Miscellaneous Earnings Call Notes 11.5.15

Colgate-Palmolive’s (CL) CEO Ian Cook on Q3 2015 Results

Have seen a decline in private label

“At the same time, we’ve seen a decline in private label shares in many of our categories indicating the consumers preference for branded products and respect of our equities.”


Anheuser-Busch InBev’s (BUD) CEO Carlos Brito on Q3 2015 Results

Big change in the Chinese economy towards consumption

“I think what’s happening in China at this point is that there is a big change from an economy that was all lead by exports and heavy investments in fixed assets, okay that generates a lot of blue-collar work or jobs to now an economy that’s much more service and domestic oriented economy. So more consumption, more consumer spending. So that of course, in the midst of this change, we see that in the Southeast, where some years ago there was lack of blue-collar workers and now there is too many of them. So there is a shift in there and I think that’s what the segments are showing us. But the segments that are more high priced are growing ahead of the ones that are lower price. And that’s exactly where we have most of our business and most of our brands position. So I think this change, while it may be bad for the industry, is not bad for us.”


PriceSmart’s (PSMT) CEO Jose Luis Laparte on Q4 2015 Results

We do have a soft economy in Columbia right now

“We do have a little bit of a soft economy right now, driven by the devaluation and other factors in the country. But we still are pretty optimistic about Columbia, and we haven’t reduced our efforts.”


Phillips 66’s (PSX) CEO Greg Garland on Q3 2015 Results

We see that the consumer side of China is doing very well

“we’re continuing to see good demand in Asia and across the system globally. So I think our view is demand is good. China is particular interest I think largely because of the reported numbers that what we see on both fuels and chemicals tells us that the consumer side of China is doing very well.””

By 2017/18 we’d expect not to be in a $50 crude environment any longer

“I mean our view consistently remains by 2017 and 2018 that really sort itself out and we are probably not $50 crude environment but we are probably not $100 but somewhere $60, $70, $80 in that range.”


Greenlight Capital Re’ (GLRE) CEO Bart Hedges on Q3 2015 Results

-16.9% through October

“The Greenlight Re investment portfolio lost 14.2% in the third quarter, bringing the year-to-date return to minus 16.9%.”

Brought next exposure up slightly during market sell off in August

“We reduced our gross exposure by 30 points in the quarter. Our net exposure increased slightly from 21% to 26% as we covered several shorts during the market sell-off in August. We continue to hold macro positions including gold, short Asian currencies and short French sovereign bonds. Overall, it’s been a challenging environment. We’re optimistic that we should get some recovery from our beaten down long portfolio.”


The Sherwin-Williams Company’s (SHW) CEO Chris Connor on Q3 2015 Results

Volume demand lagged initial expectations in virtually ever market we serve

“Volume demand lagged our initial expectations for the quarter in virtually every market we serve, but we remain focused on delivering positive results regardless of the demand environment.”

Continue to see deteriorating demand outside of NA

“We continue to see deteriorating demand for our product outside of North America.”


Banco Santander-Chile (BSAC) Q3 2015 Results

Economy has done better than most regional peers

“Segment [ph] in the corporate sectors continue to contract, but given the diversity of Chile’s economy and the fact that the average GDP growth of Chile’s main trading partners is relatively high, the economy has done better than other regional peers.”

No deterioration in asset quality

“In terms of evolution of asset quality, we think that the aligned trends are generally positive, especially in the consumer side, in the mortgage side and in the mid-size market. We haven’t seen any deterioration. ”


CBS (CBS) Leslie Moonves on Q3 2015 Results

Advertising is coming back in a big way

“advertising is coming back in a big way at CBS. Underlying network advertising was up 8% in the third quarter with strong growth in primetime, double-digit growth in sports and daytime and huge growth in late night, which was up 42%.’

The dire predictions of cord-cutting are overblown

“I think we’re all seeing that the dire predictions of cord-cutting are overblown, but the good news for CBS is, no matter where distribution goes, no matter how or where you want your content, we are in a perfect position. ”

There can never be too much content

“we are a content company, we believe the world can have more content, we don’t believe the guy who says oh, there’s too much content. There never can be too much content and we want more of it.”


Activision Blizzard (ATVI) Robert A. Kotick on Q3 2015 Results

Comparing King to Blizzard

“When we merged with Blizzard Entertainment, we found the right partner with extraordinary leadership. And when others dismissed the sustainability of Blizzard’s incredible capacity for innovation, we were certain patience would be rewarded. And it has. We see a lot of the same characteristics today in King. We think now is the right time to enter mobile gaming in a meaningful way. ”


Third Point Reinsurance’s (TPRE) CEO John Berger on Q3 2015 Results

Third Point owns Argentine debt

“Sovereign credit was up 3.1% on average exposure during the quarter, due to strength in Argentinean government debt the largest position in our credit portfolio. We’re looking forward to the run off Argentinean presidential election next month and we’ll be pleased with the victory from either candidate.’


Michael Kors Holdings (KORS) John D. Idol on Q2 2016 Results

Warm weather bad for seasonal items. Watch business still under pressure

“We saw accelerated growth in footwear, although the warm weather tempered boot sales in the quarter. The watch business continues to remain under pressure in retail and wholesale. ‘

Trend has been towards smaller handbags

” the idea that people are not buying handbags, I do not believe is a correct concept. They happen to be the fashion trend of smaller bags, so if we were selling x percent of $350, $400 and $500 handbags at this time last year we were selling less of those because we were selling a lot more in particular across bodies and large wallets. And that is what the consumer in particular the millennial is viewing as a fashion trend.’

All of us are now being impacted in parts of Texas because of oil prices

“all of us are now being impacted in parts of Texas because of oil prices there, that’s a little bit less tourist, but some of it’s related to the Mexicans shopping cross-border with the peso to the dollar.”


Time Warner (TWX) Jeff L. Bewkes on Q3 2015 Results

Programming is the most significant area of investment for the company

“Programming remains by far the most significant area of investment for the company. As you all know, we have plans to invest aggressively in content in 2016 and beyond.’


Stratasys (SSYS) David Reis on Q3 2015 Results

Excess capacity created by extraordinary expansion in 2014

“We also believe the situation has been worsened by the negative impact of excess capacity that followed the two-year period of extraordinary industry expansion that ended in 2014. Reflecting the low visibility of the current market environment, expected orders did not materialize as expected at the end of the quarter.’

Focused on adjusting the cost structure of the company to fit customer demand

“what I can tell is that we are taking very seriously the change in the business volume that we see in front of us and we are dealing with adjusting the cost structure of the company, the entire cost structure of the company not only MakerBot, to fit through what we see today in the market in terms of customer demand.”


Douglas Emmett’s (DEI) CEO Jordan Kaplan on Q3 2015 Results

Seems like occupancy is being driven by much stronger tenants

“I would say that, what’s driving — what’s going on here right now is a much stronger and wider base than what was driving the run up in ’04, ’05, ’06 and ’07. It’s way more comfortable, a way better percentage of kind of expenses for the tenants. The tenants are very — we’re seeing strong balance sheet and good credit. We’re seeing a good diversity of industries. You’re not seeing like a heavy lean on, I remember before, it was the mortgage — these mortgage guys were taking huge chunks of space”

“the strength in this market, all seems really healthy going to just literally more functional space for our tenants, as opposed to some of the tenants before that were literally just space grabbing and whether it be a big dotcom guy that didn’t exist a year ago and all of a sudden now needs 50,000 feet, 100,000 feet. What’s going on now seems a lot more comfortable and it’s backed by much stronger, more established tenants.”


Annaly Capital Management’s (NLY) CEO Kevin Keyes on Q3 2015 Results

Continued improvement in CRE fundamentals in the US

“The third quarter saw continued improved in U.S. commercial real estate fundamentals with healthy demand across all property types. Vacancy rates across all asset types declined compared to last quarter, with office and industrial continuing a trend of 22 consecutive quarters of positive demand.”

While the pace of CRE asset sales has slowed, we don’t see this as a weakening trend

“While the pace of sales has more recently begun to slow down 10% in September, we don’t see this as a weakening trend, as large take-private transactions continue to be announced with private equity taking advantage of the discount between listed markets and asset values.”

CMBS spreads have moved wider, but cap rates have not yet moved higher

“Spreads, however, have a continued widening that started this summer, with AAAs now at about 120 basis points, 32 basis points wider than at the beginning of the year and 34 basis points wider than this time last year. In addition, BBBs are almost 200 basis points wider than this time last year. While, this type of rate expansion is significant, we have not yet seen cap rates move higher. ”


PriceSmart 3Q15 Earnings Call Notes

EPS flat thanks to Colombian peso

“Earnings per share for the third quarter of fiscal year 2015 were $0.70 per share, the same as the year ago quarter. The devaluation of the Colombian peso again negatively impacted our overall consolidated results, but not to the same degree as in the first two quarters. ”

Lower renewal rate in Colombia

“We continue to see good member sign-ups in our Bogotá, Medellín and Pereira clubs and even in our existing clubs in Baranquilla and Cali. However, despite a high level of new member sign-ups and overall membership account growth in Colombia, we are also seeing a lower renewal rate in this country compared to other countries where we operate. We attribute those lower rates to different factors. Clearly, some of that relates to devalue peso and the higher prices on the imported merchandise which will feature in our clubs.’

Foreign exchange loss mitigated by efforts taken by the company

“On our last call, we spoke at length about the P&L charge that occurs when a devaluing currency lead to substantial level of U.S. dollar liabilities as was the case in quarters one and two. I am happy to report that the efforts taken by the company to provide the necessary financing and remove the U.S. dollar exposure resulted in a minimal foreign currency loss in Colombia in the quarter.”

Tend to borrow in local currencies

W”e have various currencies. We tend to borrow in local currency and sometimes, we will borrow in U.S. dollars and then we will have a swap that will convert it to local currency. And so it’s – what we have done in the last – over the last year is we have got a fair amount of that. So, we have really reduced any exposure we have on the debt side to change with an exchange rate in the currencies in which we borrow.”

PriceSmart FY2Q15 Earnings Call Notes

Colombia taxing capital

“One more item deserves mentioning, Colombia established a new tax on businesses based upon their level of equity which went into effect this calendar year”

Colombian peso devaluation had impact on financials

“As Jose Luis mentioned the extraordinary devaluation of the Colombian peso over the past several months has had a material impact on our financials in the most recent fiscal quarter. Given the level of merchandise that we import into our markets that is purchased in U.S. dollars, dramatic changes in currency can impact us in a number of ways all of which came into play in Colombia in Q2.”

Merchandise purchased in US dollars, payment due in local currency opens to exchange rate risk between time of order and payment

“When imported merchandise’s purchased, the liability is incurred in U.S. dollars. At the time payment is due, it is satisfied with local currency and therefore subject to the fluctuating exchange rate between that currency and the dollar.

During the first quarter and extending into the second quarter, a very large volume of U.S. value merchandise and fixed asset shipments were received by Colombia in advance of and during the initial opening of the three new warehouse clubs. This created large U.S. dollar liabilities which upon later settlement at a weaker Colombian peso resulted in realized currency losses.”

If you’re taking the long view in business, sometimes you have to take short term pain to maintain your position

“So there were so many fluctuations that we would keep bringing merchandise at different cost level. So it was little bit hard to in the second quarter in particular to even price merchandise them but we believe that definitely given our long-term view in Colombia the most important thing for us is try to be more reasonable with price increases and obviously be there for our members to sustain the long-term position.”

This is an opportunity to continue to look for places to grow

“on Colombia probably that currency concerns us but that doesn’t change our view of a market that has a lot of opportunity long-term.

So the initial results are encouraging obviously since we started in Colombia, we knew it wasn’t going to be without challenges. And I believe that this is good opportunity for us to keep looking for opportunities to grow there definitely the in particular the Bogota in cities are big cities where we still see opportunities for us.’

It takes people about a year to readjust after the currency devalues

“Assuming it doesn’t keep moving or it doesn’t goes the other way but I think it’s obviously very hard for us to tell but we believe that within a year timeframe people get adjusted. They just kind of realize that the new currency and that they go back to normal spending. So that is when we will probably be considering, I guess the normal condition.”

Definitely see an opportunity in buying land

“definitely we see the opportunity of buying land because all the opportunities are in all the land is quoted in pesos. We definitely depend on getting permits and getting through all those processes before acquiring land but as I mentioned we haven’t changed our position in Colombia.”

Earnings Call Notes Pricesmart and Wendys 4Q13

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.

Pricesmart:

“I would say that most of the economies are pretty solid, a little bit more challenging Honduras. Right now, they have elections during calendar year 2013 and the government is actually a new government starting January 20th or something like that, this month of January. Every time you have elections, there are some political changes in these countries. There seems to be a slowdown

Hopefully nothing would change and we will see things getting back to normal, but that’s the only market that I would highlight in Central America that that’s more of a challenging or guess, uncertainty right now on Honduras.”

Wendy’s

a new QSR standard

“We are, through Image Activation, repositioning the Wendy’s brand experience to that new QSR standard, which is, by the way, the standard that consumers today are expecting. Our product price segmentation strategy is differentiating the Wendy’s brand and growing same-restaurant sales and elevating average unit volumes.”

Why quick serve has taken share:

“So why are they the quick — the sweet spot? Because quick-serve restaurants have done the best job of delivering against the 2 most fundamental needs consumers have: convenience and value. And that is why they have built share against mid-tier restaurants, as well as casual-dining restaurants over this 5-year period of time.

Economics of re-imaging locations and rebuilding locations

“the $450,000 to $650,000, a couple of the key elements of that program. To do a reimage is about 5 weeks of closure time. We are seeing sustainable lifts of 10% to 20% when we do reimages. And we are looking for a 40% profit flow-through on those reimages. And of our total reimage — of our total Image Activation universe, 80% of all of the activity will be reimage.

The other 20% will be the scrape and rebuilds. So I mentioned a lot of the restaurants are in great trade areas with high AUVs. Much better from an economic perspective to actually scrape and rebuild for the long run. The investment is higher, $1.5 million to $1.9 million, about 13 weeks of closure time that we’d have to absorb as we did that activity, but the sustainable sales lifts are higher, 25% to 35% with that same profit flow-through.”

Pricesmart FY 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.

$PSMT Pricesmart Earnings Call notes

“The second quarter of this year in the countries where we have presence [Latin America]…the months of January and February are transition months to new seasons of business in the different countries, from carnival celebrations that occur in some Caribbean countries and Barranquilla, Colombia and also (indiscernible) celebrations that happened to be at the end of March this year, but a lot of momentum for those sales starts in the first two months of the calendar year”

“Total active accounts for the end of the quarter were more than 1,030,000, showing an increase of 12% over prior year. Our renewal rate for the 12 months period ended on February 28, 2013 was 85% compared to 88% a year ago.”

“it has been a challenge definitely to find the good sites in Colombia….Probably the biggest challenge once you find the site…is the fact that you have to go through permitting and very complicated and slow permitting process.”

“If we find a site and the permitting process goes well, we don’t have anything else that will limit, I mean we have the people, we have the construction, resources, we have everything that we need to put in place to open as fast as we can, but it will definitely depend on how soon we close on a site and how soon we get the permitting to get that construction up and running.”

“Colombia is very regulated”

[on challenges in e-commerce] “one of the challenges for sure is delivery times. We’re trying to look at different ways to reduce the delivery time so that the members don’t have to wait two or three weeks before they get their merchandise…The other challenge, believe it or not, there is still a lot of, in some of the cultures where we’re operating, there’s still a lot of fear of providing the credit card information”

“there is not a club competitor in Colombia and the same applies for Central America. There isn’t just any other club competitors, except for Guatemala”