JS Conference Call Notes MON, IHS, ACN

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Jeremy S., an investment analyst in Southern California, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Jeremy has read this week.

 

 

Monsanto (MON) CEO Hugh Grant says merging their business with competitor Syngenta would create the world’s largest agricultural seeds company and gain significant synergies

“This would give us an even more precise approach to every acre creating immediate and long-term revenue growth opportunities through a diverse range of optimized, integrated solutions. Near term by combining Syngenta’s leading crop protection portfolio with Monsanto’s leading seeds footprint we would have the unique ability to provide leading science based recommendations of integrated seeds, traits, and crop protection solutions.  This combination would also allow us to more fully participate in the value creation from our crop protection solution recommendations. “

He added that big data will play an increasing role in precision agriculture in the coming years

“Longer term and unique to Monsanto, we will be able to unlock a new data driven approach to provide farmers even more valuable real time insights about their crops with our Climate platform. The information will provide actionable crop protection recommendations to farmers to maximize productivity, while ensuring inputs are applied in a precise manner to meet society’s broad goal to preserve and protect our environment.”

Monsanto (MON) CEO Hugh Grant said he expects to double ongoing earnings per share by 2019.  This type of pledge has the potential to be dangerous as it can cause perverse incentives by the salesforce to channel stuff or it can force senior management to stick to their publically stated strategy as opposed to adapting to shifting market dynamics

“Optimized spending and the milestones that we delivered this year reinforce our confidence in our five-year plan to more than double our fiscal year 2014 ongoing earnings per share by 2019. While we believe the combination with Syngenta as optimal to several customers for the long-term and would drive even greater growth in long-term earnings per share, our current portfolio and our pipeline leads the industry and provides multiple levers to drive our long-term growth projections.”

Monsanto (MON) COO Brett Begemann said the agricultural sector remains challenged

“There is no doubt it has been a tough year with the macro pressures facing global agriculture, namely our retreat and corn acres, currency and pressured commodity prices.  We fully expect the macro environment to recover and are well positioned to participate when it does.  That said, as we develop our operational plans for next year, we are taking a clear eyed view and we expect that many of these headwinds will continue into fiscal year 2016.”

 

 

 

IHS CEO Jerre Stead said the energy market they sell their software into saw softening demand during the quarter due to the recent downturn

“In terms of our core industries and horizontal workflows , resources which includes our energy and chemicals team, continues to experience moderating subscription growth due to industry dynamics.”

And he elaborated that there is plenty of room for improvement in streamlining the company’s operations

“It’s clear that we’ve got too many cooks in the kitchen.  There is not clear simple lines of accountability or simple way to think about it is I want to be able to go to one person and get the answer everything of we need to do and will do on a global basis on the products in each of those industrial areas”

IHS CEO Jerre Stead is taking steps to reduce share dilution of the company due to employee stock option plans

In addition to improving shareholder return from planned stock buybacks, we’re also planning to reduce dilution from shares granted in our stock based compensation program. We’ve made good progress in reducing our stock based compensation expense over the last year and half. We remain committed to continuing this effort and will work to reduce our 2017 annual share purchase by approximately half of our current year level.  Due to the accounting treatment of stock based compensation expense, which would cost the expense of the underlying share grants to be recognized over the vesting period, we expect annual declines in expense over the coming years in the high single digits.”

He wants the company to remain financially disciplined on acquisitions

“I don’t want us to get fooled like I’m watching some other companies today with cheap money buying something that’s accretive because the money is cheap, that wouldn’t be long term.”

 

 

 

Accenture (ACN) CFO David Rowland said the company remains a preferred customer for some of the world’s largest corporations 

“We had 12 clients with bookings in excess of $100 million, given us 33 year-to-date, which signifies the unique and trusted relationship that we have with many of the largest companies in the world.”

And the firm saw continued strength in their technology and healthcare digital practices

“Turning to the operating groups, Communications, Media and Technology continued to lead all operating groups was 17% growth in the quarter. While growth continued to be broad-based, it was most significant in North America.  The drivers across CMT continued to be digital-related services, cost rationalization, several large transformational projects and demand for network-related services.  Clients continue to be focused on digital-related services and operational effectiveness as they position themselves to be more competitive in the marketplace.”

One area of their business that has been growing substantially over the last few years is building mobile apps for corporate clients

“With Accenture Mobility, it is now one of the world’s leading developers of mobile apps, leveraging the capabilities of our global delivery center. We have now developed over 1000 apps across nearly all industries.”