PACCAR 4Q15 Earnings Call Notes

PACCAR (PCAR) Ronald E. Armstrong on Q4 2015 Results

2016 will be another good year for Class 8 trucks

“2016 will be another good year for the U.S. and Canadian Class 8 industry truck market with retail sales estimated to be in a range of 230,000 units to 260,000 units. Additional good news is that Peterbilt and Kenworth dealer inventories are in great shape entering this year”

Seeing more used trucks coming to market

“I think what we’re seeing is there are more used trucks coming into the market, and that’s dampening used truck prices a bit. But the great news is that the Kenworth and Peterbilt products continue to earn a premium relative to the competition.”

Cancellation activity is normal, economic fundamentals are positive

“Cancellation activity in our operations are very normal. There’s nothing unusual that is happening in that arena. And in terms of where we’re at in the cycle, I think that’s to be determined. The economic fundamentals are positive, and we see that we’re going to track what the demand is, and we think the demand is going to be a good market for 2016.”

Lower commodity costs are a bit of a benefit

“Cost, I think there’s probably a little bit of downward momentum on prices with commodity cost reductions. so that’s a bit of a benefit. But everybody is getting that same benefit in the industry. Our factories and businesses around the world do a great job of managing their cost structure. And our purchasing groups around the world do a great job of procuring and working closely with our suppliers”

27% share of heavy duty truck market

“We obviously continue to push the number. We’re 27% share of the heavy-duty market, 17% of the medium-duty market in North America, so there’s lots of upside for us.”

Several years away from autonomous trucks, but following developments closely

“So all of our truck divisions and our engineering teams around the world are involved in evaluating all the technologies that can benefit our customers, including the technologies that will support autonomous driving. We’ve demonstrated autonomous vehicles at various exhibitions in North America. Our team in Europe has also demonstrated their autonomous capabilities with tuning activities, working with government and educational institutions. So a lot of work in that area, working closely with suppliers who have the technologies that can support that activity. So it’s an ongoing activity. I think we’re several years away from seeing that in the truck business. But we’re right at the forefront of all the developments that are going on in that arena.”

Ken Hastings – Director of Investor Relations

Freight activities look good

“Obviously the on-highway business is supported by strong freight tonnage metrics. They’ve been pretty flat but at a very high level. I think the last numbers that came out were like the second highest level on record. So, freight activities look good, the estimation for growth for next year for North America is 2% to 3% growth. So, consumer demand is strong. And so, we see a lot of positives that are going to support a good market.”

Miscellaneous Earnings Call Notes 10.29.15

E*TRADE Financial (ETFC) Paul Thomas Idzik on Q3 2015 Results

There’s a big penalty for a bank when it crosses $50B in assets in the form of greater regulatory spending

“as I said many times in previous calls when this topic comes up, none of our owners are going to reward us by tiptoeing over $50 billion and incurring all the costs and distraction. If we go over $50 billion, it will be when Mr. Pizzi and I and the rest of the team are confident that it’s going to make sense for our owners.”

Volvo’s (VOLVY) CEO Martin Lundstedt on Q3 2015 Results

We see a strong year for trucks in North America

“Trucks North America, we can say that North America – when we start with the macroeconomic view on North America, I think we see the same thing as many other people see. It is a solid growth also for next year, so we don’t see any kind of other things in North America compared to what most, I would say, macroeconomic people see.”

Brazil is probably not coming back for two years

“I think that also one should recognize that Brazil is most probably not going to come back into some kind of high growth or anything like that for – I would say don’t anticipate that for the next coming two years at least because Brazil has to go through quite a lot of things. We don’t see the boom in terms of raw material prices. And not only prices, also the demand is actually coming down and that was very much what fueled the economy in Brazil.”

Whirlpool’s (WHR) CEO Jeff Fettig on Q3 2015 Results

Currencies have experienced a global reset

“Given the significant economic shocks this year, we believe that currencies have experienced a global reset, and we are prepared to operate this changed environment going forward.”

Europe is a split market

“On Europe, again it’s a split market, if you want to say. But Eastern European market demand continues to be very slow and very much down, which is driven by Russia and Ukraine…The western side, on the other side, I would say its stronger than anticipated. The most markets are in a very healthy and robust phase.”

China -4% right now

“China has been slower in terms of market events than we expected, kind of coming into the year. Its at around minus 4% right now, and for that market, it’s a big decline, although in general terms its not and we don’t think that it should have a significant impact on our business”

State Street (STT) Joseph L. Hooley on Q3 2015 Results

It’s certainly a positive that markets have rebounded month to date

” it’s certainly a positive that markets have rebounded month-to-date here in October. I would point out just for completeness that emerging markets now are pretty close on a month-to-date basis back to the third quarter average. They had really dipped in late September, and what’s particularly important to us is the average over the whole quarter. So I would – I’d hesitate to try to claim any kind of victory based on the first three weeks of October, and obviously we’ve got another couple months to go. But I would agree with you that it’s certainly been helpful to see the equity market positive news on the first three weeks of the month.”

Royal Caribbean Cruises’ (RCL) CEO Richard Fain on Q3 2015 Results

Bookings are strong even in China

“The Caribbean and China which makes up approximately two thirds of capacity are significantly more booked than last year at higher rates. The strength of these two products is more than offsetting continued pressure in Latin America.”

Our feelings are good about China

” our feelings are good about how we see China. We think the opportunity is still very, very strong. So that’s kind of our perspective on China.”

Bank of Hawaii’s (BOH) CEO Peter Ho on Q3 2015 Results

CRE has been the headliner for loan growth but we are pretty mature in the cycle, and our core relationships will probably begin to pull back

“all of our lending categories are performing very well right now. So CRE has been the headliner for a good amount of time. It continues to be through the third quarter and we think we still have some space left in this cycle for continued growth. Having said that, we are pretty mature in both the commercial and in particular the commercial real estate cycle and really what you are likely to see is as our core relationships begin to pull back in light of pricing in the marketplace, you will likely see us doing the same.”

Consumer lending strong

“on the other consumer side, home-equity and indirect and installment and credit card, those portfolios are growing very nicely for us. And really, I think a reflection of what’s happening with the economy here in town.”

Comcast’s (CMCSA) CEO Brian Roberts on Q3 2015 Results

Comcast venturing into wireless service

“we believe that wireless obviously is an important area for consumers and how they are in the future. And today, we have incredible success with our Wi-Fi network, which is the largest in-home Wi-Fi network, as well as a terrific out of home Wi-Fi, we’re seeing a majority of bits travel over the Wi-Fi network. But it takes about six months to activate the MVNO. We’ve had told everybody that before, we were going to trial some things and test some things after we activate and we’ll update people as that progresses.”

Ford Motor’s (F) CEO Mark Fields on Q3 2015 Results

We are seeing stabilization in China

“just a couple comments on the China industry, we are seeing stabilization and as Bob mentioned we do expect to lift from the stimulus package. And as he mentioned we are seeing showroom traffic improve, we are seeing closing ratios improve and unquestionably we see this as a really good opportunity, because 70% of our sales have the engines that are eligible for the stimulus.”

Expect stronger for longer in the US

“We would characterize the U.S. industry as healthy and borrowing any type of shock whether it would be economic or policy related. We do see industry sales staying well supported at the current levels through the next few years or in other words we expected to be stronger for longer.”

The industry is going to have to do a lot of work to increase fuel efficiency by the end of the decade

“if you look 2019 and 2020 I mean I think there’s a lot of work the whole industry is got to do at that point in time in response to your compliance particularly around the machines and fuel economy, but I think we feel good about where we are up until 2019, but then there is a sort of a step level increase and we are all going to have to continue to work on particularly with more electrification that’s going to be required in that timeframe.”

Coach (COH) Victor Luis on Q1 2016 Results

We’re bucking the trend of a weak environment in China

“In terms of China, as you mentioned, we’re really pleased to be bucking the trends that many of our traditional competitors are reporting…our team is managing our brand incredibly well in what is of course a very turbulent environment, not only with the exchange rate fluctuations and the impact on traffic into Hong Kong and Macau, but also the domestic stock market gyrations which are now very well-publicized.”

PACCAR’s (PCAR) CEO Ron Armstrong on Q3 2015 Results

European outlook continues to improve

“The European economic and truck market outlook continues to improve. GDP growth expectations for this year are 2.6% in the UK, which is PACCAR’s strongest market in the region, GDP growth is also accelerating on the continent…We expect the strong market conditions to extend into next year.”

Simon Property Group’s (SPG) CEO David Simon on Q3 2015 Results

Bankruptcies in 2015 but better comps than expected

“We are obviously had a lot more bankruptcies in ’15 than we did in ’14 and the other impact we’ve had on the negative side is that we’ve lost certain amount of percentage rent from the outlet business because of the fact that the strong dollar has also heard tourism shopping and we’ve seen that impacted more in the outlet business, the outlet tourists centers then we had in the mall business. The mall comp sales have been a better than our expectations and our leading portfolio in terms of that.”

Applied Industrial Technologies (AIT) Neil A. Schrimsher on Q1 2016 Results

October declined from September

“I mean we had a weakness in July, some expected. That continued through August. And off of that lower base, September probably came in modestly positive. As we look month-to-date through October, I’d say sequentially, it’s around 2% decline that we would see off that period”

CBRE Group’s (CBG) CEO Bob Sulentic on Q3 2015 Results

Our strongest growth is in Europe

“we are not seeing a lot of pressure. I would tell you where we are seen the strongest growth is in Europe. You saw the results this quarter, we expect that continue, but we saw good growth in places where people did not necessarily expected. In Greater China, we had nice growth. In Australia, we did, so we have not felt a lot of meaningful pressure at this point and the backlogs of business we have suggest that year should finish out nicely for us.”

Not seeing any deals die because of lack of capital

“From what we have seen, there is sufficient capital from other sources to step in. As I mentioned earlier, we have been anticipating that the rate of growth in sales will come down to a more sustainable level and we still believe that that is likely to be the case, but we are not seeing deals die basically because of a lack of capital”

Mondelez International (MDLZ) Irene B. Rosenfeld on Q3 2015 Results

13 percentage point currency headwind

” Based on current spot rates, we estimate currency to have a negative 13 percentage point impact for the year, a little more than our previous estimate of a 12-point impact”

The European retail environment is challenging

“the European retail environment is challenging. And I think we have been able to hold our own quite well. They’re interested in some of the very same things that our retailers around the world are interested in: what’s happening in health and wellness, what’s happening on the innovation front. And as long as we continue to drive traffic to their stores, we’re an important partner.”

AGCO (AGCO) Martin H. Richenhagen on Q3 2015 Results

Another robust harvest putting pressure on farm economics

“Another year of robust global harvest is putting pressure on commodity prices, and more challenging farm economics has reduced demand for agricultural machinery, especially for larger models.”

Argentina has increased import allowances

“the biggest export market outside of Brazil, or the market that we ship the equipment from Brazil to, is Argentina. And as you’re aware, the last few years they’ve had import restrictions that has really reduced sales in that market. This year, though, there has been some increase to those import and import allowances.”

Walgreens Boots Alliance (WBA) Stefano Pessina on Q4 2015 Results

Global healthcare markets are ready for change through scale

“The global healthcare markets, and perhaps the U.S. market more than any, are ready for change, and open to new ideas and new approaches that throughout provide scale. As the leading global healthcare company, we have the potential to play a defining role in this evolution.”

We’re not doing the RAD deal to increase our negotiating power with the payer and PBM

“Well, we have not done this to increase our negotiating power with payer and PBM. We have done this because we believe that we can extract a lot of synergies, rationalizing the combined company for, I would say, from internal sources and the harmonization of prices”

This deal will not reduce competition because we’re in an environment with lots of competition

“at the end of the day we are in an environment where the margins are decreasing. So it was decreasing. We are in an environment where there is a lot of competition. And the fact that we put together two companies will not reduce the competition – not just the competition among pharmacies.”

Macerich’s (MAC) Management on Q3 2015 Results

Apparel sales are struggling with lack of a distinct fashion trend

“On the negative side, apparel sales are only showing modest sales per square foot gains, if they struggle with a lack of a distinct fashion trend increasing competition from large format retailers and sluggish consumer settlement”

We anticipate bankruptcies will likely be comparable or higher than in previous years

“Looking towards the end of the year, we are anticipating that bankruptcies are likely to be comparable or higher than in previous years. Many of these retailers are public companies and based on their current stock prices the markets are pricing in a significant risk of bankruptcy. Contrary to the previous year, we are expecting less store closing as part of the bankruptcies as many of the retailers are prime candidates for restructuring with a smaller store base. Again, we believe the lower quality centers will be disproportionately impacted.”

Chains will use bankruptcy to their advantage to reduce store count

‘these chains will use bankruptcy potentially to reduce their store count.Outside of bankruptcy it’s more difficult, because the landlords will typically require some buyout or compensation and many of the companies have not – there’s been very few examples where companies have been successful doing that.”

Manitowoc (MTW) Kenneth W. Krueger on Q3 2015 Results

Deteriorating demand for tower cranes

“our third quarter results were disappointing, as deteriorating demand for tower cranes in the Middle East and Asia coupled with lower than anticipated all-terrain and crawler crane shipments, all contributed to the shortfall in revenues. The current global economic environment affecting customer demand is unlike any cycle we’ve seen in the recent past. Uncertainty among our customers is mounting due to emerging market peers, ongoing question over Chinese growth outlook, persistent depressed oil prices and slowing domestic growth. ”

The third quarter was one of the most difficult operating environments in recent memory

“The third quarter proved to be one of the most volatile and difficult operating environments in recent memory. Manitowoc has weathered many economic cycles and our team has proven its ability to manage the business without compromising our competitive position in the marketplace. This cycle should be no different.”

Delphi Automotive Plc (DLPH) Q3 2015 Results

China was significantly weaker than expected, but we are now starting to see a pickup in orders

“we’re real optimistic. We’re still optimistic about China. For the third quarter, it was significantly weaker than what we originally estimated. If you recall, our outlook was China up about 3.5% or 4% in the third quarter; ended up actually being down 9%. So it was very fluid. For the fourth quarter, our original outlook was China volume up roughly 5%. Current outlook is basically down a point. However, when we look at sequentially third to fourth quarter, we are starting to see a pickup in orders, a strengthening in the market, sequential growth in vehicle production”

The New York Times (NYT) Mark J. T. Thompson on Q3 2015

NYT exploring ways to deal with ad blockers

“Now ad blockers have been much in the news perhaps this is a good moment to give our perspective on that topic. As you know the Times’ digital subscription revenue stream means that we are significantly less expose the most publishers to the impact of ad blockers. Nonetheless, let me make it clear that we oppose ad blocking. The creation of quality news content is expensive and digital advertising is an important way in which we and other high-quality news providers fund news gathering operations. We are exploring a number of options including but not limited to technical solutions to mitigate the impact of ad blockers should the threat increase.”

Strength in luxury, technology advertising

“We’ve seen in Q3, and I think this will continue in Q4 real briskness in the luxury business. We saw real briskness in Q3 in the technology business. I think that will continue. And then there are other categories like retail where we just have less visibility and where there tends to be more volatility.”

We are a journalism play

“we are a journalism play. We are a news and features and opinion provider with multiple platforms, and we’re very interested in the synergies between the platforms. ”

BorgWarner’s (BWA) CEO James Verrier on Q3 2015 Results

Lowering sales guidance thanks to weakness in China and global commercial vehicle markets

“Our reported sales growth is now expected to be between minus 6% at the low end and minus 5% at the high end. This is compared with minus 5.5% to minus 2.5% previously. The change in our sales growth guidance is primarily related to two things. The impact of weaker than expected market conditions in China on our business and weak commercial vehicle markets around the world.”

Paccar 2Q15 Earnings Call Notes

Strong deliveries due to economic growth and strong freight demand in NA and Europe

“PACCAR delivered 41,600 trucks during the second quarter, an 8% increase versus the first quarter this year and slightly ahead of our expectations. The improvement reflects increased truck deliveries in North America and Europe due to economic growth and strong freight demand.”

European outlook continues to improve

The European economic and truck market outlook continues to improve. GDP growth expectations for this year are 2.4% in the UK, which is PACCAR’s strongest market in the region, with 1.5% GDP growth on the continent.

Freight transport activity on German highways is up 2.6% year-to-date through June compared to the same period last year and it’s at the highest level since the German toll system was launched in 2007.”

US Economic picture positive too

“The US economic picture remains positive with GDP forecast to grow 2.4% this year. The housing and automotive industries are bright spots in the economy and create a large amount of freight. Housing starts are projected to grow 11% this year to 1.1 million and the automotive industry is expected to deliver 16.9 million vehicles, near the record level of 17.3 million set in the year 2000.

US freight tonnage is at near record levels. We’ve raised our US and Canadian Class 8 truck industry retail sales estimate to a range of 270,000 to 290,000 units this year. The stronger market reflects expansion in industrial fleet capacity due to continued strong freight fundamentals.”

Not seeing any cancellations in the US

“Cancellations have been at a very low rate and vocational trucks are very active, lots of reasonable growth in housing construction, commercial construction. So it’s all been pretty steady.”

It’s a really good operating environment

“I think it’s a really good operating environment. I think we’re in a good position right now and obviously our teams in our factories do a great job of managing to the conditions in the marketplace and we expect that that will continue as we move forward of course this year and next.”

Lots of available capacity

“We have lots of capacity available in most of our factories to be able to produce trucks to meet customer demand. So it’s not a concern for us.”

Paccar 1Q15 Earnings Call Notes

Europe has been helped by the ECB

“Europe’s economic outlook has been helped recently by the European Central Bank’s quantitative easing program and lower oil prices.”

“We have raised our forecast for Europe’s greater than 16-tonne market to a range of 220,000 units to 250,000 units reflecting a rebound in orders and the brighter economic outlook.”

Economic picture in the US remains positive

” the economic picture in the U.S. remains positive with GDP forecast to grow 2.9% this year. The housing and automotive industries create a large amount of freight. Housing starts are projected to grow 14% this year to over 1.1 million. And the automotive industry is expected to deliver 16.8 million vehicles near record levels.”

Pent up demand for trucks. If there were no driver shortage people could probably expand even more

“I think, the fleets, there was some pent-up demand over the more challenging years more and more fleets are renewing their fleets, and also I think if they had additional drivers they would probably purchase additional trucks. But we’ve seen some fleets be able to make those expansion, so.”

Very positive signs in the last couple of months in terms of order intake

“We have seen some very positive signs in the last couple of months in terms of order intake activity in Europe, but we’ll see how things progress. ”

Oil and gas should have a pretty nominal impact

“I think oil and gas – for oil and gas exploration and production related items, we’ll probably be lower this year, but that’s offset by other things other segments of the market. So I think it will be a pretty nominal impact.”

Strong outlook for truck demand

“Yes, the economy is good. And as long as the economy continues at good growth pace, I think there will be the need for the movement of goods and that will create demand for freight, and the freight numbers continue to be at or near record levels. So I think as long as that continues and trucks are operating at 90% plus utilization that we’ll see a reasonably good demand for trucks in the foreseeable future”

Customers are making very good profits

“our customers that they are all making very good of profits in their business reinvesting in new trucks and expanding their fleet I think both strategically and tactically. So, this is really just the second year where we’ve had expansion after five or six years of below replacement level demand. So I think our customers are enjoying good rates, good profitability and thinking about their business expansion plans in a pretty aggressive way.”

It’s an economically sensitive business

“if the economy softens substantially in the second quarter, things don’t progresses as economists project. That clearly is the thing that has the biggest impact on our business. So the economy is good. I think you will continue to see good demand.”

Paccar 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“PACCAR’s second quarter truck results reflect gradually improving industry truck sales in North America compared to the first quarter of this year. In fact, second quarter truck and parts revenues increased by 10% compared to the first quarter.”

“Class 8 industry retail sales in the U.S. and Canada were 54,000 units in the second quarter this year compared to 45,000 units in the first quarter. Customer truck purchases are focused primarily on replacement vehicles for their fleets. PACCAR delivered 34,800 trucks during the quarter.”

“hen we look at our vehicles, we look at it with the PACCAR engine and say, all-new family of engines, all-new family of trucks…the plan here is to continue to grow both the engines and the new products. And we’re in good shape.”

“we’ve seen many, many of our dealers and they’re in very good position, they have relatively low inventory. They’ve got a good population of trucks. The parts and service business is good. There’s really an excellent utilization by fleets. Fleets are making reasonable money, some are making record results. So the general economy in North America, let’s say, it’s growing 2-ish percent; flat to down, depending on what country you’re looking at in Europe. And in North America, I think people are saying, “These vehicles are getting old now, not only age but also in terms of miles.” And they’re excited by the benefits they see on our new vehicles. So I think it’s — the foundation is getting strengthened, and I think it will translate into improved sales over time.”

“I give our customers a lot of credit for navigating through the challenges. As the general economy improves, which we’re starting to see some of the — some of the benefits of, I think truck sales will improve because it is a fairly old fleet out there and the new products that, certainly, we’re introducing and have introduced will directly benefit their bottom line. So we’re encouraged by it. We’re pleased by the strength of the dealer and customer body out there and it should be an exciting couple of years.”

“we’ve got the largest population of vehicles. We have Kenworth, Peterbilt, DAF over 1.5 million vehicles running around the world.”