Domino’s Pizza (DPZ) Q2 2017

J. Patrick Doyle – Domino’s Pizza, Inc.

Pizza business growing faster outside the US

“…international markets in general are actually less competitive in pizza than our domestic market on average. There are certainly exceptions to that, but the category is growing faster outside of the U.S. than inside the U.S. The competitive set is generally less restricted and 95% of the people in the world live outside of the U.S. and the pizza category is probably a little over double the size internationally what it is in the U.S. So clearly far less-developed, less competition, more opportunity to grow.”

Small players have a scale advantage

“The broad story remains the same that it has been domestically, which is larger players taking share from smaller players. And certainly we’ve been doing better than the rest of the large players over the course of last few years. But I still believe that the longer-term story is the competitive advantage that scale brings to the larger players versus the smaller players.”

Wage pressure won´t be passed on to customers in higher prices in the short term

“There is pressure out there on wages in general as the labor market continues to strengthen and that’s a really high-class problem. When strength in the labor market is putting pressure on rates that’s the way you want to see it working and we are always going to be conservative about reacting to that with pricing to our customers….We pay what we need to pay to keep our stores staffed and give our customers great service….It may have some effect on margins and then we kind of fine-tune pricing where we can but we want to be conservative around that

Alphabet’s (GOOG) Q2 2017

Ruth Porat – CFO

Mobile is the primary driver this quarter

“The primary driver again this quarter, as you noted in question was the strong growth in mobile and the fact that more mobile searches are subject to TAC. But the increase in Sites TAC year-over-year, I think what I would stress is it really provides another lens on just how strong our mobile business is. There are other factors that affect the TAC rate including the mix of paid versus organic traffic as well as changes in partner mix and agreement terms. But I think at the, main point of your question here is we do continue to expect Sites TAC to increase, but our focus remains on growing profit dollars and I go back to my comment which is really pleased with the strength of our mobile business, which is benefiting profit dollars even as the TAC percentage increases.”

Sundar Pichai – CEO

The growing influence of Youtube

“YouTube now has 1.5 billion monthly viewers and people watch on average 60 minutes a day on their phones and tablets. That’s incredible and it helps 1000s of passionate video creators make money. The fastest growing stream for YouTube is in the living room. YouTube watch time on TV screens has nearly doubled year-on-year.”

Stanley Black & Decker (SWK) Q2 2017

James Loree – President and Chief Executive Officer

On price vs margins

“When we are pulling those levers on price promotion and margin optimization, trying to figure out where the sweet spot is, I would say, we tend to go in cycles sometimes. The needle will move from one side of the spectrum to the other a little bit. And I would say in the second quarter, in particular, we probably were a little bit more aggressive on price than normal, and so you saw the negative 1% price for the tools segment.”

The future seems to be omni-channel

“…you think about omni-channel and the advantages that brings, and you look at the recent purchase of Whole Foods, and you scratch your head and say why did that happen, I think if you start to envision how omni-channel could play an important role in e-commerce. You could see an unfolding scenario that says there can be successful pure players and successful omni-channel players. And maybe it all gravitates towards omni-channel at some point.”

Donald Allan, Jr. – EVP and Chief Financial Officer

E-commerce driving growth in emerging markets

“…we have seen the e-commerce channel increase its share of the market and become a larger contributor to our growth within emerging markets. As you know, we have what we believe to be leading positions in e-commerce and in developed markets and we are leveraging that know-how as our emerging markets teams work to develop this critical channel for the times.”

Project lower activity in oil and gas in H2

“oil and gas also generated 19% organic growth in the quarter, well ahead of expectations as the industry benefits from an acceleration of onshore pipeline construction activity within North America in the first half of this year. This is being offset by continued low offshore project activity. While the results of the oil and gas business are encouraging, our expectation is that without resumption of approvals by the Federal Energy Regulatory Commission, also known as FERC, we will see a return to lower level of project activity in the second half of this year.”

Some pressures expected in H2

“…there are market-related pressures which are expected to emerge in the second half. These pressures fall into three areas. One, North America light vehicle production is expected to soften; two, automotive systems which support customer new model rollouts will be lower in the second half of 2017; and three, expected lower project activity in North America for oil and gas, as I discussed earlier.”

 

Reckitt Benckiser Group’s (RBGPF) Q3 2017

Rakesh Kapoor – CEO and Executive Director

The cyber attack in June to impact full year fuidance

“On June 27th, many companies, some 30 companies as we understand it, including RB, were impacted by an unprecedented and sophisticated global cyberattack….To give you a measure of the scale, nearly 500 systems and 2,000 servers, which are reliant upon certain operating systems, were affected and rendered inoperable…., I think we have at this stage, we have rolled everything into the full year guidance of 2% topline growth rate, and we believe that some of the big impacts of cyber, which is going to flow into Q3, will mean that the acceleration of growth will be more back end weighted by that simple logic.”

Pricing pressure in Europe and emerging markets

“We are certainly in very volatile and unpredictable markets…. let’s start with Europe, the pricing environment is tough because you can see the amount of pressure there is in the retail space…there is a flow into this competitive pricing across European markets….So you see some of those normal inflationary markets which were building pricing in the past are not so doing so at this point in time. And clearly, in emerging markets, where, again, we would normally expect material inflation and pricing, you are seeing that market like Brazil and India for very different reasons, actually are also very volatile. So I would say that when you add it all together, the pricing environment is tougher.”

Lockheed Martin (LMT) Q2 2017 Earnings Call

Bruce Tanner – CFO

Positive book bill for international orders. 

“we still think we’ve got a chance to end the year potentially at around $100 billion of backlog if some of these, especially the Kingdom of Saudi Arabia orders come in this year, as opposed to next year. But even without that, 95 to 100 is probably what we’re expecting…So a positive book to bill. “

Upcoming changes in the revenue recognition principle may not have a signficant impact 

“we’re kind of I’ll say running rev-rec in addition to the normal methodology for the first quarter and second quarter….But so far everything is indicating that you would think we should see a whole lot of difference. And part of the reason for that is a lot of the units of delivery are what we call POT, Passage on Title transfer where we essentially record sales upon delivery…We don’t see a large drop off or a large increase or decrease in our POT deliveries there. most importantly on our rev-rec, F-35 is not – does not change one bit and that’s obviously the biggest driver of Aeronautics and for that matter, sales for the corporation.”

Morgan Stanley’s (MS) Q2 2017 Earnings Call Notes

James Gorman – Chairman and Chief Executive Officer

Changes in regulations would boost growth

“now is the time to make some practical changes for the multitude of regulations. These changes would allow U.S. banks to be greater engines of economic growth…Let’s focus on some sensible changes, because we’ve now had eight years of experience and digest and see what worked and what didn’t. And the cumulative effect of a lot of these regulations in some cases end up if you will with a double counting”

Rate hikes will be beneficial

“as the major U.S. depository we have endured historically low interest rates for a very long time. Each move when hiring rates assuming a measured path should benefit our business.”

Human advisors are not that much more expensive than robo platforms. 

“If you look at the average basis points paid from the various robo platforms, they range in general like things from something like 20 to 40 basis points. If you look at the average basis points for a full service advisory like us, just divide our revenue into our assets including everything, you get somewhere in the 70s, low 70 basis points. So the value added of the financial buys and the institutions behind it and the research, the product offering, the new issued calendar you could argue is being putout there for 30 to 40 basis points. It’s not clear to me that, that is such an expensive gap that that’s going to lead to the cannibalization issues.”

Miscellaneous Quotes for Week to 21st July 2017

Mario Draghi, President of the ECB

Strengthening economic expanision in the EU has not boosted inflation

“The incoming information confirms a continued strengthening of the economic expansion in the euro area, which has been broadening across sectors and regions…While the ongoing economic expansion provides confidence that inflation will gradually head to levels in line with our inflation aim, it has yet to translate into stronger inflation dynamics.”

 

Bill Gross – Janus Capital

Markets increasingly risky

“…don’t be mesmerized by the blue skies created by central bank QE and near perpetually low interest rates. All markets are increasingly at risk….Strategies involving risk reduction should ultimately outperform “faux” surefire winners generated by central bank printing of money. It’s the real economy that counts and global real economic growth is and should continue to be below par.”

Barnes & Noble Education’s (BNED) Q4 2017

Max Roberts – CEO

Significant chanegs going on in higher education

“Higher education is in the midst of significant change with increasing focus on student affordability and success, while at the same time experiencing enrollment decreases. As a result many of the major publishers are more aggressively shifting from physical to digital options, reducing prices, pursuing direct-to-consumer models, and piloting rental programs for new additions.”

Printed books still in vogue

“Sales and rental of printed textbooks remain a core driver of revenue. Printed textbooks are still the format of choice for most students…While the evolution toward digital solutions has been slower than some originally anticipated, we saw an increasing shift toward a broader adoption of digital solutions in fiscal 2017”

Short term fluctuations in enrollments expected

“Consistent with national students clearing house projections, we believe there will be short term fluctuations in overall enrollments particularly at community colleges may continue to decrease over the next 12 months… the value of higher education over the long term is still widely acknowledged as positive…we anticipate a lack of improvement in general retail trends in the near-term.”

Merchandise sales down

“…for the first time since 2008, we had a decrease in general merchandise sales…I believe it’s a combination of, obviously, there are less students in higher ed, and that is a definite trend that is supported. What is also interesting is the decrease in enrollments both in community colleges and many of the private schools …So it is a level of traffic decrease, and there is clearly apathy by the consumer across all retail channels, general merchandise channels, both traditional stores and other formats, and in clothing and general merchandise. So it’s a combination of both.”

Yum China Holdings (YUMC) Q2 2017

Micky Pant – CEO

Growing delivery sales

“On previous calls we have highlighted our growing strength in digital and delivery and we have continued to make progress in this vital strategic frontier. With over 4900 restaurants offering delivery service total delivery sales in the quarter reached $200 million which is about 13% of our total company sales.”

Towards cashless payments in china

“Mobile payment represented about 40% of our total company sales and cashless payment reached a record of $900 million in Q2 alone…If you now come to China and visit a KFC you will be surprised of the number of people not standing in line but actually ordering on their phone just like you would at an airport where you check in at a machine.”

Jacky Lo – Interim CFO, VP, Controller and Principal Accounting Officer

Looking for solid same-stores growth

“we expect our labor inflation to continue in the high single digit range and commodity inflation to be in the low single digit….in order to cover our inflation and maintain our margin, we need solid same-store sales growth….on the commodity price or specifically chicken price, commodity inflation was 4% during the second quarter and the rate peaked at 4.5% in the first quarter, this came out to 4% in the second quarter and we expect it to continue to moderate throughout the rest of the year.”

TAG Oil’s (TAOIF) Q4 2017

Toby Pierce – CEO

They chose equity to debt for a reason

“As we looked at all the options, and specifically in March timeframe when prices were – oil prices were more robust, they were in the $55 a barrel Brent range. We anticipated the market to stay flat or oil prices to stay about mind you or they increase and obviously we were wrong on that point. So we are actually quite happy that we use that raised equity instead of debt. Debt in an oil and gas company can be very detrimental if you get the timing wrong. In addition, I have to say you definitely need to hedge out any depositions. Most reserves based lenders and most debt providers will require you to hedge out a portion if not all of the debt and that can make, that sort of sets your price and your price floor, so you don’t get to experience the upside in the oil price if you hedge out. We took the opportunity at the time to raise capital to focus on incremental drilling and to really get our cost per barrel down and so move the oil company forward.”

On acquisitions

“Are we going to do more acquisitions? It’s very hard to say. It’s a great deal presents itself. We’ll definitely consider it. In this type of market and sideways market, more distressed sellers may occur, may emerge. And we do have our sights on two or three, but we’re very patient and we’re not going to over pay”

He sees oil prices rising on supply crunches

“my personal view is we will probably edge back in the $60 range by the end of calendar 2017. I think it will be in the high 50s, low 60s….the amount of capital that’s actually come out of spending programs, globally depends on who you read, but its on the order of $1 trillion to $2 trillion, and that capital is not being reinvested in. It will start to cause declines with some point. So while we do have production growth in the Permian and it’s a fantastic resource, I do believe that the supply and other things will have a supply crunch at some point and we’ll see high oil prices. “