Deere FY 4Q14 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

Crop receipts expected to be down 17% from 2012 record levels

“US farm cash receipts which in spite of lower grain prices remained at historically high levels, thanks to help from record livestock receipts. As a result, our forecast calls for 2014 cash receipts to be about $413 billion, up about 1% from 2013, which would be the highest level ever recorded.

Given the record grain yield of 2014 and lower commodity prices going forward, our forecast calls for cash receipts to be down about 5% in 2015. Of note, although livestock receipts remain at high levels, crop receipts for 2015 are forecast to be down about 17% lower than 2012 crop receipt record.”

Unfavorable growing conditions could have a big impact on prices

“global grain stocks-to-use ratios remain at somewhat sensitive levels even after abundant harvest. Global grain and oil seed demand remains strong, while supplies appear to be adequate. Even so, unfavorable growing conditions in any key region of the world as well as unknown impacts from any geopolitical tensions could lower production, reduce the stocks-to-use ratio and result in prices quickly moving higher.”

Expect ag and turf equipment sales to be down 20% next year

“fiscal year 2015 Deere sales of worldwide Ag & Turf equipment are now forecast to be down about 20%. The Ag & Turf division operating margin is forecast to be about 8% in 2015 due to lower shipment volumes and a less favorable product mix as large ag machinery shipments declined.”

The long term trends are still in tact

” the trends that hold so much promise for John Deere’s future translates on population growth, rising living standards and increased demand for grain remain very much intact. They are largely unaffected by the periodic ups and downs of the farm economy”

Cash receipts is the best indicator of our future sales

“in some of the analysis that’s been done internally specifically around from our Chief Economist and again we continue to believe that farm cash receipt is the best indicator of sales in the US and Canada”

If you assume normal weather, then demand will outpace production

“much of that increase in the US corn stocks that we’ve seen is related to a bulk normal weather, and that’s resulted in yield really well in excess of trend. If you look out into 2015 and 2016, so the crop that will be planted this spring, if you assume trend yield, so just normal weather, not above normal weather, but normal weather trend yield, assume demand continues at same pace as 2015, so no increase in demand, holding demand solid, even if you assume acreage stays the same, you would see a drawdown in US corn carryovers as a result of that. The demand would outpace the production. And of course, as you’re probably aware, most analysts now expect US corn farmers to reduce acreage somewhat next year. ”

Only one period since 1965 that we’ve had three years of negative sales

“there’s only really one period if you look from 1965 forward where we saw three sequential years of lower sales. And even in that scenario, one of those years, I think, was less than 1% down.”

The worst thing that could happen is really good weather

“I would tell you the biggest downside risk would be that we would have incredibly positive weather again and that you would see trend yields moving forward.”

Hewlett Packard FY 4Q14 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

Net cash position vs. net debt position in 2012

“As a result, our balance sheet now stands at an operating company net cash position of $5.9 billion, a significant improvement from the $11.8 billion of operating company net debt in the first quarter of fiscal 2012.”

Finally breaking up the company

“Last month, we made another significant announcement that I believe will help accelerate the progress we’ve already made in the turnaround. We plan to separate HP into two new market-leading independent publicly traded companies. Hewlett-Packard Enterprise will lead the next-generation technology infrastructure, software and services for the new style of IT.

HP Inc. will be the leading personal systems and printing company, delivering innovations that will empower people to create, interact and inspire like never before. ”

Saw weakness in Japan enterprise

“We saw softness in Japan, which contributed to about half of the regional decline. And as Meg mentioned, had a tough compare in India related to the large PC deal won in the same period last year.”

The US is strengthening in a way that is way different than the last 3 years

” I would say, from a macroeconomic point of view, we don’t expect much change across the globe with the exception of the United States, which does seem to be strengthening in a way that is different from the last three years.”

We have 786 legal entities at HP

“the immediate mandate and I am going to a little bit of detail here is there is a corporate separation management office, who is tasked with creating three years of historic financials for each of the different businesses, which of course we do not have because we’ve been together. Second is a very detailed analysis of tax and legal separation. We have over 786 legal entities that this company, all of which have to be looked at and rationalized.”

Separation is totally the right thing to do

“I will say is this separation was totally the right thing to do for this company. It will as I said make us more customer focus, but it also give us a chance to clean sheet two new Fortune 50 companies.”

Diana Shipping 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

Chinese steel demand only forecast to grow 1% in 2015

“”As for Chinese steel demand this is expected to grow by only 1% to 748.3 million metric tons this year mainly due to the cooling down of the real-estate sector and the government’s efforts to rebalance the economy. The weak growth momentum will probably continue into 2015 and the WSA forecast that steel use will grow by 0.8% in 2015 and reach 754.3 million metric tons.”

Don’t expect big increases in charter rates next year. Panamax fleet is still oversupplied

“We expect the result of demand growth being closed to expect the supply growth to be volatility and further expect average time charter rates for next year of about US$18,000 per day for Capes and no more than $11,000 per day for Panamax. According to Commodore Research, the Panamax market continues to show signs of severe over supply. Expansion of the Panamax fleet is expected to slow the 6.5% in 2014 and 4.3% in 2015. However, unlike Capesize fleet very large growth has continued in the Panamax fleet again this year up until the last few months. It will still take time for the Panamax sector to truly recover from robust fleet growth that has only recently begun to ease.”

People are finally turning negative on the market

“What is real is that we recently had analyst, banker, private investors saying that they don’t like what they see, this is a good starting point. You remember that we were the only ones that we were talking about something like this. Now that people start seeing clearly that things are not so good, but we’ll make the market better and on the supply side as you are saying, we are seeing a better attitude from the investors, form the ship owners stalwarts, new building stalwarts putting more and more vessels into the water. We are on the right direction as regards thinking about the market not being so well for the near future. I know that it sounds contradicting but it’s a bad thing when everyone — it’s a good thing rather when everyone thinks that the market is really bad and we are going towards that direction, because that’s the way the market is going to turn positive at day point.”

Chinese pollution controls worry us more than anything

“What worries us a lot is the realization now in China that the country cannot continue on the path that they have been following up till now as regards pollution. Now that may have profound effect on the production of sea the importation of coal and general movement of bulk commodities that we have been talking about.

Now that only shown is far more important than any other structural changes might take place worldwide, either in developing nations or developed countries, because if they all these influences in structural changes fail in significance compared to what might happen if China imposed strict regulations in an orderly way on pollution.”

At this stage the best thing we can do is keep reinvesting

“consistency says to us that as the lower part of the cycle, we should keep our dry bulk to invest in order to create shareholders value, differentiating in a manner by introducing a dividend just to gain $0.20 on the share price, or $0.30 is something that is not an option for us. We find this part of our industry, this timing a very attractive one to invest as much money as possible and by doing that we will create a much greater value for our shareholders rather than giving them a small or a big dividend at this stage.”

Hormel Foods 4Q14 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

Jennie-O turkey doing quite well

“Jennie-O Turkey Store continues to build momentum delivering increased segment profit of 45% on a sales increase of 11% during the quarter. For the full year, operating profit was up 23% and sales increased 4%. Results at Jennie-O Turkey Store in the quarter were driven by continued growth in value-added sales, along with high commodity turkey prices. JENNIE-O lean ground turkey and JENNIE-O turkey bacon led sales growth this quarter.

We increased our Jennie-O Turkey Store advertising spend this year with a Make The Switch campaign that started early in fiscal 2014, featuring ground turkey tacos. We plan to continue this advertising campaign in new U.S. markets early in fiscal 2015. We expect Jennie-O Turkey Store segment operating profit margin to be within the 13% to 17% range going forward.”

Expect Jennie-O to have another good year next year, but there are some headwinds

“Clearly Jennie-O Turkey Store, our expectation is to have another good year. They are in a more favorable grain environment, plus they have great value-added momentum, and this should move them towards the top of the operating profit range that we just articulated. That being said, there are some mitigating factors for Jennie-O Turkey Store. The grain benefit is partially offset by hedges. We’ve talked before about our hedge philosophy. The soymeal side of the grain formulas has remained stubbornly high. And we do have certain grain based contracts with foodservice customers within that segment.

Secondly, we expect the turkey commodity meat markets, which have been at an all-time high, to not be quite as favorable in 2015. And then third, we have approved an enhanced advertising budget for Jennie-O Turkey Store, the Make The Switch campaign has driven good results, and so we’re going to be investing further there. In fact, overall advertising spending, as we talked about, was up double digits in 2014 for the whole Company and should be again in 2015.’

DSW 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

Comps turned back positive

“After posting a negative 3.7% comp in Q1 and a tenth of a percent comp in Q2, we rebounded to a plus 2.6% comp in Q3. Our sales performance strengthened across all major footwear categories.”

Strong trend in athletic footwear

“the athletic category was the strongest footwear category in the quarter, hosting the plus 7% comp increase. This was driven by very strong increases in fashion athletic across both genders. We continue to distort our inventories in support of this strong trend.”

West coast port situation being monitored closely

“we are closely monitoring the West Coast port situation. Our higher level of pre-buys gives us some flexibility. But our work stoppage in the West Coast ports would have negative consequences for all U.S. retailers.”

No aberration to weather in the Quarter

“what we saw is that when the weather was cooler than last year, we had nice positive comps and when the weather was warmer than last year, the comps were softer. It was a day-by-day thing. I don’t think for the quarter as a whole, we would attribute any aberration to weather quite honestly.”

Conversions up because customers doing research beforehand

“I think what we’ve seen all year along that customers are doing a lot of pre-shopping online and there that’s one of the reasons, our conversion is up in stores because not just that we are able to get them the wanted products but they’ve done a lot of home work ahead of time.'”

Tiffany 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

Americas doing great. Gold jewelry especially, entry level silver still not so much

“Starting with the Americas region, total sales increased 10% in the quarter due to an overall increase in the average price per jewelry unit sold, reflecting price increases taken in the Americas and other regions as well, but also stronger demand for gold within the fashion jewelry category. It’s worth noting that there was healthy unit growth in most categories, but that was offset by continued unit declines in entry level price point silver jewelry.”

Strong macro environment for our core customers

“We attribute the healthy sales growth from the Americas to a range of factors, including more engaging selling initiatives and visual merchandizing in our stores, new products, compelling marketing, and what has been a favorable macro environment for our core customers.”

Asia pacific soft, but China still had double digit comp

“The Asia pacific region had its challenges in the quarter, starting with the difficult comparison to a 22% comp store sales increase last year, which at that time had been driven by broad based growth across the region, including some statement jewelry sales. It was a different picture in this third quarter, with double digit comp store sales growth in mainland China, offset by varying degrees of softness in other markets. We’d expected only modest comp growth in Asia Pacific in this third quarter.”

Sales growth in Japan is taking longer than expected

“I presume by now you’re all aware of the extreme volatility in consumer spending before and after an increase in Japan’s consumption tax on April 1st…The return to monthly sales growth is taking longer than anticipated and we believe softness is now being exacerbated by weakening economic conditions.”

Mainland Europe better than UK

“We saw quite a contrast in European sales results between the UK and the continent. All countries in which we operate stores in continental Europe, achieved varying degrees of comp store sales growth in local currencies tied to both local customer and foreign tourist spending. However, comps continued to decline in the UK, reflecting some softness in both customer categories.”

Workday 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

Winning business in legacy system conversions

“we are really the only vendor that has taken those companies live with a unified solution that includes HR, talent management, benefits all the like in one unified solution and taken them actually live and put them into the production whether it’s an HP or a Flextronics. And I think those data points are a starting point for why those large companies have chosen us. In almost all cases, they are facing an upgrade of a legacy system and you know the math on that. The legacy systems are so expensive to upgrade. They look at different alternatives”

Converting 10-20k person businesses

“We are now very comfortable with a 10,000 to 15,000 person organization going live on financials and the associated volumes. And our pipeline now has companies north of that size 20,000 employees and higher. ‘

Data is really the next step forward

“I think that the cloud has been a transformational platform, but in many ways what you can do with the data is really the next leap forward. I mean, at the end of the day, companies are getting better and better at automating their transaction and processes. These Insight Applications really truly make them run their – or help them run their businesses better. And I think if you look forward 5 years from now, vendors that are in a similar space like Workday will lead with the analytics and lead with these decision-making platforms and the transactional platforms will just be assumed to be there.'”

We can give a CEO data to make important decisions

“when we sit down with an executive – I sat down with a CEO of a large company and he was looking to understand what is a good career path for an entry level person, how best to address turnover? In the old days, we would have said here is a set of tools and you can slice and dice the data any way you would like and figure it out. Now, we can actually tell them with 70% confidence, this career path will lead to a successful employee down the road, this one won’t. We can tell you with – I mean, the confidence levels move around based on the data itself, but we can give them not just ideas of turnover issues, but actually recommendations on how they might solve it. So, I mean, from our perspective this is the future of enterprise computing and so we are going to start leading with it pretty strongly going into next year.”

Ross Stores 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

Sales up 7%

“Sales increased 7% to just over $8 billion, with comparable store sales up 2% over the same period in 2013.’

Still prudent to maintain a cautious outlook

“Our merchants have done a terrific job of acquiring a wide array of exciting and sharply priced name-brand fashions and gifts to appeal to today’s value-driven shoppers. That said we believe it is prudent to maintain a cautious outlook as we have all year, given continued uncertainty in the overall environment and the likelihood of an intensely competitive and promotional holiday season.”

Promotional environment will be much more aggressive

“We are anticipating that the promotional environment will be much more aggressive, and we look at two things. We look at the pace, the amount of times that our competitors promote, and we also look at the depths that they promote. Since we’re in the value business, off of mainstream retailers, we’re constantly monitoring that.”

We’re not economists, we don’t know how much gas prices are going to help

“we’re not economists, so it’s for us to sort of calibrate those things and create them off against each other. So we really don’t know to what degree gas prices helped or to what degree they will help going forward.’

The port disruption will lead to extra inventory

“‘as it pertains to inventory from the port, it is hard to tell. It is – it’s a buyers’ market, there’s a lot of merchandise in the market right now. It’s hard to differentiate what’s from the port or not. But what I would say is that whenever there is a disruption like that in the marketplace, it definitely leads to supply. So you would expect that we would see supply sometime the end of this year into beginning of next year.”

We’re an everyday low price model

“We don’t promote. So we’re in an everyday value business, so we have to anticipate where we think they are going to be, and then set our values based off of where we think they’re going to bench their promotions.”

No major issues in real estate availability

“we don’t see any major issues in terms of real estate availability at this point.”

More digital

“We have over the last several years devoted more and more of our marketing budget to digital. We see digital as a good sort of proxy for word of mouth, which is kind of something we’ve always relied on very heavily, that the customer will spread sort of the – will talk about the great deals they got at Ross with their friends and we see digital as a way of doing that.”

The Gap 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

Not pleased with our 3Q performance

“While we’re not proud of our third quarter sales performance, driven by a particularly tough result at Gap brand, we are pleased that the team has demonstrated strong discipline on both expense and inventory”

Sales flat, comps down

“Regarding sales for the third quarter, total net sales were flat at $4 billion and comp sales were down 2%.”

Art Peck will be new CEO

“Art Peck, our new CEO, who will be taking over from me on February 1st can put the team he wants to put together going forward that gives Gap Inc. the best chance to have innovation to win more customers, to grow internationally and to be a top global retail apparel company around the world.”

He’s been with the co for 10 years

“Being at the company for the last 10 years and having multiple roles around the company has really given me very broad and oftentimes very deep exposure to the executives in our senior roles.”

Currency is an important headwind to consider

“in Q4 we really expect more foreign exchange headwinds than we did in Q3 as well. If you think about the yen alone, the average rate was about 105 in Q3. And as of today, it’s about 118, which is a 12% depreciation. So that’s an importance piece to keep in mind as well.”

foreign exchange does help SG&A

“just as foreign exchange hurts your sales and hurts your earnings, when you translate the SG&A dollars, it helps your SG&A.”

Digital gift guide actually costs slightly more money

“We have a new gift guide out, which is doing really well and we feel very good about that. But it’s electronic, so those are trade-offs we do. We could have gift guide distributed to our best customers, call it 3 million, 4 million people and that would have cost x per copy.

So thoughtfully we actually put a little bit more money into the digital side of it. It’s so far so good. The money we put into it when you have the digital gift guide, which changes every day on Gap, you can actually click on to something you love that’ll take you right to our site. So we felt it was more prudent to put a little bit of money behind that choice as opposed to mailing out 4 million copies.”

General Motors at Barclays Conference 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

Johan de Nysschen – President, Cadillac & General Motors Executive Vice President

I’m going to be candid

“I’d like to do is to give you a very candid assessment, I suppose about the state of the Cadillac business. It may or may not be as frank as you are accustomed to hearing, but hopefully it’s what you want to hear.”

We have to really take stock of where we are

“I’m not here to try to sell anything to you. I am not here to try to impress you. But I think that unless we really take stock of where we are, we cannot implement and execute the strategies and tactics and operational measures to address the shortcomings and to begin to build the brand back to where we would like to take it.’

I’m a newcomer

“I’m a newcomer to the company and I kind of look at it with a fresh pair of eyes. ‘

I’m from Audi

” would like to make one small correction to the introduction, no Audi guy would ever want to be described as being from Volkswagen. I prefer to say my 20 years was spend at Audi, which probably gives you a bit of an insight into the way my brain in wired.’

GM is focused on the mainstream business, not the nuances of the luxury business

“there are lot of very smart people that I’m now proud to call my colleagues, but also a lot of people who – to be honest are more rooted in the needs and requirements for success in the mainstream business as opposed to understanding the finer nuances for success in the premium end of the business and the rule books are different.”

If you apply the same plays to the premium sector that you do to mainstream, it doesn’t work

“if you exercise the same plays in the premium sector as you would do in the mainstream sector, which are the requirements for the success there. I guess you do that for long enough and you take one of the greatest brands in the world and you turn it into one that have a great potential, but is no longer living up to that very high standard.’

You need to change the culture and systems completely

“it’s not just a matter of policy you also need systems, mindsets, even our dealer staff will need to come to terms with the new way of doing business.’

There’s really not a cadillac division within GM

“I’m referring today the reality that Cadillac is heavily matrixed within the General Motors organization and to be really candid with you – idea that there exists a Cadillac division, that’s not so.’

The company is organized by function

“the company is organized by function and the functions work across all brands.’

You end up with a lowest common denominator approach

“it works particularly well when you’ve got brand that are Chevrolet, Buick and GMC positioned more or less in the mainstream part of the business. But imagine, what we are asking the fine men and women of General Motors to do. We said to them, please start your product planning discussions, your marketing planning discussions and your network development discussions, your distribution discussions with a full agenda.

In the morning, you cover all the brands and somewhere about 3:10 in the afternoon, you get to Cadillac. And now, we expect them to do a 180 degree shift in terms of the insights and understanding of the competitive environment and in terms of the application of particular strategies that are appropriate for that environment.

It can’t happen and what does happen is that you end up with kind of a, lowest common denominator approach that really is rooted in predominantly meeting the needs of the maintain stream business.”

A problem with the number of stores too

“we have a massive legacy issue with our retail distribution network, 929 stores. This will lead to of course very strong dilution of the volume throughput per store. It means the dealer profitability is somewhat challenged. That means dealer can’t invest into facilities, into people, into creating an ownership experience that supports the positioning of the brand.’

The luxury segment of the auto industry does 10% of the volume but 50% of the profit

:The global luxury market accounts for, depending on how you define the luxury market, 10% to 12% of the total auto business globally, but generates about half the profit. :

GM is a titan

“General Motors is a titan corporation. Seriously, you know, I read a lot of negative press about the company, but as an outsider whether it was in the VW Group or whether it was at Nissan, we looked at General Motors with trepidation. It’s a powerful competitor. It’s a company with massive resources, with great expertise, with great depth of skill and financial things.’

We don’t want a cadillac in every driveway, we want it in the right driveways

“one of the issues for us that we see as an opportunity is to get back to the original concept of premium exclusive motoring. It used to be the domain of a few. You had to have a particular station in life to get to these high-end brands.

And we have to hand it to the three leading German brands, they have become so successful that they’ve almost become ubiquitous, everybody drive one, there is one in every driveway. And the opportunity for us to say we don’t want to park a Cadillac in every driveway, but in the right driveways. ”

Captains of industry make things aspirational

“if people see the captains of the industry arriving at the airport or parked outside the golf club, driving a particular brand of automobile, then to conformation, that kind of automobile is driven by successful people. Therefore, it’s aspirational.’

We’re separating Cadillac from the rest of GM

“it’s been discussed and agreed and announced, you will be aware that we are now effectively separating Cadillac from General Motors. We are setting up dedicated organization and we really want to focus on this notion of securing 100% mindshare on developing the Cadillac business.”

We can’t just go commando though or we’ll fail

“I will absolutely as a new comer to the company and with the strong support that I’m getting from all of my colleagues, if I try to go to war with General Motors and the organization and I want to tell it this is how the world will work, I will definitely, definitely fail. It’s clear.

And so, how we do business must be taking into account how General Motors does business. I have set up the top layer of functions that I believe need to be inside Cadillac. This has been done and it’s been agreed. However, the bottom up construction of the organization is being done on a consultative basis.’

Moving Cadillac HQ to NYC

“there is a lot of talk and discursion about the decision for us to relocate Cadillac global headquarters to here in New York.

Particularly, a lot of the Michigan people were unhappy about that and I need to explain. It’s not that we have a problem with Detroit, we don’t. What we need to do is to create geographic separation. It forces process changes, it forces us to do things in a different way.”

We want to use our American heritage

“We’re an American brand, we definitely don’t want to try to out German, the Germans. We want to use our American roots and heritage as a key differentiator. And America is still, I have to tell you despite what you might hear on CNN and read in USA Today, are an admired country around the world. I say that as a non-American. And American products are highly regarded.’


“Cadillac will present itself as a bold American brand, bold and confident. We are sophisticated, but a modern progressive contemporary kind of sophistication, not the old world grand chandeliers kind of sophistication. That’s not the lady in the ball gown, but in the seductive black cocktail dress.

And then, of course, being American, we also have this deep-rooted belief that the future will be even better than it is today. Yes, we are about a little bit of domestic [ph] behavior, the joy of life and enjoying life to its fullest everyday. But there’s a fundamental belief that tomorrow holds even better prospects. And that will be a little of the swagger that we will come to market with. And you’ll see it expressed in the design language of our cars, you will see it expressed in the marketing communication tone and manner, you’ll see it expressed in our behaviors at Cadillac.”