JS Earnings Call Notes SLP, FAST, JPM, WFC

Jeremy S., an investment analyst here 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.


Simulations Plus (SLP) CEO Walt Woltosz says the firm continues to see high retention rates amongst its customers

“Our software renewal rates continue to be very, very high, 99% based on fees, based on actual number of licenses that would be slightly lower but typically when we lose a license its an academic license or something that is not being full retail price.”




Fastenal CEO (FAST) Lee Hein says the company continues to sustain its maniacal focus on cost controls

“To execute, you must be disciplined. And so we put a call out to our folks to the blue team we call them and we ask them to scrutinize every expense and to reduce where possible. The reason we did this and we tell our folks over and over why are we doing what we do. And in this point, we look to reduce expenses so we could add energy into the stores.  We’re starting again to show discipline and balance and what we’re trying to do in our growth initiative of offering or getting more energy into our stores, again to offer a high level of service, immediate service when needed to stay in line on these large key customers and to serve our customers on a local level.

Fastenal CEO (FAST) Lee Hein says his customers loathe to switch suppliers

“If I look at that fastener business, a lot of production business in there. The beauty of that business is incredibly sticky. It’s really invasive and complicated and painful to switch a fastener supplier. Because that’s a very tight relationship because I’m supplying you the stuff you need in what your producing and the quality, the source supply, all those things we bring to the table are critical and it’s very, very disrupted to change your supplier.”

And they believe they are taking market share from competitors

“That’s about Fastenal taking market share that’s not about Fastenal being impacted by the economy. We’re out taking market share as fast as we’ve ever done. I look at our signings in the first six months of this year; they are ahead of our signings in the first six months of last year. So, I feel very good about the underlying business as far as our ability to take market share.”




Wells Fargo (WFC) CFO John Shrewsberry did say they saw an uptick of oil & gas firms defaulting on their loans during the quarter

“We had an increase in non-performing loans in our energy portfolio. Oil and gas loans are only 2% of our total loan portfolio and balances in this portfolio declined by approximately $700 million from first quarter reflecting pay downs.  Our energy team completed their spring re-determination process during the second quarter and as expected, the drop in energy prices did impact the cash flow and collateral values of a number of our borrowers leading to downward portfolio migration.”

Wells Fargo (WFC) CFO John Shrewsberry said the firm continues its shift to a digital-centric bank and is thinking about launching it’s own robo investment offering

There are a number of initiatives underway in that business to modernize and to create service capability to attract new investors and to better serve the investors that we have. And that turns up in the – sort of primary systems that our financial advisors use to interact with our customers. It will turn up in our mobile and online offerings that allow people to do more for themselves and at some point, it could even include service or capability that competes with some of the sort of the robo advisory people out there today who rely primarily on technology to construct portfolios and make offerings to customers.”




JP Morgan (JPM) CFO Marianne Lake says the firm intends to further increase profitability by reducing expenses

“We remain focused on our commitment to reduce expenses by $2 billion in 2017 relative to 2014, while continuing to self fund investments in the business. In the first half of this year, expenses were down approximately $0.5 billion versus the same period last year, and our headcount down roughly 6,000 year-to-date.”

JP Morgan (JPM) CFO Marianne Lake said the functionality of the banking branch is changing

And then as you know really looking at the nature of branches as a footprint the way we’re using them, the way we’re staffing them importantly moving them to more advice and less transaction, more automation. So, definitely responses to the evolution in customer preferences and mobile and online is not only a fantastic customer experience evidenced in our experience that, but it’s also a lower cost to serve. So we’re also improving the profitability of the very highly transactional customers. So, I mean I think Gordon used the word omni-channel. It’s, we have a place for everything in our fleet and branches are very important. And we’re just going to be evolving them to continue to meet customer needs.”

JP Morgan (JPM) CEO Jamie Dimon said he continues to see corporations take advantage of low interest rates and issue bonds denominated in Euros

“We’ve almost never seen before in the EU, the volume of American companies financing in euro, because it’s cheaper to do that even if you swap back to dollars. So a lot of American companies go to Europe to do that.”