Company Notes Digest 12.1.17

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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.

We were off last week for Thanksgiving, but did have some notes that we compiled, so this post incorporates the last couple of weeks of conference calls.  Earnings season is slow, but several companies spoke at conferences. 

From an economic perspective, the consumer is optimistic, but credit card debt is likely the next area where there is a little too much leverage.

The Macro Outlook:

The economy is strong

“The North American market is – remains extremely strong, even though there’s still a lot of uncertainty on the whole federal government infrastructure support bill and tax bill, et cetera. The demand is there. The economy’s strong.” —Jacobs Engineering (Engineering/Construction)

Consumers are optimistic

“as we survey consumers, we continue to see favorable trends. Our third quarter Consumer Sentiment Survey highlighted that consumers have an increasingly positive view of the national economy and continue to view their personal financial situation favorably. Given that over half of homeowners believe their home values are increasing, intent to engage in discretionary home improvement projects remains strong.” —Lowes (Home Improvement)

And they’re spending more

“mid to high single-digit growth rates in debit and credit card transactions that represents a lot going on out there among consumers. People are spending more, in some cases, they’re earning more.” —Wells Fargo (Bank)

Are they getting over-extended?

“there’s a lot of competition to provide credit to consumers. And that’s probably at the margin, where excess leverage will show up. I don’t think it’s happened yet, broadly speaking, even the loss rates are a little bit higher than they have been for the last few years.” —Wells Fargo (Bank)


Caterpillar sees sustainable change in India

“India is growing well. Under the Modi government it’s really doing some things that seems like there is going to be sustainable change going forward in India as well.” —Caterpillar (Construction equipment)

Brazil is still tough though

“Brazil is tough, very tough. I mean, the industry has really dropped off, whether it’s corruption and the government trying to get their act together. It’s taking a long time and it’s still got some time to play out I think before you see that coming back out.” —Caterpillar (Construction equipment)


Malls aren’t the only ones losing foot traffic

“So we’ve talked clearly about the first 450 branches that will be taken out…there still are very high-level of personal interactions in branches, but it was down 5% or 6% year-over-year. And almost all of that is attributable to people self-serving on their computer, on their phone, and of course, phone has now recently, in our case, overtaken online.” —Wells Fargo (Bank)


Advertisers need to figure out how to work with a new medium

“we need to develop 21st century storytelling…the media diet has changed. Those meals of 60 seconds or 30 seconds, nobody is eating those as the only meal they get; that’s still exists; but now they are eating a lot of bites; six seconds that’s all the span of attention they have” —Coca Cola (Beverage)

Success is critical

“You know, particularly for the Urban brands, our customer lives on social media. So, that presence is really critical…it’s really not driving a lot of sales just yet, but I think this is very, very early days and I would expect this to be a major strategy going forward.” —Urban Outfitters (Retail)

Walmart grew its e-commerce business at 50% last quarter

“Walmart U.S. eCommerce sales were up 50% this quarter, with the majority of the increase through Existing customers have become advocates for popular initiatives like online grocery and free two-day shipping, and as a result, new customers, suppliers, and partnerships are coming to Walmart.” —Walmart (Retail)

They’re hanging out with Google

“We heavily invested in some of the relationships…take the Wal-Mart example, we all spent a lot of personal time…with the teams at Wal-Mart. We went there. We visited them. They visited us over many, many years and we got to a point where we thought we can create a great relationship here.” —Walmart (Retail)


Walmart isn’t the only Fortune 500 company building strategic partnerships with Google and Facebook

“There are platforms like Google and Facebook. I was there 10 days ago; telling them listen, I don’t want to tell you – I don’t want to ask you tell me what is the best price for these words in Google Apps or for these in your platform; I want for you to sign a number a non-disclosure agreement; I want to tell you all my strategy; I want to you to poke all the holes in it; and I want you to bring insights; and we’re doing that in the December, because we are going to co-create our strategy with our partners.” —Coca Cola (Beverage)

Tech decisions are being made at higher levels of organizations

“Mark and I have seen this over the last 24 months, there is a very accelerated increase in CEO dialogue…the level of dialogue is up leveled significantly with respect to what levels in the organizations we are talking to and what our capabilities are. I mean just last week I was in Europe and met with over 50 CEOs and the topic was all about digital transformation and how these companies move.” —Salesforce (CRM)

“Over the last six months or so, I’ve seen a pretty dramatic shift to where enterprises realize the value of what they have in that data…we’re really moving from where we were traditionally in the back-office data processing now out into the line of business. So we maybe within the same company, but we’re talking to entirely different people. We’re not to talking to the CIO of a hospital. We’re talking to the Chief Medical Officer.” —IBM (Enterprise Tech)

Quantum computing could represent the next paradigm shift in computing power

“I said, 10-15 years ago I did not think I would see a quantum computer in my lifetime. And by the way, the quantum computer is not on that Moore’s law curve I showed you. It’s in a completely different curve of its own. Its orders of magnitude faster than anything built on Moore’s law. In fact, a robust quantum computer, when we build it in the fairly near future, will be a performance step equal to the last 50 years of Moore’s law. So this is not like a little – so this is disruptive…So I used to think I would never see one in my life. Five years ago, I said I’m going to see one in my life. I now see one in my career.” —IBM (Technology)


GM sees $1/mile as a magic number for ride sharing

“We think autonomous ride sharing opportunity will be very, very large from an addressable market perspective and today is only in its early phases. The true value will be unlocked when you can get the cost per mile to be less than $1. If we think about it today, ride sharing is between $2 and $3 and we see a path to get into below $1 in the medium term” —General Motors (Automobiles)

Global aviation market is robust

‘Turning to aviation. This market is robust due to continued passenger growth, especially in emerging economies, aging terminals in some geographies and improved profitability among major airlines.” —Jacobs Engineering (Engineering/Construction)

Materials, Energy:

Copper and Iron Ore companies are investing in replacement capacity

“The focus for us is copper and iron ore, and we’re seeing activity in both. A lot of activity in Australia and South America specifically…replenishing capacity as mine lives come closer to end” —Jacobs Engineering (Engineering/Construction)

Dry bulk shipping carriers are even showing signs of improvement

“The bulk carrier market conditions have shown clear signs of improvement this year compared to the historically depressed market environment seen in 2016.” —Diana Shipping (Dry Bulk)

Full transcripts can be found at