Priceline (PCLN) Q2 2016 Earnings Call

Priceline (PCLN) CEO Jeff Boyd said the Chinese tourism market continues to be an area of immense importance for the company 

The China outbound market continues to be a market that is large and growing and that we all view has great potential because of the demographic factors that are well known affecting China. We have a number of different ways to participate in it. I know there’s been a lot written about a slowdown in overall economic growth in China, but we still view it as a very, very attractive market that will have substantial macro tailwinds helping build both the middle class and travel demand, and we want to participate in it.”

Increasing their digital advertising dollars on the Facebook platform

“I think we would like to spend more money on Facebook going forward. We have a good relationship with them, and we’ve found that a number of things that we’ve done on Facebook works well, particularly retargeting, which really is more of a performance-based analysis the way we look at it. So, I would look for us to be doing more. As you could see by Facebook’s announcement, the scale of their advertising business is growing, and while it traditionally has been more of a brand advertising platform, we like to work closely with Facebook to find ways to make more performance-oriented placements work for us. And that’s something that we continue to be interested in doing.”

Recent terrorist attacks are hurting hotel bookings in some regions

“We have seen some relative strength in the South Spain and Portugal have been very strong markets. Turkey is not. Turkey has been an impaired market, between terrorist attacks and then the attempted coup. Some of the other markets that have been strong, like Ireland and Germany, so people shying away from some of the markets where terrorist attacks have been taking place in the past, and where maybe they have more of a fear of safety for traveling there at the moment.”

Miscellaneous Earnings Call Notes 2.18.16

Hormel Foods’ (HRL) CEO Jeff Ettinger on Q1 2016 Results

Jeff Ettinger

One of our secrets is being located in a small town in Minnesota

“One last aspect of the secret behind Hormel Foods that I’d like to share with you really relates to our team, where we are — I mentioned to you we’re in a small town in Minnesota; we’re little bit of a throwback in that regard. When someone joins our organization, they tend to join it for a life and indeed our average tenure of our officer team at Hormel Foods is 26 years, that’s not 26 years of industry experience, that’s 26 years of experience at Hormel, which I think does make it somewhat unique in the industry.”


Southern Copper’s (SCCO) Q4 2015 Results

Raul Jacob — CFO

China consumers 46% of the world’s copper

“As you know, China is the world’s major copper consumer with about 46% of world consumption. We believe China’s demand for copper will increase about 3.5% in 2016 driven by the partial recovery of the Chinese housing market and the national grid investment program.”

Current prices not high enough to support supply growth

” current copper prices are not sufficient to promote the necessary supply growth to meet future market needs. Thus, we believe current market circumstances are improving the strong long-term fundamentals of our industry.”


Community Health Systems (CYH) Wayne T. Smith

Volumes lower because of lower flu

“Our volumes, including emergency room visits, were lower than expected in the quarter as compared to a year ago, mainly attributable to the lack of flu and respiratory illness which we historically see during this period. On a same-store basis, if you factor out the flu-related volume decline, we would have had reported slightly positive growth in adjusted admissions.”

Unable to complete proposed spinoff because of debt markets

“The decision to delay the spin, as we have previously stated, is the sudden disruption in the debt markets. This is a market-driven decision. We understand that the debt markets have not been like this since 2008. We expect to complete the spin once market conditions are favorable.”


Potbelly (PBPB) Q4 2015 Results Michael W. Coyne – Chief Financial Officer & Senior Vice President

Wages generate inflationary headwinds

“Similar to last year, we are expecting inflationary headwinds in 2016, primarily as it relates to our labor costs, which we expect to be more impactful this year due to the continuing impact of minimum wage increases that were taken in 2015, as well as expected wage increases this year.”


Freddie Mac’s (FMCC) CEO Don Layton on Q4 2015 Results

The concept of capital in our conservatorship is very unusual

“I’d also wish to remind everyone that the concept of capital, equity primarily, in our conservatorship is very unusual. The many firms and industries which deal with us, look not to our small permitted capital buffer but to the unused portion of the purchase agreement as the source of the capital stream behind our liabilities and thus us appropriately as a very strong credit. That unused PSPA amount has been a very large number for some time specifically $140.5 billion.””


The Priceline Group (PCLN) Daniel J. Finnegan – Chief Financial Officer

Global airfares were down by 15% over the last several months

“In addition, global airfares were down by about 15% over the last several months, according to KAYAK flight search data, which significantly impacts Priceline.com’s gross bookings growth but has no impact on gross profit growth.”


Jack in the Box (JACK) Leonard A. Comma on Q1 2016 Results

Hurt by stressing quality over value and also felt competitive effects from MCD

“the major takeaway is that we chose to focus on this effort and not to promote value deals to the same degree as quarter one last year. Although we stand behind our decision to invest in long-term quality improvements, we paid the price in the quarter as we struggled to roll over last year’s two for $3.50 breakfast croissant promotion. Additionally, we experienced the effects of both the heightened competitive focus on value and the impact of McDonald’s all-day breakfast, primarily between the hours of 10:30 a.m. to noon.”


PG&E (PCG) Anthony F. Earley Jr. on Q4 2015 Results

60% of energy was carbon free

” In 2015, nearly 30% of PG&E’s electric deliveries came from qualifying renewable resources, and even more meaningfully nearly 60% of the energy that we delivered was carbon free.”

CPUC authorizing ROE of 10%

“you’ll see that we continue to assume a CPUC authorized equity ratio of 52%, and a return on equity of 10.4%, which we now have certainty on through 2017.”

Miscellaneous Earnings Call Notes 11.12.15

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. ”


JS Earnings Call Notes 11.10.15 – Amerco, Priceline, Rockwell Automation

Amerco (UHAL) Principal Financial Officer Jason Berg said the company saw continued sequential revenue growth and volume growth during the quarter

“Operating earnings at the moving and storage segment increased $37 million to $297 million from another good quarter of revenue growth. Equipment rental revenues increased 7% or approximately $45 million.  We are continuing to see growth in transactions and revenues across both our truck and trailer fleets, as well as from the in-town and one-way moving markets.”

And they continued to add locations where you can utilize U-Haul equipment

“Our team continues to expand the distribution network, adding over 350 net new independent dealers, along with 30 new company-owned locations during the quarter.”

They’re also utilizing their existing fleet of moving trucks more efficiently

What’s happened this year is that the growth of the fleet has flattened out and we’re seeing improvements in efficiencies of the existing fleet.  We’re seeing improvements in utilization for truck. We’re seeing improvements in revenue per unit.  Things that we’ve done back-office wise is we try to increase truck availability through improving the repair and maintenance process so that we don’t have trucks down for as a longer period of time.”

They’ve been able to raise prices in the storage unit 

 In general across the country, I think our rates are up approximately 3%.”

Amerco (UHAL) Principal Financial Officer Jason Berg acknowledged they have a significant amount of excess cash on the balance sheet but they plan on reinvesting in various growth initiatives

We do continue to accumulate cash.  We have recently done dividends, but the focus of the organization right now continues to be in reinvesting back into the business. We’re going to be reinvesting in the fleet here in this fiscal year, at least toward the second half of the year, rotating the significant number of trucks back on.  And on the real estate side, all the new facilities that we’ve shown here during the quarter as well as a significant number of projects in the pipeline construction and development projects that over the next several years, we’ll certainly utilize at this point, a couple of hundred million dollars. So, I think we’ve earmarked growth as the primary use of the excess cash right now.  For this company, reinvestment has always been the great value creator for our shareholders over time versus other chances.  We’ve proven over time that by reinvesting in our core business, we can create returns for the shareholders over time.”

The company listened to the voice of the customer and increased the company’s offerings in the small truck space

We heard what the customer was saying and there was a need in the market for us to improve our service in the small sizes of the fleet and we’ve done that significantly.  So, on a percentage basis, if you were to look at the fleet, I think on a percentage basis, the smaller trucks are greater percentage than they were before.”

 

 

 

 

Priceline (PCLN) CEO Darren Huston said they helped clients book over 100 million hotel room nights in the quarter

Our customers booked accommodation reservations for over 115 million room nights in the quarter.”

And they continue to add hotels to their platform

“Booking.com’s platform now has over 820,000 hotels and other accommodations in 220 countries and territories, up 38% over last year.”

Priceline (PCLN) CEO Darren Huston they are launching a business traveler product

Following our successful launch of BookingSuite which continues to gain traction in the B2B arena, we recently introduced another important B2B innovation, Booking.com for Business. This new offering is geared to both the business traveler and the travel organizer. Our tools allow organizers to link travelers to the company account without losing oversight or to book on their behalf. Spending can be managed through budget filters and spending reports. All the company’s hotel reservations can be viewed and managed in one place. And best of all, all enrolled Booking.com for business travelers automatically benefit from our rewards program including closed user group discounts and special benefits at over 100,000 select properties worldwide.”

Along with many other multi-national companies, Priceline blamed currency volatility for reduced revenue

Throughout 2015, we’ve seen the strong U.S. dollar significantly impact our U.S. dollar reported results because about 90% of our gross bookings and operating income are generated by our international brands. Our two most impactful currencies, the euro and the British pound, were weaker by about 16% and 7% respectively for Q3 as compared to the prior year. Many other important currencies in which we transact were also significantly weaker versus the U.S. dollar this year in Q3 relative to last year.  The strong U.S. dollar means our gross bookings, gross profit, operating expenses, adjusted EBITDA and non-GAAP net income mathematically translate into significantly fewer dollars than they would have at last year’s exchange rates for Q3 and Q4.”

Management also asserted they have a mid-single digit market share of room night reservations that runs over their platform

“Now for Q4 guidance. We often get questions from analysts and investors trying to understand the size of the accommodation market and our share of room night reservations. Darren just pointed out that the accommodations on our websites have about 21 million rooms.  This math implies a mid-single digit market share, which I believe highlights the opportunity for us to continue to grow our share with existing partners, while our supply teams also continue to aggressively add new partners.”

Priceline (PCLN) CEO Darren Huston spoke about competing with AirBNB

Basically, in vacation rentals, we’re building a very different product than what Airbnb has, or what HomeAway has. And our whole business is based on no fees for consumer. So it wasn’t a strategic move. It’s just a reflection of the way that our business works, and we charge our accommodation partners between 12% and 15% commission, so that’s where the take rate is. When you’re in a classified ad business, it’s more difficult to get that kind of take rate from the accommodation partner, so many players will try to also charge a fee or increase fees to consumers.”

And they’ve been spending more and more of their advertising dollars with Facebook

“And then your next question on Facebook as a marketing platform, we have been doing more and more business with Facebook. Most of it though is in the category or re-messaging or re-targeting.”

 

 

 

 

Rockwell Automation (ROK) CEO Keith Nosbush said orders were weak during the preceeding quarter

Both sales and earnings came in below our expectations in the quarter. Organic sales declined a little over 2%. As we progressed through the quarter, conditions softened. And September was especially weak, particularly in the U.S. product businesses.”

He highlighted both China and the energy sector as notable spots of weakness

“The shortfall in the U.S. was broad-based across verticals but particularly in oil and gas. Heavy industry end markets, including oil and gas, have not stabilized, and we see continued softness in key emerging markets.  China was the other weak spot. Sales in China were flat compared to the third quarter, but came in a bit lower than expected.”

They noted a slowdown in spending by their U.S. based industrial customers

There appears to be a general slowdown in U.S. industrial customer spending, both capital and operating spending. And what we experienced in the U.S. market in Q4 seems to be consistent with what we have seen reported by other automation-related and electrical suppliers, including some of the major distribution companies.  So that’s why we’re cautious about how we’re approaching this because we don’t believe we’ve seen the bottom.”

Rockwell Automation (ROK) CEO Keith Nosbush said he expects to take market share from competitors due to new product launches 

And I also think some of our new products, we do expect next year to be able to take market share.  I think that’s how we look at our ability to demonstrate differentiation. And certainly, with our new technology and our new products, we expect as the year unfolds to be able to take share, even in a difficult market environment.”

They expect mining equipment orders to remain subdued

Mining will continue to be weak across all regions, with the commodity prices continuing to be down. And also you’re seeing a lot of restructuring in the larger global customers, and that tends to slow CapEx spending while that’s going on.”

They do expect to see strength in customer orders as some companies look to bring down their operating costs

“We do believe that they will continue to spend on driving down their operating costs. We believe we have some new technology that we’ll also be talking about at Automation Fair that enables us to create a much more productive oilfield as well as the ability to create more of helping them maintain their assets, their rotating equipment, which is very important in that industry with some capabilities in remote monitoring and in asset management capabilities of that equipment.”

Priceline 1Q13 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.

“we have been pleasantly surprised with the resilience of the travel and consumer that we serve, really in all our markets were times of economic uncertainty, travel is — we’re leisure travel guys and it’s compelling activity and people are — they are traveling and booking hotel rooms, and of course airline tickets, some really shaky economic circumstances.”