Miscellaneous Earnings Call Notes

Weyerhaeuser (WY) Doyle R. Simons on Q2 2016 Results

Optimistic that we’ll see lumber prices begin to return to levels they were pre recession but not in 3Q

“we’ve all talked about it is as what is the inflection point where you see significant improvement in pricing. And we remain confident, as housing continues to improve as you said, as additional lumber capacity comes online in the South we remain confident we’re going to hit that inflection point based on where supply and demand reach equilibrium. And at that point, well, we believe we’ll start to see Southern log prices begin to return to the levels they were prior to the recession. However, we don’t think we’re going to see that in the third quarter. We’re set to wait as we move forward to hit that inflection point.”

Sotheby’s (BID) CEO Thomas Smith on Q2 2016 Results

Paradox in the art markets

“there are a number of geopolitical, macroeconomic, commodity pricing and financial market uncertainties that leave the art market with a paradox. On the one hand, collectors are still buying top quality works of art in well-curated sales. On the other hand, consignors who have the luxury of discretion are showing a bit of reluctance to sell their work at this time. This paradox has led to lower overall sales volume this year, down some 30% to-date.”

Settling of presidential election would be a positive catalyst

“Wherever I go around the world, I hear a lot of discussion about the United States presidential election. And I would say, seeing that one calm down, however, it is resolved, but seeing it calm down, I think will be an interesting and positive catalyst for our many businesses, and honestly probably for a lot of other markets as well, so that I would look for. Number two, I would look for any sort of – and this is actually the catalyst here will be the absence of bad news. If you see the absence of bad news, related to any further instability in Europe, I think that would be a positive catalyst, meaning Brexit seems to have been largely absorbed. And as long as there is not more noise about Europe, I think it would be a positive”

Lamar Advertising (LAMR) Sean Eugene Reilly on Q2 2016 Results

Did see some softening

“as we move into the summer, as I mentioned, we saw a little bit of softening of activity. So yeah, that would have affected June a little bit. You’re talking really about the law of small numbers there, but you could see in the performance of national versus local in Q2 that local softened up a tad. We expect as we finish up the year that national and local are going to come in pretty close to each other, and again, strong enough to meet our guidance.”

” I wouldn’t go completely to the full second half. What we’re seeing is just a little bit of a downdraft for Q3. It’s a little early to call Q4, and we don’t quite know how political is going to shape up. But yeah, just a little bit softer than what we saw in Q2.”

Not seeing anything that would send off alarm bells

“we’re not seeing anything that would send off alarm bells in terms of as we look across the regions, relative strength pretty much everywhere with the exception of the oil patch. And as I mentioned, New York City had a difficult last few months given what was going on with the movie buys.”

Norwegian Cruise Line Holdings (NCLH) Frank J. Del Rio on Q2 2016 Results

Taking down earnings expectations because of steep deterioration of operating environment in Europe

“The reasons for our revision can be attributed to four primary drivers: a challenging operating environment in Europe, the impact of weaker foreign currencies, a sharp increase in Miami-based Caribbean capacity, and our decision to maintain pricing discipline consistent with our go-to-market strategy. The main drag to our earnings expectation has been the rapid and steep deterioration of the operating environment in Europe and the negative impact that successive incidences and geopolitical events have had on cruise demand for the region, especially from our core North American consumers.”

View on China remains in tact

“In terms of China, as my commentary just said, we continue to feel very good about China. Things are progressing well. The interest is high. Our pricing is fair. The way we’ve decided to engage with the travel agent community there is slightly different than the norm and is being well accepted. And so, our view on China has not changed; and, therefore, whatever variable was part of the prior guidance remains intact for China.”

Valeant Pharmaceuticals International (VRX) Joseph C. Papa on Q2 2016 Results

Restructuring company into durable growth, growth and cash generating segments

“In the past, Valeant had been organized primarily by geography. We intend to structure the company through three new segments, as we note on slide 18, first, a durable growth segment, representing approximately 50% of our revenue. This will encompass the Bausch + Lomb franchise, global consumer, and most of our international markets. Second, a growth segment, representing approximately 30% of our revenue, will include our branded Rx products, where a majority of our future investment will occur. Finally, our cash generating segment, representing approximately 20% of our revenue, will encompass those portfolios which we will look to optimize as a high-margin and low-investment business”

Jacobs Engineering Group (JEC) Steven J. Demetriou on Q3 2016 Results

Economic conditions continued to pose challenges

“During the third quarter global economic conditions posed continued challenges in certain end markets. Specifically, weak commodity prices such as crude oil, copper, and iron ore have negatively impacted our oil and gas and mining sectors.”

US highway bill has increased spending confidence in infrastructure

“In infrastructure, there’s been an uptick in government rail spending, and several high-speed and light-rail projects are moving forward in the U.S. Our 2015 acquisition of J.L. Patterson & Associates is supporting our efforts, particularly on the West Coast. The U.S. Highway Bill has provided increased spending confidence, with most notable opportunities in areas where regional transportation packages exist, such as Florida, Texas, and California.”

Coach’s (COH) CEO Victor Luis on Q4 2016 Results

International businesses strong

“Our international businesses continued to generate growth, highlighted by double-digit increases in Mainland China and Europe, as well as sales gains in our directly operated businesses in Southeast Asia”

Hertz Global Holdings (HTZ) John P. Tague on Q2 2016 Results

Pricing trends are clearly improving

“The U.S. industry pricing trends are clearly improving. Retail published pricing turned positive on a year-over-year basis during the quarter up markedly from the industry low point in first quarter.”

Security concerns will soften European growth expectations

“From a macro perspective, it doesn’t appear that Brexit will have a material impact on 2016 results. However, security concerns emanating from France and elsewhere on the continent will likely soften our European growth expectations for the remainder of 2016. ”

Ralph Lauren (RL) Stefan Larsson on Q1 2017 Results

Biggest change is how we work as a team

“As I mentioned on the Investor Day, the biggest change here is a cultural change and it’s a change of how we work as a team. So instead of working in a sequential way where you hand over function by function and by that you build in slack in the lead times and you extend the lead times, we are working together cross functionally. So, one thing that has really excited me over the first couple of months digging into the Way Forward execution with the team is to break down the silos, to have design, merchandising, sourcing, sales distribution channel at the table from the first design idea all the way in to selling the actual product”

Robert L. Madore – Chief Financial Officer & Corporate Senior Vice President

Net revenue decline 11% in Americas because of department store channel

“In the Americas net revenue declined 11% as we continued to see pressure in the U.S. department store channel. Same-store sales were down high-single digits in North America in the first quarter driven by traffic challenges. ”

Alibaba Group Holding (BABA) Daniel Yong Zhang on Q1 2017 Results – Earnings Call Transcript
Joseph C. Tsai – Executive Vice Chairman

The winners in the cloud are going to be the companies that have real use cases

Yeah, the second question, Alicia, I’ll answer the second question on Cloud. I think the question is: who’s our competitors? There’re a lot of competitors. I mean there’re real competitors and there’re pretenders in cloud computing and obviously, globally, you have some really serious players like AWS and Microsoft Azure as well as Google getting into the space. But I like to take a step back because I don’t think that’s the right question. I think the right question is: what does it take to be competitive in cloud? So we’ve been in this business for seven years, all right. And the reason we’re in it is because Alibaba is the biggest internal customer of a cloud computing infrastructure. We got into it because we have use cases. We have huge amounts of data. We have massive amounts of storage needs. And therefore, we developed the cloud products for ourselves first, and then they are strong enough and good enough to be – open up to third-party customers. I think if you look at the history, the real winners are going to be those that have real use cases themselves and also use the cloud platforms efficiently themselves because that’s how you can gain operating scale, scale of economies as well as cost efficiencies. It’s also the pre-condition for the cloud player to continue to develop and invest in technology and products. As I said, that is absolutely the total priority for our Cloud Computing business, to launch new products and features. And at the rate of launching 319 in a quarter, I don’t think anybody in China is going to be able to match that. Otherwise, it will just take them massive amounts of investment and costs to catch up. So I think it’s important to understand what it takes to be competitive.

Shake Shack’s (SHAK) CEO Randy Garutti on Q2 2016 Results – Earnings Call Transcript

Shake Shak saw weakness in the Middle East thanks to lower oil prices

Internationally, we are not immune to global economic and political uncertainty. As I mentioned in our call in Q1, our Middle East business which is the largest of our licensed portfolio, continues to experience headwinds, given the regional challenges, and the volatility of the oil market. Traffic throughout the region is down and uncertainty abounds, and therefore we are continuing to expect sales pressure on our Middle East business for this year. Also even though it’s a much smaller part of our license business, the recent terrorism in Istanbul has, and will continue to affect our four Shacks there”

Wages are going up

We know wages are going up, and we’re going to continue to invest in our team, and spend the money in order to get the right people. So looking at what we expect for the remainder of the year I really think we’re going to see a little bit of an increase to get to the 50 bps for the year, simply because of our plan to invest in a little bit higher quality team members than some of our competitors. And it’s not just the hourly team members which we’re doing. It’s managers at all levels, it’s our shift managers and our supervisors, many of which we’re going to need to bring on in an increased number, in order to be well-prepared for that ramped up growth, for this year and next. So that’s an investment that we’re excited to make

Airport or stadium restaurants take special operator relationships

You’re right about the 450. That’s we see that as our company-operated restaurants. We have no desire to let anyone else license a restaurant in this country. We love our returns, and we want to keep them for ourselves.
Unless it’s a situation like an airport or a stadium where there’s a better operator and possibly the only operator that can get that. So in that case, we’re happy to take the royalty fees, and we’ve got a great business there.

Brinker International (EAT) Wyman T. Roberts on Q4 2016 Results – Earnings Call Transcript

Tough macro environment

We enter fiscal 2017 believing this will continue to be a tough macro environment. We’re not counting on relief from a presidential election or significant improvement in the economy anytime soon. Until household incomes start to see some absolute growth, we believe things will continue to be a challenge for consumers and for our industry.

Thomas Edwards, Jr. – Executive Vice President & Chief Financial Officer

Wage inflation running at slightly below 3%

We expect wage inflation of slightly below 3% in fiscal 2017, primarily reflecting wage increases for salary and hourly team members, with a third of this increase from higher minimum wages.