance between US equities and everything else so far in 2013.  While US stocks are up more than 10%, other asset classes are showing less robust returns.  Morningstar’s Core fixed income indices, which had provided equity like returns in years past, are flat to down in 2013, and even high yield is only up 2.8%.  Meanwhile foreign equities are similarly weak compared to the US:  the MSCI World index excluding the US is only up 4.7% in dollar terms, while the MSCI emerging markets index is down year to date.  Commodities are also in a lull, with gold down 4%.

All this has contributed to some respectable but not necessarily stellar returns for a diversified asset allocation portfolio.  Investors with moderate risk tolerance are likely up somewhere around 4% this year, while conservatively positioned investors may be up as little as 1%.

As we head into Q2, this mediocre performance compared to equities could be a source of consternation for advisors and their clients.  The areas that are lagging are precisely the ones that most investors have pushed into in order to diversify away from US equities since the financial crisis.  To complicate matters, as advisors conduct quarterly reviews, most clients will know that the Dow has made all time highs, and the discrepancy may tempt clients to chase performance.  And so greed overtakes fear.  Sic semper conservativis.

Asset Class Performance Year to Date

Notes From the Merrill Lynch Auto Summit

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$BWA Borg Warner

“as we look ahead, fuel economy and emissions improvements will remain the key objectives for automakers around the world”

“Throughout our history, our technology has competed against alternatives”

“Chinese domestic companies are going to get stronger and better and better, and I think they’re going to get a lot of support for that”

“I think the way to think about what the next technologies look like for us, first of all, each of the products that we have in the portfolio today are all enabling fuel economy and emissions performance across-the-board, every one of those products. And we see area for opportunity and advancements in all of those products, actually. So if I think of turbochargers to pick on an example, we see optimization in the turbo to help the automakers overcome such things as transient response, or turbo lag as some folks may know it. So we’ve got a bunch of examples going on there where we’re looking to use lighter materials, different types of materials. So there’s a whole stream of work around next generation of the products that we have today, and I could list those examples for — across every one of the products that we have. And that’s a big, big part of the work that we do. But the other part of the work that we do, and that’s kind of part of the BorgWarner DNA, is what’s the next thing that’s not in our portfolio, and we approach that both organically as well as through M&A. So we’re looking at what the powertrain may look like 10 years, 12 years, 15 years. We have a Chief Technology Officer, a team of people that are dedicated to — that’s what they do. And that may come externally where we may see a technology that isn’t in play today but will be in a decade”

“The way we interact with the customer is almost always as a system-type approach. But what leads us to the solution with the automaker is our system know-how. Absolutely, our engine system know-how or our clutching and control systems know-how. And integral to that know-how is a tremendous amount of sophistication that we have inside the company about understanding engine and transmissions as a complete system.”

$TRW TRW Automotive

“we’re big, we’re global. We have over 65,000 employees around the world. There is usually not a platform or a car that you can name where we don’t have some kind of content on”

“there’s no one platform, no one product, no one customer that is hugely material to the company, and that speaks to the defensive nature of our business.”

“We do feel that there’s pent-up demand building in Europe. We do think that the normalized level is something more in the 20.5 million to 21 million zone.”

“over many years, it’s gone from a component base to a systems base to an integration.”

“We go through ups and downs, be it the downturn of ’08, ’09, the investment phase that we’re going through now, commodity spikes. But at the end of it, we always generate cash…Two worst years in the history of the auto industry, ’08, ’09, we generated $545 million in those 2 years. And this is something that we highly focus on in the company”

“Yes. We are making money in Europe at these levels. I think at 18.4 million vehicles being produced this year, that’s well above our breakeven. You’d have to get down into the 17 million, sub-17 millions before there’s any concern or worry.”

$DLPH Delphi

“The pace of change in the automotive industry, well, it’s accelerating…global platforms have become a reality. By 2020, they will represent over 1/2 of the global vehicle build.”

“China isn’t the only area that we’re seeing massive change, stricter fuel economy. And emission standards are taking hold worldwide. And consumers are demanding to be connected from the car.”

“we do have the industry’s leanest cost structure.”

“Delphi is a very large and a very complex company that earns the trust of our customers through outstanding, flawless execution…we purchase 0.25 billion parts every day from 6,400 supplier locations. Our 110,000 people in our 141 global facilities deliver 60 million parts every day at quality levels of less than 2 rejected parts per million and with on-time delivery of 99.5%”

“We believe the role of the Tier 1 supplier is becoming increasingly more important. OEMs rely on system integrators like ourselves. And there are only a few Tier 1 suppliers like us that are focused on innovation and even fewer that can execute globally like we do”

“there’s a long list of consumer electronic companies that’s at the top of the game and the connectivity technology. But being able to make that technology, automotive grade and make it work in a car, then that’s a different story, and that’s where we come in at Delphi. Those companies don’t know cars like we do, so we work very closely with companies like Microsoft, NVIDIA and Google”

“we’re a very high-tech company with very special products, and there’s an extra amount of percent of vehicles on the planet that will not utilize ours, particularly, a lot of the entry-level emerging market types of vehicles. They’re not heavily contented in our space, and we do not try to engineer down into that. So there’s probably 35% to 40% on the vehicles that we don’t want to be on because they won’t generate the kind of value that we want to generate, and we don’t plan on taking our technologies and trying to cheapen them, and brand them down to meet into that space. In addition to that, we don’t — we only have about 5% of our business with the Japanese OEs.”

“[on how to achieve fuel efficiency] much improved conventional Powertrain through technology improvement, it will lead the way, it will be the majority of what you see in d vehicle fleet followed by the hybrid and the plug-in and then the EV…when we look at our content for vehicle, it’s actually higher on the electrified vehicle than it is on the conventional vehicle.”

$GPI Group 1 Automotive

“we’re the fourth largest dealership group in the U.S. Last year, we retailed a little bit over 128,000 new vehicles, about 85,000 used vehicles”

“We’re currently up to 142 dealerships, representing over 180 franchises, we have 36 collision centers…we added 18 dealerships in Brazil.”

“brand mix has always been very dominant with Toyota and Lexus, it’s still about 30% of our company. And then you can see Nissan and Honda and BMW and MINI, all around 11%; and Ford, a significant part of our business at a little less than 10%. You can also see that Texas, California and Massachusetts are our primary geographies, and the U.K. showing up there at about 6%, but I expect will continue to grow.”

“While Only 12% of our revenue, our Parts & Service business generates 42% of our profit. Finance and Insurance business also is disproportionate in its contribution to our profit level, 4% of revenues generate 23% of our gross profit. So although a vast majority of our revenues, 57%, come from selling new vehicles, only a little more than 1/5 of our profit comes from that.”

“We continue to see great potential for growth in the U.S. market in the next few years as well. However, still a lot of pent-up demand, the age of the car park is as old as it’s ever been, near 11 years. The number of licensed vehicle drivers is on the rise. Financing is widely available in the market. And used vehicle prices, although they’ve softened recently, are still very strong, which helps consumers trade their vehicles.”

“And as new vehicles trailed off during the recession, our best source of inventory, if you will, is the trade when somebody comes to buy a new vehicle and that fell off as the new vehicle sales fell. We got down to a low of about 50% of our used vehicles being sourced via trade-in, where kind of prior to the recession, we were running about 70%. That puts some downward pressure on our margins…we have to go to auction to source cars. We’re paying $500 to $1,000 more kind of for a similar vehicle. You got auction fees, you got transportation cost, and you’re ultimately bidding against other dealers. So it’s a more expensive place to pick up inventory, so we think there’s opportunities going forward there.”

“the productivity of salespeople over the last decade, or maybe it was even longer than a decade, hadn’t really improved much while you’re selling 8 to 10 cars per month per salesperson. And we’ve got to find a way to change that.”

$HTZ Hertz

“$9 billion of revenue. You can see that a little over 84% of that is in the rental car space…equipment rental business is a $1.4 billion business”

“we’ve really focused over the last couple of years in becoming experts in the used car market. if we can sell a car directly to a dealer, we can make $500 more per car by eliminating that wholesale channel. That’s really the fees that you pay to the wholesaler. And if we can sell directly to the retail channel, there we can make $1,100 more per car”

General Cable 2013 Analyst Day Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

$BGC General Cable Corp Analyst Day Notes

“Today, we’re around 14,000 people, 57 plants, 26 countries, selling into probably 100-plus countries. So again, a heavy product that is somewhat freight-sensitive. There are regional specifications. So the serving area, generally, is 1,000 or 2,000 miles around that plant, depending on where it is.”

“we’re more of a late cyclical. And as we see, the construction cycle begin to kick back in again, led by North America. That’s a good thing for us”

“knowing we’re in a fast-moving local business, but knowing there are certain things that can separate us over time from our competitors, we developed a view — I’m sure others have done it, but what we really said is “Let’s not get a big corporate center, but let’s make sure if we have a breakthrough in the Philippines today, that it’s known in Zambia in 10 minutes.”

“we’ve really seen almost no construction recovery unlike the typical peak to trough and maybe 7 years, if you look back over economic history”

“demand from the electric utilities by approximately half or more from where it was in the last decade”

“We see a lot of capacity that was built in the 5, 6, 7, 8, 9 years ago, coming out of the business or not working. A lot of companies are for sale in the industry because again, it’s been 5.5 years of fairly tough times. So we need the utilization to come up. In some markets, we’re in the 80s, in the 60% percent range. There is no independent figures for utilization. But that will help drive. As utilization comes up, we both get a net contribution margin against our fix. We have plenty of open capacity, generally, as well as occasionally, you get some pricing power.”

“It’s a $175 billion industry, which few people have thought about in terms of that size and scale.”

“We do have a culture of we’re going to be better tomorrow than today, which is continuous improvement.”

“I think we really — we came out of that crisis [’02,’03], which is a very difficult time for the company and said, we’re going to be really good in a very tough business.”

“lean was one of the big legs that help carry us through that ’02, ’03 timeframe and a very important piece of everything we’re doing today”

“We’re not going to run away from businesses that are thought as commoditized. We’ve got some great positions in key markets where what you would think of is commoditized products has been some of our most successful products.”

“in this business, if you can see into what’s being sold, you can reduce your capital employed. So what we love is we have a distributor that says, will you look into our distribution center and as we sell something, will you go ahead and hit an automatic replenishment? We also will do that backward with our suppliers. So as we really grow with these customers, we try to get into the business where we look at each other’s mistakes or weak points, eliminate them so we can make a seamless integration between the companies. So we’ll sell through distribution, which is a bit more than half the business. so we have a channel partner that may call on this hotel who’s about ready to rewire the hotel. We’ll try to specify our gen speed data cable and other things, sell a package through a Graybar at WESCO, Sonepar, Rexel. It depends on the project. We’ll also sell directly to OEMs. We’ll also sell to utilities. And then there’s all kinds of subspecialist like industrial distributors, electronic distributors, communications distributors; some of them are hybrids. But again, it reaches the market in lots of different ways. We’re measuring within those channels the inventory velocity, the cycle time, breakage or below the line cost. So you have your sell price minus — and then your gross profit and then you have all the places where money can leak out from transportation to rebates allowances and so on. So we’re constantly looking at channel profitability and pricing”

“So again, the long-standing relationships, we’re tough on each other because we’ve got to be successful in a tough business. So this is nothing taken for granted. But we really know these folks well. We meet at the highest levels, at my level to be sure we’re pointing the right direction together. If we have issues, we need to get them out on the table, as well as integrate right through it operationally. And this isn’t just about lowest price. This is about can you run the material? What’s the quality of the material, or how is the supply chain running?”

“One of the things that I think is our key advantage over our competitors is the fact that we really offer everything they need in just about every situation. So when I walk into a customer or I walk into a building, or even you just look in this room, you can see that this room doesn’t just sell data cable, yet you have a lot of our competitors that, that’s really all they do. But when I look up and look around in this room, you can see that there’s portable power, you can see there’s LED lighting, you can see there are lighting signs, you can see there’s outlets on the wall. And we sell all those things, and customers buy those things at the same time. And we worked very, very hard in the last 5 to 6 years to try to leverage that purchase into one package, and we really gained some good traction”

“We actually have an organization with salespeople that are responsible for all of our products. And I’ve worked for several wire and cable companies, and I can tell you that’s not the case in many of the wire and cable companies that are out there. And having the ability for a salesperson to represent electronics, to represent our broadcast, to represent our data, is a very powerful tool. And we’re also finding with our distributors that they have the same desire to try to collapse this decision process into a single process that leverages all of these types of cables.”

“In many organizations, problems might be subdued, they might be hidden; they might be covered. In our organization, the philosophy is we want those problems to surface, because those are opportunities and those become the next way for optimizing that value proposition to customers.”

“I don’t get too concerned about telling our story and about our journey of Lean. And part of the reason that I don’t fear that we’re giving away any secrets or competitive advantage here is because this is not easy to imitate. Lean is not a plug-and-play model.”

“Now having said that, we prefer practitioners over academics. What I mean by that is we want people who are willing to go out and try something as opposed to think about what the perfect ideal solution may be.”

“we always talked about net contribution margin. So you can run one more of the average product [indiscernible] product, $0.12 to $0.20 falls to the bottom line in terms of operating income. If you can do that. And then there’s pricing power if we ever get into the high 80s, low 90s, where you begin to see a scarcity build around that product. Which you saw in ’06, ’07 with some products.”

“We can see projects being quoted. We are probably a short backlog business, other than some projects that have a forward look, most of our stuff is sort of a 14-day backlog. But, yes, no, I feel the U.S. is gathering after a softening second half of last year and a soft-ish first quarter. We see a little bit of pace to it. But I would say it’s more the resi side taking up; the non-resi, looks like more of the same. But we don’t know much more than the newspapers other than we are with channel partners quoting on projects, industrially, non-resi, et cetera, so we do get that view.”

“I think the Chinese are getting serious about standards and quality, and doing business the right way.”

“The greenfields are hard. We’ll get them to work. But I prefer to acquire than build. The reason we did the greenfields was the expectations were so high among the sellers because of this road of the sky [ph] around ROW that we felt, let’s go ahead — around the developing countries facilities, we’ll go ahead and build these facilities. I those expectations have come down. It has been a sobering 5.5 years. So, broadly, what we’re seeing today, even in the developing world, is a lot of companies for sale. And we’ll just be careful about what we do in terms of both management time and talent, as well as the upside in this business.”

” if you took the metal out, with your margin on the work that you do in the cable, they’re actually double-digit margins generally…So I have the tendency to think that the margin we make on the value-added, which is generally the double digits and if copper were down, you’d still need to make $400 million on operating income or $300 million otherwise you don’t have a business”

“Wire and cable is about 65% of the overall demand for copper”