Applied Industrial Technologies 4Q17 Earnings Call Notes

Neil A. Schrimsher – Applied Industrial Technologies, Inc.

Sales trends by month

“Sure. So, Ryan, our sales per day trends for the overall fourth quarter improved 1.1% from the third quarter. May was slightly below April. We finished up in June. July was positive year-over-year probably mid-upper single digits. So, as expected, down sequentially from June with seasonality, and month-to-date August, we started well over these initial seven to eight days.

Overall good activity in the quarter

“All right. So, similar, 18 were up in the past quarter, positives around oil and gas that we’ve talked about year-over-year and sequentially in the U.S. Other related industries, infrastructure, aggregates, cement positives; seeing positives in machinery OEMs, transportation equipment and paper and food, those are probably the ones in the 18 and I think the others start to narrow a little bit more too. So, I think all-in-all, we saw good activity in the quarter and it’s a good base as we move into fiscal 2018.”

Applied Industrial Technologies 1Q17 Earnings Call Notes

Neil Schrimsher – President and CEO

April down a little from March

“I would say the sales per day trends really improved throughout the prior quarter of January to February, February onto March. April is running positive year-over-year, really in the projected sales range. It is down from the month of March with a couple of days to go, but I would say somewhat as expected considering holiday timing, spring break season so forth.”

Likely inflation but not runaway

“I would say from an year to date standpoint, we haven’t seen so much. We are seeing increases from suppliers. So I think as we work through calendar 2017, we will see a few more supplier increases, and likely have some moderate inflation as we go forward. As we look back at the results and the impact prices it has not been so large, but we think going forward in that time period; it will start to show up more. “

Applied Industrial Technologies FY 2Q17 Earnings Call Notes

Applied Industrial Technologies’ (AIT) CEO Neil Schrimsher on Q2 2017 Results

Overall trends continuing in January

“So, I would say for us, as we move through the last quarter, the sales per day trends improved from October to November, and really for us through a large part of — a mid part of December. I think, as expected, we had some seasonal softness in comparison to around the holidays but we finished buying. And then, overall in January, I’d say the quarter trends are continuing. We’re showing modest improvements, I’d say, around year-over-year 1% with a few days to go.”

Improvements in oil and gas throughout the quarter

“Yes, but we think about our top industries. I think this past quarter, we had a few more positive, I think 14 out of the 30, still positives around those construction related industries. I think as expected lumber wood products, building materials. I think also in cement in aggregate, and as you talked with customers, there is probably some optimism around infrastructure type projects. They don’t see all of those today, but there’s belief that there will be investments, and those will be going forward.

Food has been steady and a good comparable. And then also in oil and gas and refining, as some of those related industries, just a little step-up or a pick-up in activity, and probably a little bit of optimism. And it’s still early. We touched on year-over-year, we still had a decline. Sequentially, as we move through the quarter in those businesses, we had improvements. So we think, as we go through the back half of our fiscal year and into 2017, we would expect some continued improvements in those markets.”

Miscellaneous Earnings Call Notes 10.28.16

SunTrust Banks’ (STI) CEO Bill Rogers on Q3 2016 Results

Regulatory and compliance costs are not likely to abate

“But in terms of overall regulatory and compliance costs, if I look forward, John, I don’t think that in the short- to medium term I would think of regulatory costs in general abating or declining. I think we’re in an environment, where we would expect regulatory and compliance costs to be generally stable or increasing over time. And just the environment that we’re in, I don’t see realistically that anybody in the industry is going to see regulatory and compliance costs fall off.”

Potlatch Corporation’s (PCH) CEO Michael Covey on Q3 2016 Results

Eric Cremers

No rollover in land pricing

” Pricing remains firm. There is a lot of money on the sidelines looking to invest in the asset class. People have an expectation that prices will move higher over the next several years as we continue with this housing recovery that generally gets built into the models that are used to value timberland. And in a low interest rate environment high timberland prices are supported. So we’ve not seen a rollover in timberland pricing at all.”

Lumber prices well supported here. Moving from mid to upper 80s capacity utilization”

” As I think Jerry mentioned in his opening remarks, we might see a real slight rollover in lumber pricing in Q4, and that’s consistent with what the external pundits are forecasting maybe 1% or 2% rollover in pricing. You know generally speaking markets are well balanced, our order book is solid. As you know we sell forward our lumber production. So we’re out into the first or second week of November at this stage. And so we feel very good about where lumber markets are at, at this stage of the game. Just the general backdrop here, if you think about it, we’ve got demand, which has remained strong. Of course the housing market data, there is starts data is volatile from month-to-month. But generally we’re seeing starts increase, we’re seeing strong R&R repair in the model activity, and we’re seeing strong commercial and industrial activity as well. And with industry wide capacity utilization now moving up from the mid to the upper 80s and supply-chain inventories as Mike had mentioned remained very well, we think, lumber prices are well supported here.”

Brown & Brown’s (BRO) CEO Powell Brown on Q3 2016 Results

Hurricane Matthew will have little impact on rates

“We believe Hurricane Matthew will have limited impact on rates, if any. There will be more discussions around flood and wind deductibles, rate for cat property continued downward affecting retail, wholesale, and national programs, and that will continue into Q4 and into 2017.”

Honeywell International’s (HON) CEO Dave Cote on Q3 2016 Results

A favorable setup for 2017

” Darius and Tom will provide more details about 2017 during our annual outlook call in December, but we have a favorable setup. The fourth quarter momentum continues, our long cycle businesses are improving and our inflections start to kick in.”

Tom Szlosek/Dave Cote

A salesperson isn’t productive in his first year on the job

“A salesperson really isn’t productive enough in his first year on the job, so we have to ensure we have enough sales employees in place today to support tomorrow’s business… when you hire salespeople there’s training and familiarization that has to go on. So they’re not immediately productive. It’s the sort of thing that shows up in the future.”

Heidrick & Struggles International’s (HSII) CEO Tracy Wolstencroft on Q3 2016 Results

Rich Pehlke

Improvement in September/October

“we can’t really point to one thing because as we saw July and August kind of soft we really did worry a little bit about was it a sign of some kind of a cyclical trend or a movement but you know September bounced back pretty well and so – and as we talk to our folks and see what’s out there and see how October is progressing. You know there is nothing we can really point to that says that you know there is one – there is one driving factor. So whether or not it could have been client decision caused by things like Brexit et cetera certainly is certainly one of the factors that would have fallen into play but there isn’t any one thing that we can put to, and I don’t know if you want to leverage.”

Zions Bancorp. (ZION) Q3 2016 Results

Harris Simmons

It was a softer quarter for C&I loan demand than we would have hoped for

“I think that’s consistent with what we saw during the third quarter. The third quarter has generally been a softer quarter. You get kind of the summer vacations and everything else baked into it, but this was softer than I think we would have expected. And so we’ll see what happens through the remainder of the year. But it was a softer quarter in C&I than we would have hoped for.”

Brinker International (EAT) Q1 2017 Results Wyman T. Roberts – Brinker International, Inc.

Challenging times across casual dining

“Just as we said last quarter, these continue to be challenging times across casual dining. We’re already seeing some of the weaker players struggle with their viability in this choppy environment. ”

There are some examples of concepts that are shrinking

“We don’t have great metrics around capital spending in the category. But there are some examples of concepts that are shrinking. And in some numbers that are reasonable, we’re talking now in tens and hundreds. So that does make a difference. We’re also hearing from some competitors a dial back, which I think is again encouraging that people are starting to say, hey, listen let’s address the overcapacity and slow things down a little bit. And I heard something recently from a competitor that the expectation was that would also maybe take some of the steam off some of the real estate market, which has not really come back in our opinion kind of represented the softer overall economic situations out there. Still paying a pretty good premium in this environment we think for real estate. So all of those things I think bode well for getting the economics right and getting the supply and demand situation more in line”

United Technologies (UTX) Q3 2016 Results Gregory J. Hayes

China Otis sales down 10%

“We also continue to make good progress at Otis. Our China new equipment orders and units were up 2% in the third quarter and 3% year-to-date. This is in the face of an overall market, which is down more than 5%. I would remind you though, the pricing pressure remains intense, so despite unit orders being up, new equipment orders on a sales basis in China were actually down 10% in the quarter. A tough market right now, but we remain focused on increasing our installed base and converting those units into our service portfolio, which will deliver recurring revenue for decades to come.”

Have seen a slowdown in construction activity in UK

“In Europe, we have seen a slowdown in construction activity in the U.K., we think as a result of the Brexit vote, but the rest of Europe appears to be improving slowly, more than compensating for the slowdown in the U.K.”

Freeport-McMoRan (FCX) Q3 2016 Results
Richard C. Adkerson

It’s clear there’s going to be a need for copper

“Is just, unless you see the world really turning upside down economically, it’s clear that there is going to be a need for copper that’s going to require a significant price increase to justify the spending, and that’s why we feel very good about our long-term strategy.”]

C.H. Robinson Worldwide (CHRW) Q3 2016 Results Andrew Clarke

Carriers raised rates when Hanjin filed for bankruptcy

“Hanjin filed on August 31 and what happened shortly thereafter is the other carriers that remained in the Trans-Pacific eastbound lane began to raise rates. I think what happened then shortly thereafter was that they doubled them. They were up as high as $750 as I mentioned earlier, $750 to $900 a box. Now, we weren’t able to immediately pass those rate increases along to our customers. As I mentioned, our account managers are out there right now having those discussions with our customers to reflect the rates that are now in place in that trade lane. We would expect the impact to trickle into the fourth quarter, but not much beyond that.”

Applied Industrial Technologies (AIT) Q1 2017 Results
Neil A. Schrimsher

October a little softer than September

” I’d say on our sales per day trends – did include expected seasonal softness in July with improvements then in August and even stronger in September. Order trends for October, as expected, developing a little softer than September. However, we still have a handful of days to go. And I’d say year-over-year October is just kind of down low single-digits, which, again, is what we expected looking at the comparables. And, again, that’s got still a handful of days for us to positively impact it.”

Mark Eisele

Foreign exchange rate impact down to zero

” That’s exactly the expectation. If you look at foreign exchange rates, let’s say, for September and if those would stay relatively stable through December, when we look at our overall sales, we would expect to have a 0% impact of currency translation in the December quarter. Then if you keep going on through the rest of the fiscal year, you’d actually see a small positive impact probably in the March quarter and then more flattish in the June quarter. So, our view is, for the entire year, we may end up at virtually zero on FX. Obviously, it depends upon how the rates move from today forward, but that’s our perspective. We’re seeing some stability.”

Range Resources (RRC) Q3 2016 Results
Jeff Ventura

Supply and demand for gas could be more balanced into 2017

“On a macro level, there are signs that later this year and into 2017, supply and demand will be more balanced and pricing could improve. We expect natural gas production in the U.S. to continue declining for the remainder of the year. Based on available data, it appears 2016 will be the first time that natural gas production will decline on the year-over-year basis since 2005. This supply decline is happening while demand for natural gas is increasing, driven by Mexican exports, power generation and LNG exports. Looking towards 2017, the NYMEX Strip has moved above $3 and we think it can continue to climb. Based on where strip pricing is today, we believe that we can grow the combined company at 33% to 35% for 2017. This equates to an organic growth rate of 11% to 13% for 2017, coupled with the full year of the North Louisiana division versus roughly a quarter in 2016. Importantly, this preliminary plan for 2017 also results in strong growth for 2018, assuming a $3.25 per mcf and $60 per barrel, we are projecting that we should achieve organic growth for 2018 of approximately 20%

Applied Industrial Technologies FY 4Q16 Earnings Call Notes

Applied Industrial Technologies (AIT) Neil A. Schrimsher on Q4 2016

Seeing some sequential improvements in August

“Sure. Sure. So, I’d say, Will, our sales per day trends included declines in April and May with improvement in June. July somewhat as expected with seasonality, softer than June. And through the early days of August, we’re seeing sequential improvements in that.”\

Positive industries are construction relatedCustomers took longer downtime in July now planning for more projects in the second half

” think around July, and we’ll see going forward customers took longer time out of their production. And I think many had less preventative maintenance productivity-type projects going on in that time period. Now, as they’re back up and running, right, we see that brake fix demand coming through. And then, it’s early but the dialogue for those that would have planned downtimes, which more of that would be towards the end of the calendar year, they would be slating projects that would positively impact their uptime and their productivity. So, we experienced it around that July time period, but I think too early to call what it may look like going forward.”

Mark O. Eisele – Chief Financial Officer, Treasurer & Vice President

Sales down 7.2% y/y

Thanks, Neil. Good morning, everyone. I’ll provide some additional insight regarding our fourth quarter fiscal 2016 financial performance. Our sales per day rate during the quarter was $9.91 million, 7.2% below the prior year quarter and 0.7% below our rate in the March quarter. We had 64 selling days in the June 2016 quarter and 63.5 selling days in the June 2015 quarter.”

Applied Industrial Technologies 3Q16 Earnings Call Notes

Neil A. Schrimsher – President, Chief Executive Officer & Director

Saw a stabilization as we went through the quarter, April was consistent with that

” For us, our sales per day, we had improvements really each month throughout the quarter, with a couple of days remaining April is consistent with March. So, perhaps I’d say consistent with others then, right, (17:10) seeing a stabilization perhaps as we go through the balance of our fiscal year and perhaps on through calendar 2016.”

M&A pipeline is productive

“I’d say short answer would be yes, but our M&A pipeline remains productive. We’re busy, I’d say, we have prospects or opportunities at really each stage of our funnel.”

Didn’t see any noticeable decline in the back half of March

” I’d say no noticeable decline in the back-half of March. So, I wouldn’t have seen or noticed that. And I would say April is consistent. Usually at month end, you can have a pickup in volume activity – hey, to be determined if we see that over this last couple of days, but it is looking like March, which was stronger as we moved through quarter three and we’ll look to being better in May and June to close out the quarter.”

Mark O. Eisele – CFO, Treasurer, VP & Head-Investor Relations

Did see an increase in bad debt expense relating to oil and gas companies

“Yeah. Adam, I’m happy to do that. I would say the majority of the bad debt expense increase really is relating to reserves that we’re putting on the books for receivables for our upstream oil and gas subsidiaries. And so they’ve had a meaningful increase for the whole year.

Applied Industrial Technologies FY 2Q16 Earnings Call Notes

Applied Industrial Technologies (AIT) Neil A. Schrimsher on Q2 2016 Results

A continuation of headwinds

“Our second quarter results reflect a continuation of the economic and market headwinds that have been affecting our business, including reduced demand in oil and gas and other industrial end markets, as well as negative impact of foreign currency translation”

January is running similar to December

“I’d say broadly across the company, we would have said or see October and November sales were consistent with the September quarter and then the sales per day decline in December was more consistent with what you’d expect with seasonal trends and holiday timeout. So, for us, looking forward into January, it’s running similar to December. ”

Not expecting a second half improvement to occur

“We know traditionally we do see a second-half improvement, but we’re not counting on that to occur.”

Mark O. Eisele – Vice President, Chief Financial Officer & Treasurer

We’ll have a clearer picture of January as we do reviews, but different people are giving different color

“we’ve got a round of operating reviews that we will be going through right at the end of January, just to understand. But as we watch it, some guys are caught a little bit more with weather than others. Some are caught as we look at some end customers taking perhaps some extended timeout from end of their calendar year to start their calendar year. And I think we’ve got customers that are looking at their own capacity or their manufacturing footprints. And they’re not necessarily taking all capacity out, but where they’re going to do what, I think customers are making some choices right now as depending on the end markets they serve and kind of that overall industrial outlook or market that we’re participating in right now. So we think that’s all into that January-type result that we’re seeing so far.”

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.”

Applied Industrial Technologies FY 4Q15 Earnings Call Notes

Deceleration in demand as moved through the year

“As we moved through fiscal 2015, we experienced deceleration in industrial demand, headwinds from energy markets, and the unfavorable impact of foreign currency translation. While the combination of these factors kept us from realizing our initial expectations for the year, we did achieve the highest level of sales and earnings per share in company history.”

Modest positive progressions month to month throughout the quarter

“if we look back at the quarter, I think month-to-month throughout the quarter, we saw modest positive progressions. I think Mark talked about the traditional core being up. I think from an oil and gas side, we’d say sequentially down in the teens. I think that’s perhaps consistent with the rig count movement.”

The greatest pressure in oil and gas are doing better

“The greatest pressure, the volatilities around the upstream drilling and completion, the businesses that are upstream production service-focused are doing better.”

Internal plans are higher than external guidance

“clearly, our internal plans are going to be higher than external guidance.”

18 product categories

” We say we represent 18 product categories across, and we’re intent on expanding those with current and new customers.

Seeing some improvement in August

“July year-over-year total, that would be mid-single digits from that July standpoint, right, because obviously, we know when it’s in the books. And then, we would see kind of improvements as we move from there. It’s early in August, but we would see improvement. So for us, maybe not all surprising as it go from closing of fiscal year into a new one, but that’s the year-over-year metric.”

Breakdown of industry performance

“our kind of top 30, 13 of them were up. I think increases would be in the expected categories like automotive, utility, food, and some of the construction-related ones like lumber, wood, aggregate, and so forth. Declines, as you would expect, in oil and gas. And I think mining may be stable off of a lower base and then some of the machinery manufacturers, but a large group or category and I think that varies to where they play in market. So if they’re into some of those that are down or a little more global participation, I think those are the ones that we would see being down. Others that are serving some of the more – the earlier segments that we talked about are faring better right now.”

Applied Industrial Technology 3Q13 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.

“These results were below our expectations, as weaker industrial demand continued.”

“We are continuing to experience weakness in our top line sales into October, including certain industry segments like mining, machinery and pulp and paper. We do expect improvements beginning in calendar 2014, which coincides with traditional seasonality in the second half of our fiscal year.”

“So I don’t know a stumbling block but as you know, right, we’ve closed no acquisitions in calendar 2013 to date. We are busy. The M&A team, me personally as well. I’d say we’ve got a strong pipeline. We want to be as active every year as we were in calendar 2012. And so that was 8 acquisitions and $150 million. We’re working around our clear priorities. We continue to raise our sights on kind of the prospect size. We’ve got the financial capability, the operating know-how to move in this. So we do not expect that we will close this fiscal year with no transactions.”

“So I think it’s different. And so in our international markets, a lot of mining exposures. We think about Australia, as we think about Mexico and even Western Canada, potash and the oil sands. So that exposure on that side. It’s a weak environment that people are looking to improve maybe as we move throughout this fiscal year.”

“I think U.S., in particular, I think it’s steady and stable. People are looking to continue to operate. They will serve their customers. They will make modest investments, if it’s got productivity attached to it and most are still doing pretty well from their own cash standpoint. But I don’t think they’re looking to make the most significant investments right now. And perhaps that turns with the calendar year and they see some greater pickup in some of their businesses. I think most are mindful of the broader economic indices but I think many would say, right, some of those ISM manufacturing statistics aren’t necessarily translating into day-to-day business results. I think there’s some belief. There’s some optimism with the typical lag that’s going to happen. But I don’t think they’re moving forward with the most significant side. Now in our Fluid Power side, I’d say more of our segments on the industrial, even some of the ag customers, they’re making some investments. On their product platforms, they’re looking at technology and content and then they’re looking at what new platforms that they can be developing. But I think in ag, right, they’re going to have a mindful eye on — of the markets turnout and what subsidies may look like going forward”