Miscellaneous Earnings Call Notes 11.12.15

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Chicago Bridge & Iron NV (CBI) Philip K. Asherman on Q3 2015 Results

Technology group turning around after slow start to this year

“In our Technology Group, after a slow start this year due to economic headwinds in China and a strong dollar elsewhere, the technology market is turning around.”


The Kraft Heinz (KHC) Bernardo Vieira Hees on Q3 2015 Results

ZBB is more than just a one time event

“The way we like to think ZBB, to be honest, is much less as a one-time event and much more as a systematic approach of doing business. It’s really fighting for the penny in the terms of capturing all the opportunities that allows us to be in a position that you can reinvest more behind working dollars, behind our people, behind our products, behind our brands and so on. So it’s not only a program, but it is really a business tool that we apply in different ways.”


USA Trucks’ (USAK) CEO Tom Glaser on Q3 2015 Results

Environment has been ok, holding up well

“I think it’s holding up well, to be honest with you. The volume hasn’t been exciting like it was last year but it’s consistent, it’s okay volume. As far as pricing, and probably not going to be as aggressive as some of our competitors in saying they are looking at 3% to 5%. We’re looking at probably 2% to 3%, and that’s pretty aggressive given the fact that our last two years”


AP Moeller-Maersk’s (AMKAF) CEO Nils Andersen on Q3 2015 Results

Container shipping rates have deteriorated in 2H

“Essentially, what is basically driving the change in our forecast is that the fundamentals in the container shipping have deteriorated in the second half of Q3; the rates have dropped quite significantly. So on average, the rates are or were 20% or 19.3% to be exact I believe, below last year’s and that became worse during the quarter. So September and October did not give any hopes for an immediate recovery and that’s why we adjusted downwards.’

Capacity has grown faster than demand

“So the challenge in the container business is not new. We’re struggling with all capacity; capacity has grown approximately 9% compared to Q3 last year and the market has only grown 1%. I think the low growth has taken everybody by surprise. At least it was below what we expected and definitely did not meet our hopes for the peak season.”


ArcelorMittal’s (MT) CEO Lakshmi Mittal on Q3 2015 Results

Expecting global steel consumption to decline by 1.5-2%

“This shortfall in volumes reflects the exceptionally challenging market we have faced so far in the second-half of this year. With the exception of Europe, all major markets have seen apparent demand contract in 2015. We are now forecasting global apparent steel consumption to decline by between 1.5% up to 2% this year. China, the ongoing weakness in real estate and machinery end-markets has caused a contraction of real demand by around 3% up to 4% this year.”

Chinese production is sticky but they have no structural cost advantage

“Chinese steel production is sticky, so exports have increased. Here the volumes, price, excluding China have declined to less than $300 per tonne. But this is not a profitable business model for Chinese mills as they have no structural cost advantages. This is highlighted by Sesa reports that mills lost an average of $35 per tonne in the third quarter.”

Customers are holding off on buying while prices are falling

“My view is that this is unsustainable. In order to arrest these losses, steel prices in China need to increase, either as a result of improved demand or as a result of production curtailment. The weak international price environment is eroding prices in our core domestic markets, also prompting customers to hold off on their order and their inventories down, so apparent demand has been running below real demand. And expected stabilization of prices will bring steel buyers back to the table. There is already some indication of this happening at the margin. ”


Hertz Global Holdings (HTZ) John P. Tague on Q3 2015 Results

Rise sharing impact has been less than “logical worriers” might expect

“As it relates to ride-sharing, we’ll talk a little bit about that next week. I think if you look at the highest concentration of ride-sharing markets, New York, San Francisco, and LA, in New York, you’d see an impact or at least what appears to be an impact. I think it would be hard in Los Angeles and San Francisco, given the overall industry trends, to draw a conclusion that there has been much of an impact, although obviously growth would have been higher for the industry without it. So, look, I think the impact continues to be less than the logical worriers might expect.”


The Priceline Group (PCLN) Darren Richard Huston on Q3 2015 Results

Travel is an inherently non-local business

“The case of China is a good reminder that travel is inherently a non-local business. It’s a global scale combined with win-win partnerships like we have with Ctrip, are critical for our mutual success.”

We’re doing a lot more business with Facebook. But Goog still the leader in intent based marketing

“we have been doing more and more business with Facebook. Most of it though is in the category or re-messaging or re-targeting. It’s not really in the big sweet spot which is intent-based marketing. That’s really what search gives you is intent-based marketing. Somebody types in, I want a hotel in New York, and then you are responding to that request. But the folks at Facebook very much understand this. They’re working to try to win that kind of businesses. It’s direct response business, it’s a big prize for any marketing channel, and we’re also trying to work with other large audience versus in Silicon Valley to try to get out that Holy Grail of intent-based marketing.”


Dean Foods (DF) Gregg A. Tanner on Q3 2015 Results

Milk supply is expanding faster than demand

“The EU is a leading contributor as their milk production has increased year-over-year by more than 2.5%, largely due to the elimination of the milk quotas at the end of March. This is particularly meaningful when one considers that the overall size of the European dairy production is approximately seven times larger than that of New Zealand and over one-and-a-half times larger than that of the U.S. Moreover, we see China’s milk supply expanding faster than their weaker consumption and a continuation of the Russian import ban. In the U.S., we continue to see ongoing domestic supply momentum due to a slightly larger herd and productivity growth more than offsetting the impact of the continued drought in California. These supply and demand factors should contribute to a relatively benign dairy environment over the short term.”

The health of the dairy category is as good as it’s been

“The health of the dairy category is probably as good as it’s been in my career at Dean Foods and while lower priced milk in terms of both cost and prices at retail is helping support that, I also believe that the abatement of certain secular headwinds, which we discussed in depth last quarter, is contributing. ”


D.R. Horton (DHI) David V. Auld on Q4 2015 Results

No question labor is tight

“Stephen, David. No question; labor is tight. The reports coming out of other builders – I mean, we’re not immune to it. I think we have mitigated it by having the best operating team in the industry. And the relationships that our people have with vendors, suppliers put us at the front of the line. So it flows back to the time with a company, time in a market.”

Controlling costs is really about people

“You guys are going to get tired of me saying this, but it really is the people. We got the – one of the toughest markets, toughest weather conditions, toughest labor markets, is our Dallas-Fort Worth area. And those two guys, because they have been in the market for 20-plus years, because they have a direct relationship with the vendors and suppliers, make a call and get people to show up. And you just can’t put a – you can’t quantify that and put it into a model.”

We still think there’s legs left in this cycle

“I would say we still think that there’s legs left in this cycle. I mean, we’re not even close to what is a historical demand. So we’re trying to be very judicious and value the capital we have.”


The WhiteWave Foods (WWAV) Gregg L. Engles on Q3 2015 Results

Almond milk sales growth has slowed but is still strong

“These are category growths that are very strong, they’re certainly not what we saw last year where we saw growth, where we still had the expansion of Almond, but it has been mid single-digits over the past several quarters, and we now have a category here that’s approaching $1.4 billion in overall retail sales.”

New distribution channel creates new manufacturing challenges

“I will add to that Ken, that this move into the immediately consumable beverage in the away-from-home market requires some slightly different manufacturing capabilities than we have. So we’re going to have build those – up those products, really want to be aseptic, so they can be distributed in a non-refrigerated way. You can make it work – refrigerated, but it’s somewhat more challenging.”


Energizer Holdings (ENR) Alan R. Hoskins on Q4 2015 Results

Seeing signs of stabilization in the battery category

“First, we continue to see signs of stabilization within the battery category. Value and volumes were essentially flat over the latest 12 weeks and 52 weeks. This is an improvement over the trends we’ve seen in prior years”

TV is still the best ROI for us on advertising dollars

“We were able to understand the return we get on each of those particular mediums. I can tell you that today, given both the effectiveness of our copy, the strength of our brand and the fact that we have global icons, TV is still the best ROI for us. But you will see us over time continue to migrate to shifts in mix of how we approach consumers and shoppers depending on what it is we’re launching, the marketing news that we’re bringing to the market and, again, continued ROI rates on each of those individual investments depending on what’s in the mix. ”