Company Notes Digest 9.30.16

Each week we read dozens of transcripts from earnings calls and presentations as part of our investment process. Below is a weekly post which contains some of the most important quotes about the economy and industry trends from those transcripts. Click here to receive these posts weekly via email.

This week’s post: Strong Consumer

Pier 1, a struggling retailer, pointed out that sales trends improved in September. It could be company specific, but it also could be an indication that the consumer was out spending this month. Other consumer oriented companies have tended to echo that the consumer looks strong.

Earnings season will start in a few weeks. Don’t be surprised if we return to earnings growth for the first time in many quarters.

The Macro Outlook:

Consumer spending may have been pretty strong in September

“The improved sales trend that started in August and continued into September is encouraging…We’re not really sure what happened in July…Anyway, we saw sales pick-up in August, comps were minus 1%, and in September, comps are trending positive low single-digits with merchandise margin also ahead of last year…We are certainly not ready in any shape, way, or form to declare victory, but we are pleased to see that the slowdowns in store traffic, the decreases in store traffic have ameliorated over the last nine weeks.” —Pier 1 CEO Alexander Smith (Home Furnishing)

There’s no slowdown for the high end consumer

“what I’d say is that we have not seen a slowdown in the high end consumer…what we are seeing is, it feels like vacation spending in particular has so far been strong and certainly over the summer we didn’t see any signs of some kind of slow down. I think people are still booking trips” —Vail CEO Rob Katz (Ski Resorts)

Carnival Cruise’s booking trends look strong

“In terms of the North America brands in Europe, again our booking curves look strong, and look good as do our pricings” —Carnival Cruise Lines CEO Arnold Donald (Cruises)

Businesses are getting closer to full employment

“businesses are getting closer to full employment and we are seeing the checks per client slow, but we expect that frankly for the last couple of years as people came back from recession.” —Paychex CEO Martin Mucci (Payroll Processing)

Industrial companies have destocked and may be ready to make new orders

“I think largely the destocking has occurred. And I think what will happen is the dealers and the larger distributors wind up having more line of sight to more demand. They are going to bring more inventory in…So, I really think as we move through ‘17, we are going to see some improvement in that general industrial market.” —Actuant CEO Randy Baker (Industrial Components)

No one is expecting much growth though

“The general industrial market appears to have stabilized, but shows little signs of growth. Industrial distributors continue to report sluggish retail order demand. The impact of weak oil, construction, general manufacturing markets have constrained with level of sales improvements throughout the world…Regionally, the U.S. remains the most challenged, while Europe does not seem meaningfully impacted by the Brexit panic.” —Actuant CEO Randy Baker (Industrial Components)

The outlook is for a 2.5% growth environment

” we don’t see anything as we sit here today that would fundamentally change the dynamics that we see in the market, let’s say, as we look out over the next four quarters. We see more of the same. And what we see is an organic market that would continue to grow in that 2.5% range” —Accenture CFO David Rowland (Consulting)

International:

A stable dollar will help companies post better numbers next year, but it will be tough to get back to 2014 levels

“I think now with the currency having stabilized we feel like that positions us pretty well going in to this year in terms of really for those countries where we did see some decline to really kind of moderate those declines if not eliminate them in some cases…That said, with the strong US dollar, I don’t think we can necessarily get back to where we were 2.5, 3 years ago without seeing some shift in currency.” —Vail CEO Rob Katz (Ski Resorts)

Business has picked back up in the UK

“There was a slight slowdown in the sales cycle in the UK when Brexit came out. People were sitting and sort of contemplating a little bit. We saw that and we see that picking up now” —Factset Director Global Sales Scott Miller (Financial Data)

Russia faces different economic challenges than most other countries

“as far as the Russian economy is concerned, we find ourselves in a totally different situation. Unlike many other countries we have high inflation, we have high interest rates, we still have the option of lowering them…the task facing the Central Bank of Russia is different.” —Central Bank of Russia Governor Elvira Nabiullina (Central Bank)

Financials:

Financial services firms are under a huge amount of revenue pressure from low rates

“although we are very pleased with our growth in Financial Services, in banking and capital markets specifically, I would say that is an industry that we are watching…very, very carefully and very closely.” —Accenture CFO David Rowland (Consulting)

Factset is seeing more small investment firms go out of business

” We had a record growth in new client acquisitions…but it was mixed with an increased cancellation rate that was what I would call market related. So, it was clients going out of business, hedge funds going out of business, some of the smaller buy side where they have been shedding employees…We definitely saw an increase in the quarter of the market-related cancellations in that buy side sector.” —Factset Director Global Sales Scott Miller (Financial Data)

Finance is a tech intensive industry

“Financial Services is a very technology-intensive sector, especially if you’re thinking about banking and capital markets, specifically.” —Accenture CFO David Rowland (Consulting)

Consultants benefit from increasing regulation

“the rules keep coming, I don’t think that helps necessarily the business environment in general because of over regulation, but it certainly gives Paychex a lot of opportunities to go and talk to clients about their payroll need and their HR outsourcing need, because small to midsized business is just can’t keep it up with all of these changes. The other thing is that enforcement and the penalty have increased as states and federal governments have looked for revenue sources.” —Paychex CEO Martin Mucci (Payroll Processing)

Consumer:

The Chinese government wants to see the cruise industry succeed

“cruise is in the 5 year plan for China. So that means the government has committed to developing the Cruise industry. The reason for that is pretty self-evident. We’ll employ, overall with port development and infrastructure, and supply chain, and training as well as ship building that will employ millions, and millions, and millions of Chinese. So the government is very interested and they see cruise as an economic engine going forward. So you’ve got the support of the central government and the various provincial municipal governments, so that’s very important.” —Carnival Cruise Lines CEO Arnold Donald (Cruises)

There is a ceiling to how much shopping people will do online

“I think what we do know is from all the research that there is, we’re getting — moving towards a sort of ceiling where the percentage of home furnishings that are bought online starts to — as a percentage of the total starts to slow down very considerably because there’s many, many customers…who like to visit stores” —Pier 1 CEO Alexander Smith (Home Furnishing)

Technology:

Verizon continues to claim that they’ll have 5G in 2017

“I’m going to speed into the 5G world in 2017, and it’ll be just similar to LTE as far as I’m concerned, where we get a leap on all of our competitors. So we’re moving forward. I mean, at least, two of our competitors are still trying to deal with building out their LTE network. I mean, that’s like five years ago already… They’re still dealing in the LTE world. I’m dealing in the IoT world, smart city world, telematics. So I’m moving ahead and they’re still talking about how great their network is in LTE.” —Verizon CFO Fran Shammo (Telecom)

Is it just a marketing tool? Network performance has converged.

“there isn’t much of a difference between network performance today. We don’t profess to have yet the best network but we do feel that our network is good and certainly does not justify a very large premium that the competitive providers are actually charging… we shifted the messaging to say why pay more. And this started to resonate with consumers in the United States” —Sprint CFO Tarek Robbiati (Telecom)

Blackberry is exiting the hardware business

“Coming out of Q2, I feel that we are reaching a good inflection point where our financial picture is stable and our pivot to software taking hold. In line with this pivot…we have decided to discontinue all the handset hardware development, only hardware, and to leverage third-party partners to provide that function” —Blackberry CEO John Chen (Smartphones)

Industrials:

Nike says it is revolutionizing manufacturing to allow for greater personalization

“we took major leaps toward…the promise of personalized performance. Our connection to the consumer through Nike+ is core to that vision. But equally important is disrupting the business model that supports it or as we like to call it, our Manufacturing Revolution or Man Rev… We’re continuing to scale our transition from cut and sow where precision is at the stitch level to digital design where precision is at the pixel level. We’re leveraging the power of computational design that uses algorithms to create highly tunable innovations very quickly. This summer in Rio, athletes such as Allyson Felix, Elaine Thompson and Mo Farah claimed gold wearing our latest track spikes. Each were developed using computational design, 3-D printing and Selective Laser Sintering, which allowed us to create and refine prototypes in hours instead of months and aligned with the athlete’s specific training programs and competitive needs.” —Nike CEO Mark Parker (Apparel)

Materials, Energy:

Budgets are still constrained for oil companies

“Despite oil prices beginning to stabilize, companies continue to operate in a budget constrained environment and recent global events have caused additional market uncertainty.” —IHS Markit CFO Todd Hyatt (Data Provider)

It may be two more years before there is a recovery in agricultural equipment markets

“Off-highway mobile equipment continues to be very weak, particularly in agriculture. While major manufacturers are reducing their inventory due to low crop prices and weak model year 2017 order writing. I expect we will now have at least two full planting seasons before we see improved end market activity” —Actuant CEO Randy Baker (Industrial Components)

Ag equipment manufacturers are still sitting on a lot of inventory

“I think you follow the ag market pretty close like we do. And what we have seen is that the major distributors around the world are sitting on a lot of inventory. And so as the major OEMs have completed their order writing campaigns for combines, spring equipments, planting and seeding equipment it is a weak order demand. And I think you would have heard that from our major customers” —Actuant CEO Randy Baker (Industrial Components)

Miscellaneous Nuggets of Wisdom:

Operating leverage starts at the top line

“On the SG&A leverage, it all starts first with topline growth. The minute you get good top line growth, you get leverage on all of the other SG&A costs that we have in the P&L.” —Pepsi CEO Indra Nooyi (Sugar Water)

You can always find something to worry about if you want to

“every year there’s geopolitical tensions. There’s some kind of disease consternation. There’s macroeconomic malaise…Every year in some markets around the world, those things happen and it’s part of our business. So we manage that. We anticipate it. We change deployments…to us it’s normal business.” —Carnival Cruise Lines CEO Arnold Donald (Cruises)

Full transcripts can be found at www.seekingalpha.com

Sprint (S) at Deutsche Bank Notes

Sprint’s marketing message: why pay a lot more for a network that is only marginally better?

“And so we’re very pleased with that campaign, because what it actually pointed out is that there isn’t much of a difference between network performance today. We don’t profess to have yet the best network but we do feel that our network is good and certainly does not justify a very large premium that the competitive providers are actually charging… we shifted the messaging to say why pay more. And this started to resonate with consumers in the United States” Tarek Robbiati – CFO

 

Network is the number one cause of churn

50% of the reasons why customer churn are network related. 30% to 35% are price related and 15% to 20% are service related.” Tarek Robbiati – CFO

 

CapEx is lower presently because Sprint is benefiting from its historically high CapEx

“We spent and historically Sprint has had the highest CapEx to sales ratio of the industry. With Network Vision we spent a fair bit of money modernizing our tower infrastructure. And so we are still benefiting from that historic investment and this is really a positive walking into fiscal year ‘16 and that’s why our CapEx in part was lower in the first quarter of fiscal year ‘16.” Tarek Robbiati – CFO

 

CapEx is also lower because small cell installation is far cheaper than towers and other previous infrastructure

“The cost of those cell sites, small cell site is a fraction of the cost of the towers. So it depends on how many cell sites you need to build in every geography but a cell site is on average costing 20% the cost of a tower. So you need to spend less per small cite as you roll out some of them. So the spend is more scattered over time because of the permitting and the unit dollars that you spend are lower and the two effects combined explain why we guided the market towards the 3 billion mark for this fiscal year. We said less than 3 billion.” Tarek Robbiati – CFO

 

Sprint wants to utilize multiple sources of financing going forth

“It’s important for us that we have a diversified financing strategy. And so we will use different types of source of financing whether it’s high yield, whether it’s asset backed lending or others that I’m not mentioning but — to continue to finance our operations. And that’s really important because now that we have shored up liquidity we’re paying more attention at lowering our cost of capital and lowering our cost of debt. We pay every year around $2.3 billion of interest expense. It’s a very high number and it stands in the way from us becoming pretax positive. You know, it’s not talked a lot about in our – by the analysts who follow us but we do have a fair bit of operating losses on our balance sheet that we would like to monetize and realize the value for. We have $19.2 billion of notes at the end of the first quarter… It’s really important that we have sufficient liquidity to repay them and it’s a gradual process that we are embarking on incremental over the next several quarters to reduce our cost of debt.” Tarek Robbiati – CFO

Accenture 4Q16 Earnings Call Notes

Accenture plc (ACN) CEO Pierre Nanterme on Q4 2016 Results

Example of digital project

“. In digital, we are working with many hotels, the European hospitality company to implement a digital transformation strategy to increase sales across all channels through data driven customer segmentation. In just one-year, direct sales were up of 27% and more than one million people have joined Meliá’s Rewards program.”

Example of cloud and security projects

“In cloud, we are helping Rio Tinto, a global mining company, transition its enterprise systems to the public cloud, including the world’s largest SAP production system migration to Microsoft Azure, delivering increased agility with an as-a-Service model.

And in security, our cyber experts are working with large U.S. based utility to define, develop and run a next-generation security operations center. We are developing a comprehensive strategy to assess risk, managed identity and enable alerts for cyber threats in real-time. ”

See strong demand for mission critical transformation programs

“We continued to see strong demand from our clients for large scale mission-critical transformation programs. The broad range of services we provide across our five businesses, together with our deep industry expertise, continues to differentiate Accenture and we remain the partner of choice for the world’s leading companies.”

Double digit growth in the US

“In North America, we delivered 11% growth in local currency, driven by the United States where we have now delivered double-digit growth of five of the last six years. In Europe, we grew even 11% in local currency, with double-digit growth in the UK, Italy, Switzerland, Spain and Germany, as well as high single-digit growth in France. And in growth markets, we grew revenue 8% in local currency, driven primarily by double-digit growth in Japan, as well as strong double-digit growth in China, India, South Africa and Mexico.”

David Rowland

Macro environment volatile but guidance assumes market growth

“Great, thank you. So, let me just take a minute and just frame how we see the environment and then how that relates to our guidance. I think, first of all, and I don’t think it’s a surprise to anyone on this call, in balance, we see the overall macro environment being more volatile, let’s say, at this time than where it was a year-ago entering fiscal 2016. So we’d see a higher level of volatility overall in the macro environment for the reasons that this group understands very well. Having said that, in that context, our guidance assumes that the market growth, and when I reference market growth, I’m talking about the basket of publicly traded companies. We expect for purposes of managing our business and the outlook that the market growth is going to be very similar in 2017 to what we saw in 2016. And in 2016, to be clear, we saw organic growth in the basket of publicly traded companies of about 2.5%.”

Financial services is a tech intensive sector

” I think, as we know, Financial Services is a very technology-intensive sector, especially if you’re thinking about banking and capital markets, specifically. Within that, I would say the three demand drivers continue to be significant investment in digitizing the customer channels, so what we refer to, the sector refers to as distribution and marketing. There are significant investments to digitize the channel as a way to drive growth in the bank.”

We don’t see anything that’s going to fundamentally change a 2.5% growth environment

“What’s driving that assumption is that we don’t see anything as we sit here today that would fundamentally change the dynamics that we see in the market, let’s say, as we look out over the next four quarters. We see more of the same. And what we see is an organic market that would continue to grow in that 2.5% range, which means that we are making our own market through our differentiation, the uniqueness of our strategy, leveraging the power of our investments to drive a level of organic growth that is meaningfully higher than that to take share. But we don’t see anything that would meaningfully change that underlying organic growth of about 2.5%. So in other words, we’re not speculating on – you pick your black swan of the day, we’re not speculating on some black swan event that would materially change the market. If that were to happen, all companies will be revisiting the impact of something like that, should it occur.”

Do see some decelerations in 2017

“In terms of the – again, I almost hate to use the word deceleration because in almost all cases, our growth ambitions for the vast majority of our verticals continue to be quite strong and well above the market, albeit at lower levels than, in many cases, the very, very strong double-digit growth we’ve had the last year, if not two years. And so deceleration, what I would say for many of our verticals, we’ve assumed lower but still strong growth is the way I would characterize it. Energy and chemicals and natural resources, we don’t see a catalyst for change. We think those industries are going to continue to be tougher, let’s say, continue to be tough as we go through the fiscal year. As I mentioned, we have seen some pressure in communications in Europe in particular. And although we are very pleased with our growth in Financial Services, in banking and capital markets specifically, I would say that is an industry that we are watching, through Richard Lumb’s leadership, we are watching very, very carefully and very closely.”

Pepsi 3Q16 Earnings Call Notes

PepsiCo’s CEO (PEP) Indra Nooyi on Q3 2016 Results

3% volume growth in snacks

“we had more than 3% organic volume growth in global snacks and more than 2% organic volume growth in global beverages. While foreign-exchange translation continued to pressure our reported revenue results, we delivered more than 4% organic revenue growth, which represents an acceleration from the first half.”

Generated 37% of all food and beverage sales growth in the US

“For example, the third quarter in the US, which is our largest market, we were once again the largest contributor to retail food and beverage sales growth. We generated approximately 37% of all food and beverage retail sales growth, significantly higher than our food and beverage dollar share position of less than 10%. And we generated more retail sales growth than all other $5 billion class food and beverage manufacturers combined.”

SG&A leverage all starts with topline growth

” On the SG&A leverage, it all starts first with topline growth. The minute you get good top line growth, you get leverage on all of the other SG&A costs that we have in the P&L. And so, this quarter was a very, very good top line growth at 4.2%. That’s pretty significant.”

Hugh Johnston

Deflationary environment in commodities, but do have a negative water mix

“We are continuing to get good pricing in carbonated soft drinks. The couple of factors I would remind you of is we do have deflationary commodities right now. So you’re seeing a little bit less of that pricing flow through into retailers as we have deflationary commodities. The other is, we do have a negative water mix going on. So on the one hand, non-carbs were quite positive. But a portion of that was water which is, obviously, from a price mix perspective, negative”

Pier 1 FY 2Q17 Earnings Call Notes

Pier 1 Imports’ (PIR) CEO Alexander Smith on Q2 2017 Results

Improved sales trend continued into September

“We told you earlier this year that we expected a tale of two halves. The improved sales trend that started in August and continued into September is encouraging because in the second quarter, our topline performance was below plan with the most significant pressure seen during the month of July. We’re not really sure what happened in July. The internal factors were no different from June or August, but there were some significant events affecting the news cycle. Anyway, we saw sales pick-up in August, comps were minus 1%, and in September, comps are trending positive low single-digits with merchandise margin also ahead of last year.”

Closing stores is not a panacea

“Put another way, 95% of our sales are influenced by a store. That’s a big number, which brings me to our initiatives around real estate. There has been much discussion among investors and retailers about what the right-sized portfolio looks like in today’s omni-channel world. As you’ve just heard, our stores play a central role in almost every aspect of a Pier 1 Imports sale. We believe our current store optimization program, when completed will provide us with an appropriate number of locations for the foreseeable future. Closing stores is not a panacea. We lose store sales, we lose online sales, and we deleverage our costs more rapidly. The importance of stores must not be underestimated. And we all know that store traffic has become an industry-wide challenge and it’s certainly impacted our sales. Eventually, however, we believe equilibrium will be reached between store and site traffic.”

When things are going against you it’s everything, but the opposite when things start to go your way

“Well, all of the above. I think when things go against you it’s very rarely one thing. It’s always an accumulation of a lot of things. It’s just the way it works and what we’re seeing now is the impact we think of a lot of things going right which sort of all add up to better sales performance. Certainly, we’re seeing good traffic increases to the site. We are seeing less bad store traffic if that’s the right phrase.”

Seeing some better traffic

“when we start to get a healthy traffic, we start to get a sort of healthier mix between furniture and non-furniture departments. So I think we’ve seen some of that happening. In terms of ticket, we have seen an uptick in the ticket. That’s partly a consequence of where we are with clearance and partly a consequence of she is liking the product.”

It’s possible to overdo internet marketing

“Okay, Dan. Well, don’t forget that if you think of marketing in those three buckets, print, digital, and TV, everything we do in digital is measurable to the minute degree. So, we know exactly what return we’re getting for spend on everything to do with digital, and we can move dollars around between email and search and display depending on the — how efficacious they are all seeing at the time. So, we just have to make sure with digital that we don’t try and make it too efficient because we have to make sure that we get a balance between reach and efficiency.”

There is a ceiling to the amount of home furnishings a person will buy online

“I think what we do know is from all the research that there is, we’re getting — moving towards a sort of ceiling where the percentage of home furnishings that are bought online starts to — as a percentage of the total starts to slow down very considerably because there’s many, many customers, not just our competitors but our competitors’ customers who like to visit stores for all the reasons that we talked about.”

We are pleased to see traffic has ameliorated in the last nine weeks

“We are certainly not ready in any shape, way, or form to declare victory, but we are pleased to see that the slowdowns in store traffic, the decreases in store traffic have ameliorated over the last nine weeks”

This is who we are:

“Well, I think that’s an intriguing question, and I think I would start by saying I think our merchandise is still exclusive and it’s still highly differentiated on an item-by-item basis compared to any of our competition. And I think the other big difference that we — the other thing that we have which others don’t have is our ability to put together highly edited and thought through collections which make sense to customers. I mean those are our points of difference. I mean we are not aiming to have the biggest assortment in the universe. That’s not our go-to-market proposition, and we are happy for others to do it. We are not driven by being the lowest price in town and that’s not part of who we are as well.”

Jeffrey Boyer

-4.3% comp

“Net sales decreased 6.7% to $406 million while company comp sales decreased 4.3%, primarily reflecting soft store traffic. As Alex mentioned, July was the most challenging month of the quarter. We are encouraged that sequentially sales trends improved in August and have demonstrated further improvement in September.”

Paychex FY 1Q17 Earnings Call Notes

Paychex’s (PAYX) CEO Martin Mucci on Q1 2017 Results

#7 best company to sell for according to selling power magazine

“We’ve been named to Selling Power Magazine’s 2016 list of 50 best companies to sell for landing at number seven. This is the fourth consecutive year for Paychex has appeared on the list moving up from the number nine spot last year very proud to be in the top 10 of best companies to sell for.”

Price increases in the 2-4% range

“So payroll is different from HR services but both are in the same in the same range in the range of 2% to 4%. On HRS, we don’t uniformly apply price increases across all products. We really do that based on where we see the market. So – but our price increases are in the 2% to 4% range.”

The competitive environment is pretty much the same as it had been

“I feel the competitive environment is pretty much the same as that has been same number of competitors and I think if anything we are feeling stronger about where we are from a mid market product than we certainly did a year or two years ago with the complete bundle product that we offer and the addition that we’re constantly making almost quarterly to the HCM bundle we have for Flex.”

Don’t see any changes in the economy in general

” I think we are holding price pretty well particularly in that mid market and we are gaining more revenue per client based on the bundle. So we feel pretty good about it right now. I think the only thing that we see impacting that would be more of the economy in general and we don’t really see any major changes there other than that businesses are getting closer to full employment and we are seeing the checks per client slow, but we expect that frankly for the last couple of years as people came back from recession.”

Feel good about the middle market

“So we feel good about the mid market and we are fully staffed, in fact we’ve increased more reps there than any other division in the mid market because of the product investments we’ve made and the opportunity we have between service and product. So you’re pretty good about the mid market right now and the opportunity particularly for selling season.”

Always been known more as a service company

” we’ve always been very much known as a service company and our technology was really more internal that next external for the client facing in beginning about six years ago, we really ramped up the investment and technology. And I think the technology becomes part of the service story, clients want to do more themselves, they want to do it online, mobile, they want to do and how they want to do it when and where they want.”

Regulation has created opportunities

“there has been a steady flow based on current administration and probably won’t change much in the election which could have some impact, but minimum wage for example right now it’s extremely confusing for our clients minimum wage rules are different by state, the Feds talk about changing minimum wage they have for government, but some of those are in that tied into government, but states are different, cities are different and we really help a lot of our clients help – we help them through our payroll service only or our HR outsourcing to stay up with minimum wage changes because not only are they are not changing ones they are changing over period of years and you have to make sure that you stay current with those.

And there is a lot of work on identifying like who is a the kind of immigration type things, who is – you got to know your customer, you got to know your employees, you got to make sure you got all that well documented.

So the rules keep coming, I don’t think that helps necessarily the business environment in general because of over regulation, but it certainly gives Paychex a lot of opportunities to go and talk to clients about their payroll need and their HR outsourcing need, because small to midsized business is just can’t keep it up with all of these changes.

The other thing is that enforcement and the penalty have increased as states and federal governments have looked for revenue sources. So not only is there an issue about whether you are compliant, but if you are challenged on your compliance, we can provide a tremendous amount of help. If you get a penalty in payroll, if you get a penalty for a time issue – a time and attendance issue, we’re there to support you with expert documentation and background and relationships with federal state and local governments and that’s a big plus that we sell to clients, but they don’t realize sometimes until they are hit with an audit or enforcement penalty.”

Blackberry FY 2Q16 Earnings Call Notes

BlackBerry’s (BBRY) CEO John Chen on Q2 2017 Results

Exiting hardware development business

“Coming out of Q2, I feel that we are reaching a good inflection point where our financial picture is stable and our pivot to software taking hold. In line with this pivot, we are announcing a new strategic direction in our mobility solutions business, focused on developing and licensing of our security device software as well as the BlackBerry brand. As part of this strategy, we have decided to discontinue all the handset hardware development, only hardware, and to leverage third-party partners to provide that function, I’ll provide some details little later.”

New CFO

“You are all aware by now that James Yersh has decided to leave BlackBerry for personal reasons. James has been with the company since 2008 and our CFO since November 2013 when I came on board.”

What the announcement means

“We really have not outsourced all our development – hardware development or handset development effort. We are taking one or two products outsource it to others, but we’ve been developing our own handset also. So with what I announced today, we will end that activity and rely completely on partners. So working with partners, relying is too strong a word, and working with them to make sure their hardware portfolio is up to spec and competitive, is of course reduce a lot of expenses, not only on operating expenses, but capital that we talk about, we don’t have inventory we need to carry anymore. So it’s a long list of savings, you know, people, equipment and so forth.”

 

Actuant FY 4Q16 Earnings Call Notes

Actuant’s (ATU) CEO Randy Baker on Q4 2016 Results

Markets remain difficult but end demand is more stable

“Most markets remain difficult in the quarter, but end demand is becoming more stable.”

May be two planting seasons until improved end market activity in ag

“Off-highway mobile equipment continues to be very weak, particularly in agriculture. While major manufacturers are reducing their inventory due to low crop prices and weak model year 2017 order writing. I expect we will now have at least two full planting seasons before we see improved end market activity”

General industrial market stabilized but little signs of growth

“The general industrial market appears to have stabilized, but shows little signs of growth. Industrial distributors continue to report sluggish retail order demand. The impact of weak oil, construction, general manufacturing markets have constrained with level of sales improvements throughout the world. ”

US is the most challenged region

“Regionally, the U.S. remains the most challenged, while Europe does not seem meaningfully impacted by the Brexit panic. On a positive side, the truck – on-road truck market in Europe and China remains supported by good registrations on an aged fleet.”

Destocking has occurred

” I think largely the destocking has occurred. And I think what will happen is the dealers and the larger distributors wind up having more line of sight to more demand. They are going to bring more inventory in. They have been very, very cautious with bringing any stock in and which is probably a good thing for us in the market that they are not filling their distributors and their shelves with inventory that’s going to take multiple quarters to use. So, I really think as we move through ‘17, we are going to see some improvement in that general industrial market.”

Ag equipment makers are sitting on a lot of inventory

” I think you follow the ag market pretty close like we do. And what we have seen is that the major distributors around the world are sitting on a lot of inventory. And so as the major OEMs have completed their order writing campaigns for combines, spring equipments, planting and seeding equipment it is a weak order demand. And I think you would have heard that from our major customers”

No green shoots of any major OEM in construction

“on the construction machinery side, literally, we see no green shoots yet of any major OEM getting movement in either excavators or ladder equipment that we sell into it.”

Andy Lampereur

Stabilizing at these lower levels

” I will provide color on my segment reviews, but can summarize overall market demand as weak due to sluggish economic conditions, which is being exacerbated by related OEM destocking impacting our engineered solutions in particular. With the exception of the anticipated step down in energy core sales trends from the third to the fourth quarter, things did not get worse sequentially, but instead appear to be stabilizing at these lower levels. We expect these trends will continue in the first quarter, with the exception of the energy segment, which will decline further on a core basis due to very tough first half comps from a year ago.”

Weakness in ag but bright spot in on highway vehicles

“The second half of fiscal 2016 has been defined by weakening Ag sales, which is the combination of both lower farm income and end market demand as well as excess inventory at our OEM customers and their dealers. This de-stocking and overall weakness was also evident in other off-highway markets and was slightly worse than the pace that we have predicted on our last quarterly earnings call. The bright spot has been on-highway vehicles, such as trucks and autos, which were up and flat for the year, respectively.”

Nike FY 1Q17 Earnings Call Notes

NIKE’s (NKE) CEO Mark Parker on Q1 2017 Results

Manufacturing revolution

“In Q1, we took major leaps toward those long-term goals, especially in the promise of personalized performance. Our connection to the consumer through Nike+ is core to that vision. But equally important is disrupting the business model that supports it or as we like to call it, our Manufacturing Revolution or Man Rev. Through our acceleration of Man Rev, we’re currently seeing the benefit to product cost optimizations. At the same time, we’re building capabilities for increased speed to market.”

Computational design

“Beyond that, one of the most exciting opportunities for Man Rev is within design. We’re continuing to scale our transition from cut and sow where precision is at the stitch level to digital design where precision is at the pixel level. We’re leveraging the power of computational design that uses algorithms to create highly tunable innovations very quickly. This summer in Rio, athletes such as Allyson Felix, Elaine Thompson and Mo Farah claimed gold wearing our latest track spikes. Each were developed using computational design, 3-D printing and Selective Laser Sintering, which allowed us to create and refine prototypes in hours instead of months and aligned with the athlete’s specific training programs and competitive needs.”

Sport and innovation have always been the two most powerful drivers of culture and style

” I’ll just back up and say though that sport in general and innovation have always been and I think always will be two of the most powerful drivers of culture and style. NIKE always – we’ve always started with the athlete. That’s how we create the insight to drive innovative product and then we amplify that across the portfolio, and sportswear is really important means of doing that. We see tremendous growth in all areas, specifically in both dimensions of performance and sportswear.”

The intersection between performance and style is stronger than ever

“That intersection between performance and style I think is stronger than ever. And by the way, innovation is a huge part of creating a new esthetic and lifestyle product does prioritize I think at this stage with the consumer comfort and lightweight and breathability. So performance is really an element of sportswear for NIKE and that’s what helps to separate and distinguish NIKE in the marketplace.”

Inflection in manufacturing revolution is about taking this to scale

“Well, we’re actually starting to take some of this innovation to scale. I think that’s the short answer. For us, this is about getting product to the consumer faster, it’s about lowering our product cost as we talked about, really trying to drive greater labor productivity, less waste in the system, new design capabilities. These are all parts of Man Rev. I think though the difference, the inflection point that you mentioned, is really more about taking it to scale.”

Trevor Edwards

China has become largest market

“Just recently, the China retail market became the world’s largest market eclipse than the United States. And with our impressive growth there, we continue to feel confident about the successful strategies we are executing. We are leading with digital where we’re seeing incredible growth in our Nike.com business, as we continue to innovate with a focus on mobile. And we are leveraging the best practices from China across our global portfolio.”

IHS Markit (INFO) Q3 2016 Earnings Call

Todd Hyatt – Executive Vice President and CFO

A decline in the subscription base in Q3

“In Q3, on a constant currency basis, our resources organic subscription base, which represents the annualized value of subscription contracts, declined $19 million and through the first three quarters, the sub bases declined 8% on a base of $700 million. The Q3 subscription-based decline was primarily from customers reducing their geographic coverage, the long tail of America’s smaller independents experiencing a higher than normal cancellation rate and customers deferring to renew software maintenance.”

Constrained budgets in oil companies

“Despite oil prices beginning to stabilize, companies continue to operate in a budget constrained environment and recent global events have caused additional market uncertainty.”

Rising interest rates to positively affect financials but have not impact on core legacy businesses

“I think in financials, I think it would probably a net positive because probably at some level of volatility and improve overall volume levels and I think that is probably the biggest driver that we would see in financials. In the core legacy IHS businesses, I don’t see a big impact from interest rates going up. I just, I don’t see that a rate hike would flow through to the business in a material way.”