Johnson & Johnson’s (JNJ) Q4 2016 Earnings Call

Alex Gorsky – Chairman and Chief Executive Officer

They want a modernized tax code

“…we also are advocating for the modernization of the US tax codes. As both sides in the aisle in the Washington have noted, the US tax code for business is outdated and in many cases makes the US a more costly place to do business leaving US workers and the US economy at a disadvantage. We are very encouraged by the proposals currently in discussion and we will support business tax policy that is competitive with most developed countries and encourages innovation and growth. 

..and they are confident it would spur growth

“so far, I remain very confident in discussions that we’ve had that ultimately we will make changes to the overall tax system that will be a stimulus for growth and that ultimately will help Johnson & Johnson and many other companies grow at an even faster rate going forward.”

Thinking of your portfolio as your children when divesting

“it’s always a difficult decision and when you look at your portfolio and as I frequently describe, it is little bit like your children, you love all of them just from time-to-time we are trying to make decisions that we think ultimately are in the best long-term interest of our customers, stakeholders and our shareholders and we think diabetes is clearly an area of a lot of unmet medical need….That being said, we do feel that based upon the broader market dynamics, particularly things such as pricing in certain areas has led us to the point where we say the right thing for us to do is to consider strategic options for these three particular areas of the business.”

Dominic Caruso – Executive Vice President and Chief Financial Officer

On the Affordable Care Act

We did not see any significant impact uptick in business as a result of the implementation of the Affordable Care Act. Certainly there was not much of an impact at all in the Pharma business on our Device business because of the nature of the type of device products we have, we did not see much of an impact. So therefore, any change going in the opposite direction, we don’t think will be negative. We did see an impact in terms of the cost associated with the Affordable Care Act, but as we said before, we’ve incurred approximately $1.4 billion between the pharmaceutical fee, increased rebates et cetera even excluding the currently postponed medical device tax. So we’ll have to see when new legislation is announced, whether or not these fees and cost associated with the Affordable Care Act remain or if they are authored at any way. But those have already been incorporated in our business. ”

 

Hugo Boss’ (BOSSY) Q3 2016 Earnings Call

Mark J. T. Thompson – President, Chief Executive Officer & Director

A tough market environment globally for the apparel industry

“Hugo Boss continues to operate in a challenging market environment. In Europe, in particular, trends in the premium apparel industry continued to soften. The US market remained under pressure and highly promotional. And while the Chinese mainland has started recovering somewhat, other Asian markets still face considerable challenges industrywide. Affected by this difficult market backdrop, group sales were down 4% in euro terms, or 2% on a currency adjusted basis in the first nine months.”

Weak performance in Europe

“In Europe, performance weakened in the last three months. Third-quarter revenues were down 2%. We attribute this to the following factors; first, we suffered from weak demand in August and September, and particularly in key European markets such as Germany, France and Spain…Second, tourism has turned from a significant tailwind in 2015 into a headwind in 2016. The UK market is the only exception in this regard. However, it was just a low double-digit share of our business there generated with tourists. The demand increase related to the pound devaluation only had a limited effect on our business. And third, the region’s wholesale business suffered from negative timing effects in the quarter.”

The British pound devaluation affected margins

“At 64.7%, gross margin was virtually the same as in the prior year. In addition to a positive channel mix effect, we reduced rebates in all distribution channels. On the negative side, the devaluation of the British pound caused an adverse translation effect. Price changes however, were not a swing factor in the quarter any longer”

Cost savings are progressing well

“…overall we were pleased with our ability to adjust cost savings also based on some very tough negotiations with landlords, which clearly have also noticed our determination to walk away and basically call and discontinue operations that have proven to be not successful for us.”

On comp store sales…

“On a comparable store basis, revenues declined by 7%. In the third quarter comp store sales performance improved gradually to a negative 6%. However, all regions continued to perform in negative territory.”

Increased mobile device traffic diluting conversion rates

“…the steep increase of traffic coming from mobile devices is having a negative impact on sales performance at the moment as it dilutes conversion rates. We are addressing this in multiple ways; most importantly we focus on improving the mobile website check-out channel, where we lose far too many customers at the moment.”

UBS Group (UBS) Q3 2016 Earnings Call

Sergio Ermotti – Group CEO

New money is flowing in

“Net new money was positive in all regions except emerging markets where it was almost flat, and we remain disciplined with respect to attracting assets that are expected to drive long-term profitability. Year to date, we have attracted nearly CHF50 billion of net new money despite ongoing cross-border outflows and client deleveraging in wealth management.”

Reducing the level of risk

“Profits in the investment bank declined year-on-year, mainly as a result of lower client activity and our business and geographic mix, which is more skewed towards Europe and APAC than US. Consistent with our strategy we did not increase the level of risk or resource deployment to offset the difficult environment. In fact, we reduced the leverage ratio denominator by CHF 21 billion.”

Significant headwinds ahead call for caution

“Given headwinds such as subdued market conditions, negative interest rates, elevated litigation expenses and that we are still awaiting finalization of Basel III, also known as Basel IV, visibility is still limited and our outlook remains prudently cautious.”

Declining transaction revenues

“Transaction revenues decreased to the lowest level we’ve seen since 2008, reflecting clients’ reaction to the continued uncertain environment and seasonality factors.”

Kirt Gardner – Group CFO

Declining transaction revenues

“Transaction revenues decreased to the lowest level we’ve seen since 2008, reflecting clients’ reaction to the continued uncertain environment and seasonality factors.”

…with widening spreads

“…general market conditions have resulted in widening spreads for banks since 2014. In combination, all of these factors will increase the annual run rate of our funding cost by several hundred million..”

Electrolux (ELUXF) Q3 2016 Earnings Call

Jonas Samuelson – CEO

Brexit Impact on consumer markets

“The overall market environment in Europe was stable despite negative impacts from the Brexit vote.”

Continued price pressures in Europe

“Prices continued to be under pressure in Europe but to a lesser extent than previously, due mainly to our price actions in the UK. All in all, we more than offset the price erosion through better mix in volumes.”

Expect price increases in the UK

“With continued fluctuations in the currency markets and with the strengthening of the Brazilian real, we start to see less impact from currencies in the last quarter of 2016. The depreciation of the British pound has had a negative impact, although the intention is to mitigate that through price increases. At current rates, we expect a positive transactional effect of SEK 120 million for the fourth quarter and a negative of 1.1 billion for the full year.”

Uncertain demand in the UK

“Following Brexit vote, the outlook for demand in the UK still remains uncertain.”

Alphabet (GOOG) Q3 2016 Earnings Call

Ruth Porat, CFO & Senior VP.

Mobile search is leading Google growth

“Our revenue of $22.5 billion in the third quarter underscores the terrific performance of our businesses globally. For the quarter, our consolidated revenue grew 23% in constant currency versus last year, notwithstanding a challenging year-on-year comparison. Once again, the primary driver was Mobile Search, with ongoing strength in YouTube and important contributions from programmatic advertising and Play.”

The decline in the British Pound is having an effect

“UK revenue was up 5% year over year to $1.9 billion, reflecting the meaningful impact of the decline in the British pound relative to last year. In fixed FX terms, the UK grew 18% year over year. Rest-of-world revenue was up 22% versus last year to $9.9 billion. In fixed FX terms, revenues were up 25% year over year.”

A move to the clouds

“Most notably, Google Cloud is generating substantial revenue growth, reflecting the ongoing momentum in the business as well as the enormous opportunity in this area…the largest percentage growth year on year in our other revenue line, actually even across all of our revenue lines, was in our Google Cloud platform, and that reflects significant momentum in compute and storage.”

Sundar Pichai – CEO, Google, Inc

Elections-related Youtube searches at an all-time high

“…the three {US Presidential} debates ranked as the three most viewed political live streams of all time on YouTube, with over 8.5 million hours watched live, a 5X increase from the 2012 debates. Elections-related searches on YouTube are also at an all-time high, with searches for U.S. election content up almost 550% compared to this time in the last election..”


SK Additions:

Adobe Systems (ADBE) 16Q3 Earnings Call Notes

Adobe had record revenues this quarter

“Adobe delivered another record quarter, with revenue of $1.46 billion; GAAP earnings per share of $0.54; and non-GAAP earnings per share of $0.75. These strong results are a reflection of our market leadership and momentum we have with Creative Cloud, Adobe Document Cloud, and Adobe Marketing Cloud.” Shantanu Narayen – President and Chief Executive Officer

 

Adobe also had a record 23 trillion data transactions this quarter

“Adobe managed a record 23 trillion data transactions. Our customers in every major category of business are utilizing our machine learning algorithms to predict customer behavior and drive their business.” Shantanu Narayen – President and Chief Executive Officer

 

ADBE is at the center of the tailwind that is the digital disruption of marketing

“I mean, people are still talking about digital disruption and how do they help create more personalized experiences for customers, and we are right in the center of that particular tailwind. With respect to the second half of the year, again, it’s playing out as we expected. We told you at the end of Q2 that we had a strong pipeline, which gave us confidence to grow approximately 20% for the year.” Shantanu Narayen – President and Chief Executive Officer

 

The digital marketing space is shifting to multi-solution deals

“Given the breadth of existing customer base, certainly we are up selling all of them to multiple solutions. But whether it’s a new logo acquisition or whether it’s renewals, most of the deals are now multi-solution deals and much larger revenue to Adobe and value to the customer. So hopefully that gives you some color in terms of the number of solutions that they are all adopting and how that’s certainly migrating. To your point, it is a competitive advantage for us most definitely.” Shantanu Narayen – President and Chief Executive Officer

 

Mobile continues to be a key market trend

“Mobile remains a key market trend for this business. Mobile data transactions grew to 52% of total Adobe Analytics transactions in the quarter” Mark Garrett – Executive Vice President and Chief Financial Officer

 

83% of revenue is recurring, which has been a boon to margins

“in 83% recurring revenue model, particularly on the creative side, you are going to over time have less cost of acquisition and you can drive more margin.” Mark Garrett – Executive Vice President and Chief Financial Officer

 

AI and machine learning are becoming an industry buzz, which ABDE has been invested in for years

“there is a lot of conversation right now about machine learning and AI. It’s something that we have invested in for years… And the reality is when we think about Marketing Cloud, it’s not about data collection, it’s all about how we are driving insight and predictive, which is another form of machine learning and that’s what’s really fueled our Marketing Cloud business… It’s going to become something that becomes the industry buzz. We have partly been executed against that for quite a while now.” Shantanu Narayen – President and Chief Executive Officer

 

Ross Stores (ROST) 2Q16 Earnings Call Notes

The market is full of excess inventory and the fourth quarter will be very promotional

the market is full of excess inventory now. There’s a tremendous amount of availability in the market more than there normally would be. So in terms of excess from now through fall, I don’t think there will be any inventory issue. In terms of how promotional they get, I mean, I still believe that even with less inventory, there’s so many uncertain factors out there, the macroeconomic environment, political environment, even though stores are positioned perhaps with less inventory than they have last year, that doesn’t necessarily mean that, that sales will materialize…the fourth quarter will be highly promotional and then, I guess, that will determine the additional excess supply that could be there beyond what we’re seeing in the marketplace today. Barbara Rentler – CEO

 

Despite labor headwinds in retail, ROST still finding ways to cut costs

Clearly, labor costs will be an expense headwind for us and frankly, the whole retail industry. We entered this year in 2016 and we’ve taken minimum wages up across the chain and the impact of those adjustments are reflected in our full-year guidance, which is currently a 7% to 10% increase. So we’ve done a good job organizationally finding efficiencies throughout the business. Michael Hartshorn – Group’s SVP and CFO
However, there is a limit to how much in wage increases ROST can abosrb

So those are things that we’re looking at and as part of our budget and longer-term planning process, we’ll look for ways to offset some of those minimum wage increases. It will get harder over time. I think we’ve done a good job so far as Michael Hartshorn said in absorbing those wage rate increases in the last couple of years. But that’s probably a limit to how much we can absorb. Michael O’Sullivan – President and COO

 

Midewest region has performed well since ROST entered it 5 years ago

In terms of the new region, the Midwest, we entered the Midwest 4 or 5 years ago now. And I would say, we’re very pleased with how it’s going. I mean, you all have heard on these calls over the last couple of years, certainly over the last 1.5 years, the Midwest has been one of our top-performing regions. So we’re very good about the business we’re building there. Michael O’Sullivan – President and COO

 

No real change in message or marketing despite the election year and the highly competitive market

Our marketing strategy and message has been fairly consistent over the year. The message is pretty straightforward that we offer the best values in apparel and home fashions. That’s still the strategy. It’s still the message, so no significant changes. Michael O’Sullivan – President and COO

Esterline Technologies (ESL) 3Q16 Earnings Call Notes

Brexit and current geopolitical climate make it an interesting time for defense market

“The macro backdrop to the quarter was complex. As you know, since the last earnings call, we’ve had the Brexit vote, a sharpened, heightened global security environment, and continued questions about future trends in certain commercial aerospace markets.” Curtis C. Reusser – Chairman, President & Chief Executive Officer

 

Client relationships are handled at the executive level

“First of all, our platform presidents, who are responsible for executing our sales growth strategy, are energized and motivated to drive results for the overall enterprise. Each platform president is an enterprise point-of-contact for certain key customers. This ensures that the breadth of our Esterline products and technologies are showcased at the highest level in our customer relationships. This is an important lever to capture future sales growth.” Curtis C. Reusser – Chairman, President & Chief Executive Officer

 

Demand remains strong, as evidenced by book-to-bill ratio and an increase in backlog

“We continued a strong orders trend with a book-to-bill of 1.1 for both the third quarter and on a year-to-date basis, with backlog now at $1.4 billion from $1.2 billion a year ago. And we delivered on the sequentially improving results that we expected when we re-baselined our markets and operations in the first quarter. This includes stronger sales with the related gross margin drop-through and well-managed controllable costs.” Robert D. George – Executive Vice President, Chief Financial Officer & Corporate Development

 

Management prioritizes stability over growth

“No. I’m cautious. I want to be cautious. I don’t want to get ahead of myself, but we’ve had a lot of balls in the air with the Consent Agreements that’s wrapping up, with the facility moves that are all but done, with DAT integration, some lower sales that we’re seeing trending the other way. So I do think that there is more stability. I think the team is gelling well together. We’ve got a pretty clear focus on what we’re doing. So I feel like – as I said, I feel better now than I have before, but I don’t want to get out over my skis. So I’m cautious.” Curtis C. Reusser – Chairman, President & Chief Executive Officer

 

Lower CapEx and higher income will help bring down leverage ratio, FX translations will not

“Well, actually, so I’ve got to answer that a little cautiously. So the answer is yes, we will be de-levering from our free cash flow, without a doubt. As you know, however, we do have a fair amount of cash flow that’s generated in our European facilities, and so that is going to remain offshore….One of the reasons why cash flow is a little softer year-to-date is because of the significant capital expenditures that we’ve incurred relative to our norm. We’re anticipating that we’re not going to see that level of CapEx in Q4. So we’ve got higher income, and we’ve got lower CapEx.”  Robert D. George – Executive Vice President, Chief Financial Officer & Corporate Development

BNP Paribas’ (BNPQF) Q2 2016 Earnings Call

Lars Machenil, CFO

Modest growth in revenues with stable costs and stable earnings

“…Q2 revenues progressed by 2.2%, with the operating divisions showing a positive evolution on a like-for-like basis…Costs, were relatively flat compared to last year. Cost of risk was significantly down, standing at a low 45 basis points, with most businesses improving or remaining at a low level.”

Simple and efficient wins the cost race

“…the cost savings accruing from our Simple and Efficient plan managed to offset the natural drift in costs…our Simple and Efficient plan, which delivered an additional €153 million recurring cost savings, taking it to a total cumulative of €3.1 billion.”

They are so well diversified as to to be resilient in tough times

“just a quick reminder of our diversified business model in terms of countries and businesses, which imply that we have no concentration by country, business or sector and that none of our businesses represent more than 16% of the total allocated capital. Moreover, our integrated business model is fueled by cross selling between the different businesses. And this basically means that BNP Paribas Group has a strong resilience in changing and complex environments.”

Cheesecake Factory 2Q16 Earnings Call Notes

National campaign with MasterCard coming up

We are very excited to have been chosen by MasterCard to be featured in an upcoming national advertising campaign for their Masterpass digital wallet solution. This campaign will garner significant awareness for both CakePay and our restaurants. David M. Overton – Chairman & Chief Executive Officer

 

Restaurants face competition from non-restaurants

And the competition is coming from all over, including non-restaurants such as grocery stores. But we’ve all seen this before too, it’s happened four, or five times in just my career in the restaurant business. W. Douglas Benn – Chief Financial Officer & Executive Vice President

 

Benn believes that the expansion cycle of the restaurant business has ended

The restaurant world gets a little ahead of itself and overbuilt, it’s considered a safe place to invest capital, and when that gets to be too much, then the expansion slows and the bifurcation begins and there’s winners and losers. So, I think that’s where we are. I think there’s a lot of restaurants out there, it’s not something that couldn’t be solved with a little more vibrant economy, though, in the short-term. W. Douglas Benn – Chief Financial Officer & Executive Vice President

 

Service is an important focus for CAKE

Well overall, our hope was to increase the service and hospitality for guests and just make those dining experiences more compelling. That was goal number one. Around other metrics and benefits we’ve seen, we’ve already seen higher retention in servers that actually have gone through this new server training. We’ve seen higher guest satisfaction scores for the servers that have actually gone through the new server training. Those are two of our biggest goals. David M. Gordon – President

 

CAKE uses contracts to keep COGS stable

I certainly wouldn’t second-guess in any way the fact that we’re fully contracted, and maybe we could be paying less. Our objective really with respect to commodity cost management is to try to put predictability into our COGS model, and that would mean that we’re already looking at whether we should do booking for next year, and one of the criteria for booking for next year is not necessarily, let’s get the absolute lowest price, but if we can get a lower price than we had this year, then that’s pretty darn good. So that’s sort of the way we look at it. We look at predictability and control on volatility in the pricing of the commodities, and that’s worked out really well for us this year. Could we’ve gotten a little bit lower pricing if we were less contracted? Maybe, I’m not sure. But certainly it’s worked out well for us this year. W. Douglas Benn – Chief Financial Officer & Executive Vice President