Company Notes Digest 10.30.14

Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week.Full notes can be found here.

The Macro Outlook:

The Fed has pulled out. Will things remain calm?

“I have said before that basically when the fed starts to pull out, there is no way that they do that and everything is nice and calm.” ($AMTD)

Capital markets were spooked, but seem to be healing now

“For investment grade we have had a very good settling of the market since last week. Last week did see in the U.S. reduced investment grade issuance of only $6 billion. This week and I just checked before I came upstairs it’s probably going to be a $20 billion week, a little bit better.” ($MCO)

There are mixed signals coming from the economy

Mastercard saw deceleration in spending in September

“the monthly growth trend showed some deceleration with several sectors lodging, furniture furnishings, grocery experiencing some noticeable slowdowns in September. So these are mixed trends in the US but overall the underlying indications [have been] positive. In October, the consumer confidence index is up over September as well’ ($MA)

Kraft says it would be hard to call this a great first nine months

“Against the backdrop of a challenging consumer and customer environment and some executional missteps, it would be difficult to call this a great quarter or an outstanding first nine months in absolute terms.” ($KRFT)

Agco is responding to a weak agriculture environment by aggressively cutting costs

“In response to weaker industry conditions, we are executing our plan to reduce inventory and aggressively control costs. Our team is analyzing all aspects of the business to identify cost savings and to better align our operations with the current market environment…we decided to make severe radical cuts very early, and therefore, we might — I hope that we are a little bit ahead of the events.’ ($AGCO)

Kennametal is having to cut costs to match the environment too (primarily driven by Europe)

“Due to a more modest growth environment, we are taking some cost reduction actions for the current fiscal year. For example, those measures include hiring freezes, as well as limiting certain expenses.” ($KMT)

On the other hand, there are plenty of companies who see business as usual

Polyethelene demand at Lyondell Basell has remained strong

“We have seen very strong demand, order books are full, so supply-demand in America seems pretty tight. In Europe is that same tightness seems to be there. We haven’t seen cancellation of orders on the fall in crude prices like sometimes happens. It’s seems to be pretty solid.’ ($LYB)

Tech manufacturer Flextronics hasn’t seen any big pullback in the technology industry

“We have not seen a big pull back across the industry. I know some company has made a lot of noise about it. We just haven’t seen that evidence, don’t know if we are going to see that later or not but just based on what we can see and our expectations, we continue to see a very stable environment and we just don’t see the evidence of any kind of major pullback.” ($FLEX)

Four financial services companies all say that pipelines remain solid:

“our pipelines looking forward…do look to be very solid pretty much across the board, and we came into the end of the quarter with a significant momentum. So that, combined with the kind of anecdotal, on-the-ground input that we get from our clients every day…the trends continue to look good as we look to the end of this year.” ($CYN)

“What we are seeing now is that pipelines are robust. The pipelines are quite strong. We are expecting a heavy fourth quarter in investment grade [bond issuance]” ($MCO)

“When you look at the markets themselves, we can see pipelines, as we mentioned, which are full. Those generally give us an indication 3- to 6-months ahead and there’s no slacking up in that picture either. And then after that…all those factors together give us confidence in the numbers that we have forecast.” ($JLL)

“it slowed down a little bit. But what I’m very comfortable with is how strong the pipeline is.” ($CFR)

While we sort these issues out…Santa Claus waits to see what December will bring

“UPS has been preparing for peak season 2014 since December 26th last year…Our people have been working hard to get everything ready for the holiday volume surge that typically starts during Thanksgiving week” ($UPS)

Financials:

The lending environment may be moving into unsafe territory

“there’s a lot of crazy stuff going on right now.” ($CFR)

Lenders are getting aggressive in price, size and structure

“When I think of the competitive landscape and we compete on a debt basis, you’re looking at price, size and structure being the 3 components. As I’ve said in prior calls, you can look at all 3 of those components, and we’re seeing a very aggressiveness in all 3 of those areas.’ ($SIVB)

The longer things stay competitive the more dangerous the environment becomes

“Has anything changed dramatically? No, but the longer you see that intense competition at a certain level, that’s just — it becomes more challenging to figure out where you want to play and where you don’t want to play.” ($SIVB)

Banks blow up because people think nothing can go wrong

” I tell you what the way you blow a bank up is making bad loans…I don’t want to be talking to you 3 years from now about all the problems we created when everybody was just going crazy and you got a little bit of — not a little bit, you got a lot of just everybody thinking you can make any deal and it’ll work out.” ($CFR)

Big traditional asset managers are getting involved in funding late stage startups

“you see additional dollars flowing in from later-stage companies as the T. Rowe Prices and Fidelities get more active in putting more money at the later stage” ($SIVB)

Wirehouses may have gotten a little better at retaining their brokers

“I do think the wirehouse has gotten better at retaining their better brokers and producers” ($AMTD)

WR Berkeley is worried about hedge funds dabbling in the Reinsurance market

“The big question mark or concern from our perspective continues to be the global reinsurance market. We’ve talked about this over the past several quarters and it continues to be front and center on our radar screen…it’s still a bit unclear as to the permanence of this alternative capital. It hasn’t fundamentally been tested from a loss perspective where a lot of the decisions and judgments, which are based on models, proved to be wrong as a result of some type of unforeseen or unfortunate events.” ($WRB)

Consumer:

At least at the super-market, the promotional retail environment may be easing a bit

“I think the industry behavior has moderated somewhat, but we’re still up a bit in quarter three.” ($KRFT)

Interesting to think about the distinction between the perimeter vs. the center of a grocery store

“our protein offerings like meat, cheese, nuts are doing quite well. There is a wind at the back in those categories. They are in the perimeter of the store…we have an obligation to the center of the store and the great brands we have in them to execute the playbook equally well. And we think we can contemporize our offerings in meals and desserts to address the center of the store lack of traffic.” ($KRFT)

Local next day delivery is probably more important than same day delivery

“There are some markets where that same day is an important element…But we think that the majority of Internet shopping anyway happens late afternoon and evening and that the real hotspot is going to be local next day delivery” ($UPS)

TRW is skeptical that we’ll have fully autonomous cars on the road by 2020

“I am not yet convinced that we will see a fully autonomous vehicle on the road by 2020, which has been a date thrown out there by some commentators. Basically, because I think there are many things, which are yet to be overcome in terms of the legal, insurance, liability management issues.’ ($TRW)

Technology:

Early stage startups are still finding it easy to get funding

“So when you look at where [deposit growth] came from…early stage is the biggest driver of that…It’s driven by corporate venturing, even angel investing in that category, which was, for the third quarter, was incredibly strong.” ($SIVB)

Azure is the backbone of the new cloud-centric Microsoft

“you should think of Azure as the common fabric of all our applications…we have a very diverse set of workload. We have Xbox LIVE; we have Office 365; we have Dynamics and Bing and that diversity is what allows us to build in fact for our own needs a cloud architecture that then can meet many more workloads” ($MSFT)

This was Twitter’s explanation for why timeline views per user were down

“The year-over-year decline primarily reflects the changes we’ve been making to allow users to more efficiently access to our content.” ($TWTR)

Almost 1/3 of Facebook’s employees have joined within the last year

“We ended Q3 with 8,348 employees, up 44% from last year…Overall we are pleased with our ability to attract and retain talented people who enable us to make strong progress against our mission.’ ($FB)

Advertising measurement technologies need to improve for a multi-device world

“We think measurement really, really needs to evolve for the world we’re in today in many ways…The current measurement systems don’t work on mobile, because they are largely cookie based…They really work well for one person with one device…The world we live in today, I bet you, everyone on this phone call has multiple devices and people look at ads online and then purchase offline” ($FB)

AT&T and VZ aren’t going to get out of the telecom wars unscathed

“there’s a fallacy in the industry that AT&T and Verizon are going to sit where they are and T-Mobile and Sprint are going bash each other over the head and exchange customers. It’s highly likely that what you’re going to find is that’s not what’s going on.” ($TMUS)

The infrastructure of the internet is under stress

“The accelerating growth of online usage and cloud services is placing significant stress on an Internet infrastructure that was not designed to accommodate the rapidly growing demands for scale, speed, reliability and security. As a result, congestion is increasing at major peering points, which degrades video quality and slows down Web applications. Performance is also hampered by the increasing complexity of Web applications. In the past 2 years, the typical size of a Web page has more than doubled. The number of third-party domains on a typical page is up 56%, and the average amount of JavaScript on a page has grown by 40%. The net result is that the average time to download a Web page from an origin has increased by more than 60% in just 2 years” ($AKAM)

Healthcare:

Healthcare reform has provided a nice boost to hospitals

“The impact of reform has progressed favorably throughout the year, and we remain optimistic on the long-term benefits of health reform. And accordingly, we revised our full year health reform benefit guidance, where we now estimate a full year positive impact of approximately 4% versus our previous estimate of 2% to 3%.” ($HCA)

Affordable care act reforms are driving 1/3 of HCA’s growth

“Consistent with our second quarter, we believe approximately 2/3 of our adjusted EBITDA growth can be attributed to our core operations and approximately 1/3 to health care reform.’ ($HCA)

There are still many states that have yet to expand medicaid

“It appears Utah will be next, so we would expect Utah to come on. Indiana was in the mix, but it appears they have withdrawn their application. Tennessee, we would be hopeful going into next year, post the election, that there would be an opportunity here. Time will tell, but I think that would be maybe the next most likely to consider it. Florida, we’ll just have to wait post-election and see” ($HCA)

Generic drug price inflation may be softening a bit

“we believe that some of our second quarter inflation was pulled slightly ahead into the first quarter. Our outlook for the year remains unchanged, down slightly from the inflation rates we experienced last year but still pretty robust.’ ($MCK)

Materials, Industrials, Energy:

Anadarko isn’t changing anything about its exploration plan due to the current environment

“The current commodity price environment is going to have little to no impact on what we see over the next four to five years for things that we would be involved within ’15 with our exploration plan.” ($APC)

E&P companies are fine at $75, may have some pressure around $70

“Based on our conversation with our customers, cost of delivering finance production really needs around $75 a barrel you’re still receiving a good favorable return. If it gets to $70 a barrel, it would delay some projects not all projects, and you would also see some aggressive cuts and expenses.’ ($CFR)

Texas bank Cullen Frost underwrites energy loans assuming oil at $52 a barrel

“we also lend 65% of these amounts after you do all those calculations. And so 2015 oil would mean we’re loaning $52 a barrel and $2.40 on natural gas.” ($CFR)

No one ever said that commodity businesses weren’t cyclical

“anyone that think those types of multiples are permanent and sustained across commodity cycles, hadn’t been paying attention.” ($APC)

Utilities are still buying thermal coal even though it was a cool summer

“Even with the disappointing summer burn, we continue to see real interest from our customers and layering in significant tonnage for multiple years.” ($ACI)

Met coal markets may finally be bottoming out

“we believe met markets are in the process bottoming out. Benchmark prices are fallen below the cost for one-third or more of global producers and supply cuts are underway. Those cuts will help to offset new supply that is coming to the market over the last several years ($ACI)

At some point demand is going to cross over reduced supply

“At some point, the impact of the tons coming out and the demand for more tons have to cross. And I don’t think that’s going to take a long time to get there at this point” ($WLT)

Miscellaneous Nuggets of Wisdom:

Love competition

“every bone of my body just naturally wants to compete with anybody on anything” ($TMUS)

I’m not sure that relentless measurement is necessarily a good thing, but I appreciate the decisiveness in this statement

“This is a land of relentless measurement and continuous improvement.” ($KRFT)

Grow through cash flow, not through debt

“we have been pretty consistent in saying that we want to try to grow through cash flow. I think the ability to grow through cash flow and cash in this environment and not take on debt to be able to meet your needs makes our balance sheet and the way in which we run our company from a financial discipline perspective, consistently unique.’ ($APC)

Your brand is what your customers take away

“Even if people don’t understand every single move we’ve made or would fail our pop quiz, what they do understand is that we are the brand changing wireless for the better…and we think that’s contributing to our growth and, certainly, was one of the reasons why we had the biggest growth quarter in our company’s history” ($TMUS)

There are no mature brands as long as you have energetic people keeping them fresh

“There are no such things as mature brands and it’s all about energetic idea-driven marketers. It’s all about ideas and people” ($KRFT)

Full transcripts can be found at www.seekingalpha.com

Kennametal FY 1Q15 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. Full transcripts can be found at Seeking Alpha

Mixed trends in customer demand. Taking cost reduction actions

“For Kennametal, September quarter results reflect somewhat mixed trends related to customer demand. Those growth was largely driven by the demands in industrial markets such as transportation and general engineering. However, sales related to the infrastructure markets were lower than the prior year. This was due to weakness in underground mining and road construction, partially offset by increased drilling in the oil and gas sector. Due to a more modest growth environment, we are taking some cost reduction actions for the current fiscal year. For example, those measures include hiring freezes, as well as limiting certain expenses.”

Revised guidance driven primarily by Europe

“I want to point out that the decrease is mainly driven by the weakening of the European area, especially Germany. So I would say that we see some strength in the U.S., but we see a very relatively weakness to continue in Europe, and primarily in Germany.”

Infrastructure driven by what our sales force is telling us

“as far as the Infrastructure, given some of the softness we’re seeing with some of the commodity prices and feedback we’re getting from our sales force as well as customers, we expect that to be a little bit softer than we had anticipated.”

Europe is trending in the wrong direction

“I think we saw it towards the end of Q4, a little bit, primarily in Germany. And that continued through the quarter, so nothing significant month-to-month, but trending in the wrong direction. So for us, as you know, Germany’s a very big component of our European sales. And given the transportation and a couple of other end markets we serve there very well, we felt it was prudent to factor that in.”

General Cable 3Q14 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. Full transcripts can be found at Seeking Alpha

Divesting Asian and African assets

“We’re developing a divestiture plan for Asia Pacific and African assets. We will have more to say about that plan and our progress in upcoming calls, where our plan is to exit these operations as expeditiously and orderly as possible, while protecting the substantial underlying value.”

CEO transition

“We announced yesterday that we’ll be moving forward to implement our planned leadership transition. Our board has formed a search committee to identify my successor as CEO. Once a successor is identified, the board has asked me to remain on the board and become Chairman, and I’ve agreed to do so on an open-ended basis as the needs of the company dictate. ”

800m in liquidity offsetting 1.4B in debt

“Collectively, we have approximately $800 million of liquidity in the system to fund operations and support the quarterly dividend, the restructuring program and the anticipated retirement of the $125 million senior floating rate notes due in April 2015. Net debt was $1,359 million at the end of the third quarter of 2014”

Construction and infrastructure spend drive the business

“as construction and infrastructure spend go, so goes General Cable for the most part.”

Flat to up environment in NA

“distributors are — about 40% of our business that’s through distributors are channel partner. As you well know, and I’m seeing some mix as slightly positive. We saw the Anixter results, I think Rexel just announced. It’s sort of a mixed story. But I think consistent with what we’re seeing some positive movement in North America, particularly the U.S. The other big piece of our business, about 35% of global is utilities, and we watch energy demand and their rate cases. And it’s again way off from where we were say, 10 years ago, but we do see transmission is generally stronger, and of course, we have wind, which has been — wasn’t there 10 years ago. So I’m watching a lot of the industrial infrastructure companies like Ford or Foster Wheeler, or others watching the utilities what they’re saying and then finally the distributors, but I think it’s — what we’re seeing is fairly consistent with what you’re reading on a macro.’

Walter Energy 3Q14 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. Full transcripts can be found at Seeking Alpha

Bringing down cash cost of sales

“our mines in Alabama to continue to perform well. We’re on track to produce around 9.5 million tons of meth coal or the full year. We’ve also lowered our estimate for combined full year production cost per ton at mines 4 and 7 to around $96 a ton. We expect full year met coal sales to total around 10 million tons as we are making good progress selling down the Canadian inventory.’

Selling inventory generating cash

“We ended the third quarter with roughly 1.7 million tons in meth coal inventory, which included about 600,000 tons at mines 4 and 7 and about 1.1 million tons in Canada. Remaining PCI inventory in Canada totaled just under 800,000 tons. We expect to sell the remaining inventory in Canada over the next six months, which should translate to net cash generation of about 75 million.”

Bringing down SG&A and Capex

“We expect to hit our run rate of 70 million per SG&A expenses by year end, which will be down roughly 30 million from last year. In addition, as Bill stated, we’ve reduced our targeted capital expenditures for the year by another 10 million to approximately 110 million.”

Steel production in China up 2.5% this year, but imports down 20% from last year

“Steel production growth in China is up almost 2.5% through September but the growth is at a slower rate than last year. Along with this, met coal imports are down about 20% from last year. However, even with this decline, China is on track to import more than 60 million tons of met coal this year.”

There has been more interest in buying assets recently

” I think over the last few months there has been more activity in both incoming calls, et cetera. We’d like to take a cautious approach. We’re still committed to the target but we don’t want to talk specifically about timing at this point but there has been more activity and more interest.”

We can keep capex here for a long time

“We’re still making sure we take care of mines 4 and 7 and that we’re feeding them the capital necessary to keep those mines exactly where they need to be. So, from the standpoint of keeping our operations with good equipment and properly maintained and ventilated, we could do that for the long term. We are not starving those mines of capital.”

There are 20 years of reserves at these mines even though that doesn’t make it into the SEC filings

“When we look at the SEC documents and the requirements for tons being netted [ph] in the reserves, there are a lot of tons surrounding these operations that will likely be added into the reserve basis for both operations.

And I believe that what we’ve said previously is that it’s an excess of 20 years of reserves for both of those operations. And we still believe that even though from those tons are not currently in the – comply with SEC standard.”

Focused on smaller asset sales to reduce interest expense where possible

“None of them are I would call as homeruns, but again, our strategy is to continue to lower interest expense and frankly lower the cost with singles and doubles.”

At some point tons demanded and tons taken off have to cross, and I don’t think that’s too much longer away

“And if you also, even looking at this year, if you look at project next year another 2% growth in steel production, 2% is 32 million tons of additional steel production and call it, just to make it easy, that’s 20 million more tons of coal demanded. At some point, the impact of the tons coming out and the demand for more tons have to cross. And I don’t think that’s going to take a long time to get there at this point”

Volumes are holding up with currency higher, but the pricing is the issue

“Yes, volumes are holding up. It’s just we’re contented with – the price is the issue, to be honest with you.’

It’s starting to get a little harder to get our quality coal

“we’re starting to – maybe a little bit starting to show up our main brand type products where customers thought they could pick up a phone and just automatically get the – there’s a little bit of – I don’t want to call it tightness but it’s starting to show up out there.”

Mastercard 3Q14 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. Full transcripts can be found at Seeking Alpha

Sustained growth in the second quarter

” Our SpendingPulse data showed sustained growth over the course of 2014. US retail sales ex automobiles in the third quarter were up 4.2% and that was a higher number than the second quarter growth of 3.8%.”

Month growth trend showed deceleration in September

“However the monthly growth trend showed some deceleration with several sectors lodging, furniture furnishings, grocery experiencing some noticeable slowdowns in September. So these are mixed trends in the US but overall the underlying indications [have been] positive. In October, the consumer confidence index is up over September as well”

Lots of people signing up for apple pay

“The people signing up for Apple Pay is actually pretty good. I would say the first few weeks have been very encouraging. You see us in – if you’d been to the Giants game and Kansas City Royals game in the San Francisco stadium, which unfortunately I didn’t go to see even though I was hanging around in San Francisco, but I met a number of people who have been there. We were using and demonstrating the work of Apple Pay for purchasing in the stadium, we had advertising, we had activities and promotions going on in there. So there are a lot going on in the Apple Pay space right now.”

Still lots of opportunity in Asia

“The level of cash utilization in the Asian market is the highest probably around the world other than a few Latin American markets. I mean China and India are still in the 95 to 99 plus percentage of transactions being in cash, and that even Japan which is a developed country in that part of the world has a 75% to 80% cash percentage in its transaction in the country'”

Yes the global economic picture looks mixed

“Yes, the global economic environment remains mixed but I think we are demonstrating that we can navigate through this pretty well and to this last question, you will see us continue to invest in our business, on products, on services, on technologies that are key to our strategy, not just organically but also through acquisitions”

Anadarko 3Q14 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. Full transcripts can be found at Seeking Alpha

The current commodity price environment has no impact on what we see over the next 4-5 years

“The current commodity price environment is going to have little to no impact on what we see over the next four to five years for things that we would be involved within ’15 with our exploration plan.

Let’s just start with that. If you move down from there, I think our current view on commodity prices is we want to watch this environment a little longer. I think we all are recognizing that there is a very steep decline we have seen.”

Market isn’t in equilibrium

“The market has most peoples’ estimation not yet quite down the equilibrium and we don’t know if that is going to be at a higher price than where the current curve looks like or something lower.”

We growth through cash flow, not debt

“we have been pretty consistent in saying that we want to try to grow through cash flow. I think the ability to grow through cash flow and cash in this environment and not take on debt to be able to meet your needs makes our balance sheet and the way in which we run our company from a financial discipline perspective, consistently unique. ”

Volatility is a reminder that the business hasn’t always existed at high multiples and it wont stay there forever

“here is a lot of volatility in the commodity market that has led to a lot of volatility in the capital markets. It has not changed our view or our timing on doing something, but it has caused us to realize that as opposed, say, three to six months ago. It is not always incredibly high multiples and anyone that think those types of multiples are permanent and sustained across commodity cycles, hadn’t been paying attention.”

Thanks for raising your price target

“Scott, before you get off the line, I just want to say it didn’t go unnoticed by me this morning, that you raised your price target on us a $2 per share in light of all of the market noise and things that we have been achieving through the course of the year. We really appreciate that.”

Cullen Frost 3Q14 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. Full transcripts can be found at Seeking Alpha

Best year ever for new relationships/loan opportunities

“Even without the WNB acquisition, this has been our best year ever for new relationships, new loan opportunities and new loan commitments. We continue to see a steady increase in the percentage of our pipeline from existing customers. This is important because our success rate is much better with these opportunities. The willingness of our customers to seek financing also is a good indicator of an improving economy”

Losing loans on structure when they do, which is good

“I’m also encouraged that the ratio of lost opportunities continues to be about 60/40 in favor of structure this year. That means that we were competitive in pricing without sacrificing credit quality, and that’s exactly where we want to be.”

We continue to see signs the economic recovery is extending

“Despite the recent roller coaster ride in the stock market, we continue to see positive signs that economic recovery is extending to mainstream. Businesses are hiring again, consumer confidence is up and small business owners are taking advantage of opportunities to expand in a prudent way.”

Comfortable with how strong the pipeline is

“it slowed down a little bit. But what I’m very comfortable with is how strong the pipeline is.”

There’s a lot at play in an oil downcycle as to credit pressure

“depending on what price settles out and how long it stays there, it’s really going to have a lot to do with what’s happening. And this also we got to recognize when you get a downturn like this, you’re going to see lower drilling cost and many factors are in play as we go along hedging dividend policies, debt management. There would be some sales and purchase decisions. And certainly depending on which location in the United States basins have a wide difference in economic quality.”

We’re making loans assuming an oil price of $52

” we also lend 65% of these amounts after you do all those calculations. And so 2015 oil would mean we’re loaning $52 a barrel and $2.40 on natural gas. We always factor in other differentials such as transportation and unique lifting and secondary cost. So it all results in the numbers even being a little bit lower than that”

Customers still fine at $75 and cuts come at $70

“Based on our conversation with our customers, cost of delivering finance production really needs around $75 a barrel you’re still receiving a good favorable return. If it gets to $70 a barrel, it would delay some projects not all projects, and you would also see some aggressive cuts and expenses. ”

Answer to the question: ‘Are you being too conservative?”

“You and I didn’t know each other in the ’80s, and I can talk to you about it without my shrink sitting next to me. And I got a pretty deep scar that’s healed from. And I tell you what the way you blow a bank up is making bad loans. And there’s a lot of crazy stuff going on right now. And as I told you, I am extremely pleased that we’re staying true to what we were doing. And when you look kind of deeper into details, I told you the structure is still about 60% and 40%. That’s where we want.”

“Are we working hard to make every deal work? You bet we are. But I don’t want to be talking to you 3 years from now about all the problems we created when everybody was just going crazy and you got a little bit of — not a little bit, you got a lot of just everybody thinking you can make any deal and it’ll work out.”

Jones Lang LaSalle 3Q14 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. Full transcripts can be found at Seeking Alpha

Capital markets and leasing: Americas doing better than Asia. China down 33% ytd

“The regional divisions we’ve seen throughout 2014 continued, with the Americas and EMEA outperforming Asia Pacific. As you’ll see on the slide, overall transactional volumes in Asia Pacific were marginally higher than in the third quarter of 2013, but below 2013 levels on a year-to-date basis. There was a significant divergence within this with Australia up 23% and China down 33% year-to-date.”

Continued momentum in leasing

“While gross absorption declined in the Americas and EMEA in the quarter, the sense in the marketplace is one of continued momentum. Many U.S. tenants renewed and extended leases earlier in the cycle to lock-in lower rents”

Outlook remains strong

“For the fourth quarter of 2014, our outlook remains positive. Our pipelines are strong, as Christie mentioned, in what is traditionally our busiest quarter. And our business strategy is delivering superior results across the range of our operations.”

Retail just 5% of the business

“our retail activity, including management leasing and capital markets work, in the U.S, is — it’s less than 5% of our U.S. revenues, David. What generally happens when you have bankruptcies is that the properties get recycled, obviously, sometimes back into retail use or if they’re particularly off pitch sites then they’ll be converted into — redeveloped or converted into other uses. We haven’t had a huge amount of historical experience with them, but it’s not a huge part of our business either.”

$10 of bids for every $1 of purchase

“we’ve generally got a rule of thumb, which is that for the final dollar that ends up making the purchase, there’s sort of $10 have come in and they bid at a credible level. So the weight of money that we’re currently seeing, making offers for particular high-quality assets, is still very strong.”

Pipelines are full and don’t show any sign of slowing down

“When you look at the markets themselves, we can see pipelines, as we mentioned, which are full. Those generally give us an indication 3- to 6-months ahead and there’s no slacking up in that picture either. And then after that, the general sense we have, or our forecasters have, of continued, steady, economic recovery with, as I mentioned in my comments, forecast GDP growth next year globally which is up further on this year. So all those factors together give us confidence in the numbers that we have forecast.”

Akamai 3Q14 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. Full transcripts can be found at Seeking Alpha

22% revenue growth aint bad

“As Tom outlined, Q3 revenue came in above the high end of our guidance range at $498 million, up 26% year-over-year and up 5% or $22 million sequentially. This result marks our first quarter of year-over-year growth of over $100 million and represents our highest Q2 to Q3 sequential growth ever.”

Lots of growth over the last 15 years

“15 years ago, on October 29, 1999, Akamai began trading as a public company. At the time of our IPO, we had 350 employees, 50 network partners and 1,400 servers in 20 countries, delivering peak traffic of 1 gigabit per second for a total of 100 customers. In the fourth quarter of 1999, we generated less than $3 million of revenue and a substantial net loss.

Today, Akamai has nearly 5,000 employees, 1,300 network partners and over 150,000 servers in 95 countries, supporting peak traffic of more than 26 terabits per second for 5,000 customers worldwide.”

The internet has grown a lot too

“Akamai has come a long way over the past 15 years, and so has the Internet. The global population of Internet users has multiplied more than tenfold from 280 million, which was less than 5% of the world population in 1999, to nearly 3 billion people today. And the number of websites has grown from about 3 million to over 1 billion. The annual e-commerce volume has grown from less than $100 billion in 1999 to a projected $1.5 trillion this year. ‘

Accelerating growth of the internet places stress on the infrastructure

“The accelerating growth of online usage and cloud services is placing significant stress on an Internet infrastructure that was not designed to accommodate the rapidly growing demands for scale, speed, reliability and security. As a result, congestion is increasing at major peering points, which degrades video quality and slows down Web applications. Performance is also hampered by the increasing complexity of Web applications. In the past 2 years, the typical size of a Web page has more than doubled. The number of third-party domains on a typical page is up 56%, and the average amount of JavaScript on a page has grown by 40%. The net result is that the average time to download a Web page from an origin has increased by more than 60% in just 2 years.”

Attacks generate hudreds of gigabits per second of traffic

“We are now seeing attacks with many tens of gigabits per second of traffic on a daily basis, and some attacks generate hundreds of gigabits per second of traffic, far exceeding what the vast majority of websites can handle using traditional defenses.’

Some people try to do it themselves, but its actually pretty complicated

“Delivering high-quality video at scale is much more complicated than most people realize. And despite our many competitors and the do-it-yourself efforts by large content owners and service providers, Akamai is differentiated by our success in streaming high-quality video at scale through our unique platform of servers in thousands of locations close to end users.”

Scale enabled by telco partners

“Our tremendous scale is achieved in part through close cooperation with the many networks that comprise the Internet. We locate our servers inside nearly 1,300 networks, and we are forming much deeper relationships with the world’s largest carriers. Recently, we were very pleased to announce new strategic partnerships with SingTel and China Telecom, which we expect will further expand our capabilities and capacity in the Asia Pacific region for both local and global customers.”

DIY is our greatest competitor

“DIY is our biggest competitor. The very biggest media companies, pretty much all of them have had a DIY effort, and I think that’s going to continue to be the case in the future. Our job is to invest in research and development and figure out how to do it better at greater scale and at lower cost.”

There’s a lot of competitors out there

“I think, the CDN competitive climate has been challenging for the last 15 years and will continue to be so. There’s a lot of competitors, and we work very hard to do a better job of it, be more reliable, higher scale, better performance, better video quality and to be affordable for our customers. And I think we’ve had a lot of success. If there’s been a change per se, I would say that our success in working with the major carriers has been a helpful change. Many of the carriers were competing with Akamai, and you’re seeing in the last year to 2 years, several of the big carriers now converting to the Akamai platform, and working together with us. And I think, that’s been a fundamental shift that’s been helpful to us, but there’s a lot of competitors out there.”

Revenue is driven by traffic

“again, revenue is the product of traffic and price when it comes to video and media. And traffic’s growing, obviously, at a substantial rate.’

You can imagine a world with 25,000 terabits a second

“you could imagine a future world with 2.5 billion people that go home at night, in prime time, watch a show…if you have that world with 2.5 billion people at 10 megabits a second, and you multiply that, that’s 25,000 terabits a second. Now that’s a big number. Just to put it in context, Akamai is now delivering at north of 25 terabits a second, and we’re a pretty big portion of the Internet. And so you look at 25-plus today, you can imagine a future world with 25,000”

Kraft 3Q14 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. Full transcripts can be found at Seeking Alpha

It would be hard to call this a great first 9 months

“Against the backdrop of a challenging consumer and customer environment and some executional missteps, it would be difficult to call this a great quarter or an outstanding first nine months in absolute terms.”

Highlighting an agreement with GMCR like Coke did

“Given our agreement with Keurig Green Mountain that we announced in August, we’ll have the opportunity for expanded distribution and increased capacity to supply multiple channels and on-demand formats. ”

Unprecedented price levels in parts of our commodity basket

“we have priced aggressively in the face of what are truly unprecedented price levels in certain parts of our commodity basket. ”

The landscape is shifting

“At the center of it all, consumers with new emerging cohorts who have a whole new set of expectations of food and beverages and companies that make and deliver them. Our customers are coming to terms with changing shopping patterns and channel shifting and the rise of digital media driving the need for new communication tools and capabilities. It is clear that this is not a one-time market shift. This is a transformative time in our industry. It is also clear that this is pressuring returns on traditional advertising and promotion.”

Promotional environment may be moderating some

“I think the industry behavior has moderated somewhat, but we’re still up a bit in quarter three. ”

Proteins: cheese and nuts have the wind at their backs

” our protein offerings like meat, cheese, nuts are doing quite well. There is a wind at the back in those categories. They are in the perimeter of the store. We’ve executed our playbook quite well across those businesses, even with higher commodity costs.”

We have an obligation to the center of the store

“we have an obligation to the center of the store and the great brands we have in them to execute the playbook equally well. And we think we can contemporize our offerings in meals and desserts to address the center of the store lack of traffic.”

Relentless measurement

“this is a land of relentless measurement and continuous improvement. And it’s always a journey when you’re making food to make sure that you’re consistently seeking root causes and improving every day”

Pricing for volatility

“We priced early based on expectations and there was continued volatility. So some of those commodity trends didn’t move in a normalized curve like we would expect.’

There are no mature brands

“I’m a believer. There are no such things as mature brands and it’s all about energetic idea-driven marketers. It’s all about ideas in people. And when you think about it, would you have guessed that Velveeta would have had the five-year run it’s had in the face of millenials? ”

“So when I look at an A1 or a Shake’N Bake or a JELL-O, I say it’s our job to contemporize the ceremony of those great brands. They actually play to the preparation of the new millennial, right?”