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Miscellaneous Earnings Call Notes 10.29.15

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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.”

BorgWarner 4Q14 Earnings Call Notes

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Each week I read dozens of transcripts from earnings calls and presentations as part of my investment process. Below are some of the most important quotes about the economy and industry trends from the transcripts that I read this week. Full notes can be found here.

Excluding currency

“Excluding currency…”

Our organic growth, we feel comfortable, but there are other variables at work

“I’m glad you asked that, Ravi. Yes, currency is probably the most volatile piece that we’re thinking about right now, but there are other factors at play here. Commodity prices, for instance. Volumes are also in play. So our message is that our organic growth, we’re still very comfortable with that guidance that we gave back in January, but there other variables at work here that we want to get a few months behind us, kind of see how they play out and then we’ll give an update at the end of April.”

Lower gas prices wont change push for more fuel efficiency

” over the long run, which is the other question obviously we’re asked, could this influence CapEx pushouts or adjustments, our view on that is we don’t see anything meaningful there. We think the trend is in place for continued push on drive on fuel economy and emissions and we’re not seeing anything at all in terms of adoption rates of technology or discussions around technologies that will launch in 3 years, 5 years, 6 years out. So quick answer, really in the short run, it’s neutral to favorable and in the long term, no change.’

There’s more flexibility to change models 5-6 years out, but not closer ones

“when we get out 5, 6 years from now, there’s a little bit more flexibility, but certainly over the next few years, we feel very comfortable with that. And you did highlight that turbochargers is maybe one potential where people can pick that option or not, but that’s maybe the only one. As we think about it, the rest of our technology, they’re on those engines, they’re on those transmissions and there’s not a lot of consumer options or they’re thinking about different options as it relates to those other technologies. So I think that overall, that our backlog will not be affected by this change in oil prices.”

The change in oil prices doesn’t affect the consumer as much in other parts of the world

“let’s not forget, this is a U.S. phenomenon and a lot of our backlog is outside of the U.S. as well, where this change in oil prices doesn’t affect the consumer much at all.”

BorgWarner 1Q13 Earnings Call Notes

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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.

“the current outlook for 2013 light vehicle production, which is unchanged from our previous view. We expect global production volumes to be up approximately 1% from 2012. In North America, we expect production volumes to be up 3% for 2012. Europe down 3%. China up 10%. And Japan, down 10%.”

“In China, we now expect to see a double-digit decline in commercial vehicle production in 2013 compared to 2012. Our original expectation was flat; however, we’ve seen some weak in demand that has caused to lower our expectations. ”

” you do see a trend to more localization efforts. And I think that’s not driven purely by the yen movement, that’s the result of some of the natural disasters that were suffered there. So I think that’s a been playing out over the last year or so where we’re seeing, particularly in North America, the Japanese OEMs looking to increase local content and I think that’s playing out in that.”

Notes From the Merrill Lynch Auto Summit

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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.

$BWA Borg Warner

“as we look ahead, fuel economy and emissions improvements will remain the key objectives for automakers around the world”

“Throughout our history, our technology has competed against alternatives”

“Chinese domestic companies are going to get stronger and better and better, and I think they’re going to get a lot of support for that”

“I think the way to think about what the next technologies look like for us, first of all, each of the products that we have in the portfolio today are all enabling fuel economy and emissions performance across-the-board, every one of those products. And we see area for opportunity and advancements in all of those products, actually. So if I think of turbochargers to pick on an example, we see optimization in the turbo to help the automakers overcome such things as transient response, or turbo lag as some folks may know it. So we’ve got a bunch of examples going on there where we’re looking to use lighter materials, different types of materials. So there’s a whole stream of work around next generation of the products that we have today, and I could list those examples for — across every one of the products that we have. And that’s a big, big part of the work that we do. But the other part of the work that we do, and that’s kind of part of the BorgWarner DNA, is what’s the next thing that’s not in our portfolio, and we approach that both organically as well as through M&A. So we’re looking at what the powertrain may look like 10 years, 12 years, 15 years. We have a Chief Technology Officer, a team of people that are dedicated to — that’s what they do. And that may come externally where we may see a technology that isn’t in play today but will be in a decade”

“The way we interact with the customer is almost always as a system-type approach. But what leads us to the solution with the automaker is our system know-how. Absolutely, our engine system know-how or our clutching and control systems know-how. And integral to that know-how is a tremendous amount of sophistication that we have inside the company about understanding engine and transmissions as a complete system.”

$TRW TRW Automotive

“we’re big, we’re global. We have over 65,000 employees around the world. There is usually not a platform or a car that you can name where we don’t have some kind of content on”

“there’s no one platform, no one product, no one customer that is hugely material to the company, and that speaks to the defensive nature of our business.”

“We do feel that there’s pent-up demand building in Europe. We do think that the normalized level is something more in the 20.5 million to 21 million zone.”

“over many years, it’s gone from a component base to a systems base to an integration.”

“We go through ups and downs, be it the downturn of ’08, ’09, the investment phase that we’re going through now, commodity spikes. But at the end of it, we always generate cash…Two worst years in the history of the auto industry, ’08, ’09, we generated $545 million in those 2 years. And this is something that we highly focus on in the company”

“Yes. We are making money in Europe at these levels. I think at 18.4 million vehicles being produced this year, that’s well above our breakeven. You’d have to get down into the 17 million, sub-17 millions before there’s any concern or worry.”

$DLPH Delphi

“The pace of change in the automotive industry, well, it’s accelerating…global platforms have become a reality. By 2020, they will represent over 1/2 of the global vehicle build.”

“China isn’t the only area that we’re seeing massive change, stricter fuel economy. And emission standards are taking hold worldwide. And consumers are demanding to be connected from the car.”

“we do have the industry’s leanest cost structure.”

“Delphi is a very large and a very complex company that earns the trust of our customers through outstanding, flawless execution…we purchase 0.25 billion parts every day from 6,400 supplier locations. Our 110,000 people in our 141 global facilities deliver 60 million parts every day at quality levels of less than 2 rejected parts per million and with on-time delivery of 99.5%”

“We believe the role of the Tier 1 supplier is becoming increasingly more important. OEMs rely on system integrators like ourselves. And there are only a few Tier 1 suppliers like us that are focused on innovation and even fewer that can execute globally like we do”

“there’s a long list of consumer electronic companies that’s at the top of the game and the connectivity technology. But being able to make that technology, automotive grade and make it work in a car, then that’s a different story, and that’s where we come in at Delphi. Those companies don’t know cars like we do, so we work very closely with companies like Microsoft, NVIDIA and Google”

“we’re a very high-tech company with very special products, and there’s an extra amount of percent of vehicles on the planet that will not utilize ours, particularly, a lot of the entry-level emerging market types of vehicles. They’re not heavily contented in our space, and we do not try to engineer down into that. So there’s probably 35% to 40% on the vehicles that we don’t want to be on because they won’t generate the kind of value that we want to generate, and we don’t plan on taking our technologies and trying to cheapen them, and brand them down to meet into that space. In addition to that, we don’t — we only have about 5% of our business with the Japanese OEs.”

“[on how to achieve fuel efficiency] much improved conventional Powertrain through technology improvement, it will lead the way, it will be the majority of what you see in d vehicle fleet followed by the hybrid and the plug-in and then the EV…when we look at our content for vehicle, it’s actually higher on the electrified vehicle than it is on the conventional vehicle.”

$GPI Group 1 Automotive

“we’re the fourth largest dealership group in the U.S. Last year, we retailed a little bit over 128,000 new vehicles, about 85,000 used vehicles”

“We’re currently up to 142 dealerships, representing over 180 franchises, we have 36 collision centers…we added 18 dealerships in Brazil.”

“brand mix has always been very dominant with Toyota and Lexus, it’s still about 30% of our company. And then you can see Nissan and Honda and BMW and MINI, all around 11%; and Ford, a significant part of our business at a little less than 10%. You can also see that Texas, California and Massachusetts are our primary geographies, and the U.K. showing up there at about 6%, but I expect will continue to grow.”

“While Only 12% of our revenue, our Parts & Service business generates 42% of our profit. Finance and Insurance business also is disproportionate in its contribution to our profit level, 4% of revenues generate 23% of our gross profit. So although a vast majority of our revenues, 57%, come from selling new vehicles, only a little more than 1/5 of our profit comes from that.”

“We continue to see great potential for growth in the U.S. market in the next few years as well. However, still a lot of pent-up demand, the age of the car park is as old as it’s ever been, near 11 years. The number of licensed vehicle drivers is on the rise. Financing is widely available in the market. And used vehicle prices, although they’ve softened recently, are still very strong, which helps consumers trade their vehicles.”

“And as new vehicles trailed off during the recession, our best source of inventory, if you will, is the trade when somebody comes to buy a new vehicle and that fell off as the new vehicle sales fell. We got down to a low of about 50% of our used vehicles being sourced via trade-in, where kind of prior to the recession, we were running about 70%. That puts some downward pressure on our margins…we have to go to auction to source cars. We’re paying $500 to $1,000 more kind of for a similar vehicle. You got auction fees, you got transportation cost, and you’re ultimately bidding against other dealers. So it’s a more expensive place to pick up inventory, so we think there’s opportunities going forward there.”

“the productivity of salespeople over the last decade, or maybe it was even longer than a decade, hadn’t really improved much while you’re selling 8 to 10 cars per month per salesperson. And we’ve got to find a way to change that.”

$HTZ Hertz

“$9 billion of revenue. You can see that a little over 84% of that is in the rental car space…equipment rental business is a $1.4 billion business”

“we’ve really focused over the last couple of years in becoming experts in the used car market. if we can sell a car directly to a dealer, we can make $500 more per car by eliminating that wholesale channel. That’s really the fees that you pay to the wholesaler. And if we can sell directly to the retail channel, there we can make $1,100 more per car”