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Miscellaneous Earnings Call Notes 5.5.16

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Colgate-Palmolive (CL) Ian M. Cook on Q1 2016 Results

Sentiment not all doom and gloom in China

“I have to say, having just returned from Latin America and India and China, the consumer that you see on the ground, the behavior that you see on the ground, is really quite vibrant in India; and in China, is not doom and gloom, some concerns, but not the headlines that we read every day. Conversely, in Russia and Brazil, the consumer sentiment, as we have said before, is more negative.”

Flextronics’s (FLEX) CEO Mike McNamara on Q4 2016 Results

The environment is very slow, very weak but somewhat stable

” As far as the macro, we’ve been mentioning that the macro’s been soft, particularly that we see it in the industrials, for quite some period of time. We’ve probably been talking about it for at least three quarters. We continue to see the same kind of softness. We consider it to be a reasonably weak market and we don’t see the market getting stronger, but we see it somewhat stable. We don’t see a significant downside. We just see it very slow and very weak. ”

Cummins (CMI) N. Thomas Linebarger on Q1 2016

We do not see obvious signs of a turnaround in the high power segment

“The truth is we don’t know if there’s more downside to come. We do not see obvious signs of turnaround today.”

China is a market where some things are improving

“it’s partially because we have just seen China promise better and beat the market, not be that strong the rest of the year, a couple of years in a row, so we want to be prudent and watch and see a couple of quarters before we really call an upside and also just fundamentals don’t look that much different. So, I think that’s the place where maybe if things are improving, as some people suggest, we could have some upside in JV income there. ”

Etsy’s (ETSY) CEO Chad Dickerson on Q1 2016 Results

GMS vs Revenue

“Let’s start with GMS. During the first quarter of 2016, the Etsy marketplace generated $629.9 million in GMS, up more than 18%. Growth in GMS is driven by growth in active sellers and active buyers…Turning to revenue, during the first quarter, total revenue was $81.8 million, up 40%, driven by growth in seller services revenue and, to a lesser extent, growth in marketplace revenue.”

Match Group’s (MTCH) CEO Greg Blatt on Q1 2016 Results

Tinder MAU continues to grow, but slower in North America

“In terms of Tinder MAU, it continues to grow well. Again, as I’ve said, it’s slower growth in North America than in the rest of the world, which is natural just given the rollout. Volume of new signups continues to be very strong, and we’re showing improvement in reactivations and retention, and those things collectively drive the MAU growth, but it continues to be solid”

Ares Capital’s (ARCC) CEO Kipp deVeer on Q1 2016 Results

We believe this recovery is largely technical

“We are happy to see the fear in the market that was so prevalent in the fourth quarter and the early first quarter subsiding a bit, which eases concerns that we are headed for more significant market correction in the near term. With that being said we believe this recovery is largely technical and without a meaningful change in fundamentals, our attitude and our approach is generally unchanged. We remain cautious but confident that we can find select transactions with strong relative value attributes, amidst the broad opportunities set that our team is able to access.”

Seeing dramatic declines in banks involvement in leverage finance

“the fourth quarter and in even the first quarter you seeing a really dramatic declines in the bank’s involvement in the leverage finance markets in particular, in mid-market. So there is just less and less activity there. I’d say there has also been lack of any apatite on the behalf of investors for dividend or recapitalization deals so it’s really been a focus for 6 months on new money deals and the issue around new money deals is, I think an equity issue on the LBO [ph] side, multiples have gotten very high for private equity firms and as they look around it, the B quality and below companies, you really want to pay less and/or see more growth, and they haven’t had the ability to pay less and/or see more growth.”

Alibaba Group Holding (BABA) Daniel Yong Zhang on Q4 2016 Results

Chung Tsai – Executive Vice Chairman

Chinese consumers will propel China’s shift to a consumption driven economy

“Chinese consumers have a healthy balance sheet and ability to spend. This will propel China’s shift from an export and investment-led economy to a consumption-driven economy. Alibaba rides the secular tide as we enable more products and services, whether they are domestic or import, to reach the consumer.”

Jacobs Engineering Group (JEC) Steven J. Demetriou

Mining companies are facing most challenging commodity recession of our generation

“Our mining clients are facing one of the most challenging commodity recessions of our generation. And similar to the oil and gas situation, it’s all about preserving capital, reducing spending, and deferring projects for as long as possible. We believe we’ve hit a bottom in mining and that stabilized the business, especially in Asia and the Americas, with a successful focus on sustaining capital programs.”

Miscellaneous Earnings Call Notes 2.6.16

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Amazon.com (AMZN) Management on Q4 2015 Results

Brian Olsavsky

Distribution partners have not been able to handle all the capacity that we need at peak

“what we’ve found is in order to serve – properly serve our customers at peak. We’ve needed to add more of our own logistics to supplement our existing partners. That’s not meant to replace them. And those carriers are just not – no longer able to handle all of our capacity that we need at peak. They have been and continue to be great partners. And we look forward to working with them in the future. It’s just we’ve had to add some resources on our own. You mentioned trucks. The Amazon trucks, we did invest in those – this past year. We use those primarily for movement between our warehouses and our source centers.”

Microsoft (MSFT) Satya Nadella on Q2 2016 Results

Security is now a major driver of cloud adoption

“Security is now a major driver of the cloud adoption. As threats become more frequent and sophisticated, Azure’s unique technology like machine learning empower customers to adapt to these new realities.”

AI will be at the heart of every business in the future helping to understand the past and predict the future

“At the heart of every business in the future will be systems of intelligence, powerful AI that helps people understand the past and predict the future. Cortana Analytics is the building block for these systems of intelligence. ”

Flextronics International (FLEX) Michael M. McNamara on Q3 2016 Results

See weaker industrial demand pull through

“As far as the macro, what we see is kind of broadly across the industrial set of businesses particularly – probably more so in the United States, but also in Europe. We see it’s just been a challenge. We’ve started seeing the macro push probably in the September quarter. We talked a little bit about it – maybe even at the end of the June quarter. We continue to see it going into the December quarter. And our forecast for March reflects kind of a weaker industrial demand pull-through.”

United Rentals’ (URI) CEO Michael Kneeland on Q4 2015 Results

Market activity is solid and in many cases trending upward

“Beyond the current market uncertainty, we agree with the industry forecasters that there are multiple years of growth ahead for rental in North America. The latest projection from Global Insight is about 6% annual growth in construction and industrial rentals through at least 2017. And we’re seeing levels of customer activity to support this view. That point can’t be lost when revenue flattens out for reasons I mentioned earlier. So it’s important to note that our actual — market activity is solid and in many cases trending upward. And our customers are on a whole optimistic.”

Honeywell International (HON) David M. Cote on Q4 2015 Results

Not seeing negative surprises in January

“Right now, I’d have to say it feels just fine. I know last year we got surprised the other way. This year we’re not getting surprised. But it’s three weeks, so who can tell how the whole thing’s going to go? But it’s – I would say we’re not having to deal with the same kind of negative surprise we had last year.”

Big thing in aerospace for us is that flight hours continue to increase

“if you take a look at what’s happening in the aerospace industry, the biggest thing for us is that flight hours increase. And flight hours last year were up 4% or 5%. They’re likely to be up 4% to 6% again this year. And the big thing is that planes fly, and as long as they fly, and as long as there’s a need for the kind of upgrades that we keep talking about, and as long as the technology keeps progressing towards this kind of connectivity and the need for airlines and passengers to just be connected better than they have in the past, those are all good phenomena for us.”

No doubt it’s a slow growth environment

“there’s no doubt, it’s a slow growth environment. That being said, whether it’s slow growth or high growth, we believe your best bet is Honeywell ”

Colgate-Palmolive’s (CL) CEO Ian Cook on Q4 2015 Results

It’s difficult to find anybody with anything optimistic to say

“it is difficult to find anybody with anything optimistic to say about much of anything these days. Without being overly general, I would say that the underlying consumer sentiment and behavior in China and India is okay. I would say that the underlying consumer sentiment in Mexico is okay. I would say that the underlying consumer sentiment in Russia is not great. And that would be English understatement. And I would say in Brazil, the underlying sentiment in Brazil is not great.”

Mattel (MAT) Christopher A. Sinclair on Q4 2015 Results

Richard Dickson – President and Chief Operating Officer, Mattel, Inc.

Barbie still relevant

“never has Barbie been more diverse on so many dimensions and more celebrated. TIME Magazine’s cover story and associated buzz last week are great examples that underscore not only how powerfully relevant the Barbie brand is, but reinforce that we’re on the right track.”

Ralph Lauren (RL) Stefan Larsson on Q3 2016 Results

Our performance over the last couple of years has been very disappointing

“And when I looked at our performance over the last couple of years, including the recent quarters, it’s very disappointing. So I see significant untapped value in both the idea behind the brand and as well as how we drive the business. And therefore, in the way I outlined the way we approach, building the growth plan for the future, there will be a customer facing component which is about evolving the brand, evolving our product, marketing, shopping experience, and then radically improve some of our business engines. ”

The consumer is now in charge in retail

“When it comes to the disruption, I’m a firm believer that we’re just seeing the beginning. So I believe that the biggest disruption is that the customer is now in charge. So the customer has better visibility and better choices than ever before. So any company that’s in the business of providing generic products or don’t have any real value add beyond the lower and lower price or who, more importantly, is not close enough to the customer will be in trouble. So that’s why we are building on the strength that’s made us great, and we are adding an even closer focus to what’s going on in the market and what’s going on with the customer.”

Miscellaneous Earnings Call Notes 10.22.15

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Advanced Micro Devices’ (AMD) CEO Lisa T. Su on Q3 2015 Results

Not anticipating that Windows 10 will drive PC refresh

“While we are not anticipating Windows 10 will drive a dramatic near-term PC refresh cycle the continued adoption of Windows 10 which has already been installed on more than 110 million PCs to date, provides a great opportunity for AMD over the coming year based on a semi-consumer and commercial refresh cycle environment”

Suntrust Banks’ (STI) CEO Bill Rogers on Q3 2015 Results

We’ve been in the lower for longer camp for a long time and think it stays that way in ’16

” We, as you know in our case, we have sort have been in the lower for longer camp for some time and set ourselves up appropriately for that type of an approach. As we look forward into ‘16, I think also lower for longer stays, I think if there are Fed increases, they will be very deliberate and the pace of rate rise will probably be slower now than the market had been thinking six months ago.”

Capital Markets activity should be better this quarter

“M&A had another really good quarter and pipelines are still good there. The volatility numbers are in sort of high yield bonds and the equity sales and trading and that’s better. Spreads have come in. I think things will get done more this quarter than they did last quarter if things stay stable. And based upon what I see in terms of our pipeline, I feel good about our pipeline”

CCAR has changed the way that the whole banking industry is thinking about risk

“I think one of the other benefits also that you see for SunTrust and perhaps for the industry overall is the benefit of CCAR. The CCAR has changed the way that companies think about their overall risk. They apply a stress test to all their portfolios now and think about how portfolios would behave during a stress test.”

Kansas City Southern’s (KSU) CEO David Starling on Q3 2015 Results

Volume continues to improve in October

“volume so far in October continue to improve. And subject to ongoing uncertainty in energy markets, we feel good about the trajectory of demand as we head into the end of 2015. Through the close of business, Wednesday, average daily carloads for October were running about 1% higher than September and 1% higher than October of last year as well.”

Business demand still feels very good to us

“business demand still feels very good to us, with the obvious caveat about the uncertainty in energy markets, which you have seen across the entire rail sector, have made it more difficult to forecast demand and provide guidance.”

Mexico is probably linked to the US, but they’ve done a good job managing their inflation and unemployment rates

“I think, Mexico ends up being fairly tightly linked with the U.S. economy, given the amount of goods that end up going north into the U.S. But they’ve done a really good job managing their overall inflation rate, which is now running below 2%, unemployment is below 5%.”

Hasbro’s (HAS) CEO Brian Goldner on Q3 2015 Results

Toy industry growth is strong ytd

“The trends that we see and the data that we have would indicate that the Toy industry year-to-date is up high-single digits, and we see that as boding well as we get into the holiday season and continues our trends.”

Labor is the biggest cost input to our COGS and it’s up in the double digit range

“The single biggest cost input to our cost of goods is labor. And we continue to see labor inflation rates in the double-digit range. We have seen a slight decrease in the cost of certain types of resins over the period since the end of 2014. But they tend to be more nominal and they run in arrears to whatever the petroleum or gasoline costs prices are out there as you know.”

Flextronics International’s (FLEX) Mike McNamara on Q2 2016 Results

Partnering with Nike for connected products

“Last week, during NIKE’s Investor Day, NIKE announced a partnership with Flex to accelerate the introduction of advanced innovation to NIKE’s manufacturing supply chain. Working together, NIKE and Flex will deliver innovation that enables product to reach consumers more quickly with customized solutions and increased performance innovations.”

There’s an electrification of the world going on and we can help mechanical companies adopt that

“the amount of electrification in the world, the amount of smart products in the world that are going into what’s not typically electronic products that are now moving forward, whether it’s anything from a shoe to a shirt to a door lock is tremendous. So you’re getting a tremendous amount of this electrification of the business. And as we look forward, the value to us is if we can create more value for these customers whether it’s automation or engineering or making a non-connected product connected or providing electrification where they’re more traditionally a mechanical type company”

Zions Bancorporation’s (ZION) CEO Harris Simmons on Q3 2015 Results

Energy chargeoffs are from borrowers that were already weak in the last cycle

“the charge-offs have fundamentally been borrowers that were weak in the last cycle, they’ve been kind of limping along, and for whatever reason, you know, we have not been able to get totally out, and this recent downturn was just kind of another very difficult blow to them.”

Restraining loan growth because concerned that we may find ourselves in another downturn before things get better

“I think that, you know, I for one have a concern that we may find ourselves set [ph] into another downturn before we see the economy strengthen a great deal again, I mean. So we’re trying to be very careful.”

Hawaiian Holdings’ (HA) CEO Mark Dunkerley on Q3 2015 Results

Hawaiian airlines has had a tough time getting flights in on schedule

“It’s been a poor summer operationally as reflected in our having recently posted our worst monthly punctuality in over a decade. The culprits have been several; the combination of a burgeoning flight schedule of Honolulu and airport construction has meant that during the peak hours of the day there have been insufficient gates. This has been exacerbated by congestion in customs, resulting in our not being permitted to de-plane arriving international passengers promptly. And lastly, an abrupt change in the traffic control procedures at Honolulu gave us no opportunity to make schedule changes to address the lengthen block times that have resulted.”

Yahoo! (YHOO) Marissa A. Mayer on Q3 2015 Results

Experiencing continued revenue headwinds

“our Q4 outlook, which Ken will return to later, is not indicative of the performance we want. While there are some well-known headwinds, year over year and even quarter over quarter like the loss of the Alibaba TIPLA, we are also experiencing continued revenue headwinds in our core business, especially in the legacy portions”

ACE’s (ACE) CEO Evan Greenberg on Q3 2015 Results

Underwriting environment continued to grow more competitive

“I want to now say a few words about current commercial P&C market conditions. The underwriting environment continued to grow more competitive in the quarter for our commercial P&C business globally. With some exceptions, price declines accelerated modestly. They were varied by class of business and geography.’

Large account more competitive, wholesale and property

“Large account business, particularly shared and layered is more competitive than midsized. Wholesale is more competitive than retail and property more so than casualty related”

Kimberly-Clark’s (KMB) CEO Tom Falk on Q3 2015 Results

The rate of currency deterioration hasn’t been as severe as it was

“The rate of currency deterioration hasn’t been as severe as it was, say, a year ago. On the other hand, there’s still some opportunity for price in some markets.”

Not seeing trade down in EM

“so far we are not seeing as much as a trade down as you would think. And we are still seeing — we launched boy/girl diaper pants in some of the super premium kind of tiers. We are seeing good response and growth there… particularly the economies that are in recession like Brazil and Russia, we are watching that see how the consumer performs and make sure we got the right offer, but we are also seeing really good innovation. Mom still wants the best for her baby.”

Texas Instruments, Incorporated. (TXN) Q3 2015 Results

It’s a weak environment but some segments were stronger than we expected

“our revenue declined 2% from a year ago, and we obviously would describe that as a weak demand. That’s actually similar to what we saw last quarter. But, inside of that, certainly it was stronger than what we had expected. There were a couple of areas that were stronger than we had expected. Wireless infrastructure and industrial were both stronger than what we had expected. ”

Kinder Morgan’s (KMI) CEO Steve Kean on Q3 2015 Results

By 2030 gas should be 39% of electric generation mix

“Its projected increase from today’s level of 76 Bcf a day to about 110 Bcf a day by 2025, that’s an increase of 40%.”

” If you look at the 15 mix of generating output and this is according to the EIA, 32% is gas and 33% coal. For those of you who have been in this industry a long time or followed it you know that that represents a dramatic shift to the positive for natural gas. If you flash ahead again these are EIA numbers to 2030 their projection of the mix of generation is 39% gas, 18% coal’

Renewable energy will need natural gas facilities as backup

” reliable flexible natural gas facilities are absolutely necessary to back up wind and solar. So to sum up the idea that we could move directly from coal to renewables without increasing natural gas usage for electronic generation is an unrealistic pipe dream with the substance and the pipe being legal only in Colorado and Washington State.”

Danaher (DHR) Thomas Patrick Joyce on Q3 2015 Results

Seen some incremental slowing, but in pockets

“Overall, we have seen some incremental slowing in the macro. That being said, it’s in pockets. There’s some pockets regionally where we’ve seen some of that slowing, clearly, and in some of the more industrially oriented markets.”

China is still one of our better markets

“we’ve actually seen China, while slowing incrementally, it’s still one of the better markets where we play today. Our growth rates continue to be very good in a number of our businesses. ”

Flextronics FY 1Q16 Earnings Call Notes

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Rebranding, renaming

“We are shortening our name from Flextronics to Flex to signify that our business continues to evolve past the boundaries and confines of electronics alone. Our new tagline, Live Smarter, highlights our belief that all devices are becoming intelligent and that value will ultimately be created in the intelligence of things and the convergence of technologies and digitization of products across multiple industries and market segments.”

Taken down smartphone demand for Lenovo and Motorola to where it needs to be

“we’re actually not finding the economy anything more difficult to understand or predict with the exception of those two. I think as it relates to Motorola or Lenovo or smartphone demand, we’ve actually taken our demand down to where we think it is the right place to be. We continue to get more feedback from the marketplace, from the customer. We think it’s the right place. So, this has been our highest-risk area and just the fact that it’s lower to start with is already put less risk into the model.”

Our Q1 performance has created a big hole that we have to dig out of

“our Q1 has created a reasonably big hole that we have to dig out of. Alternatively, I talked about the four or five different programs that are going to kick in. Some of those programs are going to offset natural kind of attrition, if you will. I think you’ll see the INS revenue pick up pretty significantly this next quarter, as I mentioned, high-single digits. I think we’re going to have some also significant increases the quarter after that. But I think we’re going to be chasing it all the way to the end to get close to a breakeven. ”

The smartphone business has already come down quite a bit

“if you think about the smartphone business portion of the computer business, it’s going to be – it’s already come down quite a bit and maybe it will come down some more, but we don’t necessarily think so”

Why they bought MCi

“I mean, why did we do the MCi acquisition? One, it was – it has higher margin, it has longer product life cycles, it has a stronger growth profile than the rest of Flextronics. I mean, all these are very, very positive”

Flextronics FY 4Q15 Earnings Call Notes

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hardly pay taxes

“Our adjusted income tax rate for the quarter was 11.8% and our adjusted income tax rate was 10.1% for the year which ended up at the high end of our guided range of 8% to 10%.”

Still characterize economy as stable

“We would still characterize the economy as stable, except for INS where we have seen incremental softness in wireless, driven by reduced CapEx spending in the U.S., delayed CapEx spending in China and general softness in Europe. Overall, our revenue was slow in the March quarter and this will continue into the June quarter.”

Mexico continues to be a very strong place for manufacturers

“Geographically, Mexico continues to be a very, very strong place to manufacturers. Demand in the U.S. has been relatively stable. Mexico as a manufacturing location continues to be more attractive.”

India is picking up quite a bit

“one thing I would add is India. India as a manufacturing location and as a demand environment is probably picking up as much as anything, so that’s probably where we see the biggest place of growth. And maybe I’ll add one other thing, Sherri which is Brazil, because I didn’t mention Brazil. A lot slower than it was last year. So I’d say a little bit slower.”

Flextronics FY 2Q15 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. Full transcripts can be found at Seeking Alpha

Continue to see the macro environment stable

“In terms of macro environment, we continue to see it as stable. Our guidance also reflects this.”

Don’t see any major pullback in technology space

“I think our visibility has not changed very much and I consider it to be reasonably good. We have not seen a big pull back across the industry. I know some company has made a lot of noise about it. We just haven’t seen that evidence, don’t know if we are going to see that later or not but just based on what we can see and our expectations, we continue to see a very stable environment and we just don’t see the evidence of any kind of major pullback.”

Networking and server business down 0-5%

“We see the group somewhat down like a 0% to 5% kind of thing on an annual basis in terms of the data we see in the marketplace. We are trying to offset that by really going after more customers in China, where we already have a pretty good position. We are trying to offset it by going into the appliance manufacturers”

Connected home

“connected home, we have a whole range of technologies and wireless technologies that we are now taking and putting into our number of different customers products in order to get them smart and connected into the whole engineering of things.”

Wearables

“I think I mentioned earlier we probably have about 25 customers in variables. We do everything from sensors, to glasses, to fabrics, to wrist bands, to watches, to a variety of different product categories. And what we are focused on in that place because you mentioned the capabilities, that’s actually what is important in wearables in our view. I don’t think anybody really knows what the consumer preferences are going to be on consumers and our wearables in the future. What we are very, very focussed on is the underlying core technologies associated with wearables. And these are things like — and we probably had 30 patents in materials and methods and advanced manufacturing processes and technologies over the last 12 months.”

YOu have to solve a lot of problems to put together a wearable device

“the reason they are differentiating is you actually have to solve plastics problems, you have to solve circuit problems, you have to solve very traditional electronics problems all simultaneously. And the fact that we have more techs effectively, we have a big mechanicals operation, and the fact that we have really, really broad electronics ecosystem really gives us the tools that we need.”

Flextronics 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.

“Globally, demand trends remain challenging, and the hardware sales of many of our customers this earnings season have been disappointing. While most customers point to a better second half, we have not yet seen these in our orders except for consumer customers.”

“there’s a little bit of uncertainty with us in terms of how the revenue will flow through the rest of the year in that whole Google-Motorola deal. Like I said, there’s going to be a lot of new products coming out. And, I think, you guys will probably see — will start seeing announcements soon enough and have your own opinion on it.”

“a lot of the industrial business or a lot of the telecom or datacom or server storage…We’ve heard a lot of commentary from some of our customers in those spaces that have been positive on the second half, but until we see that, we’re going to assume it’s going to be pretty flat.”

“We do have other programs that will begin to kick in at the end of the year. I would expect those to start hitting in the December quarter and actually carry on into the March quarter. And then of course, we have the big Google thing, which hard to say exactly what that’s going to be…You got some products like Xbox that has a refresh that’s going to kick up some incremental seasonality for us.”

[commenting on the Google/Motorola relationship] “I think normally, you’ll find that new products launches start pretty aggressively in the September quarter and the December quarter, and then it’s hard to say in March. So I think it’s fair to say that we would see a pretty significant ramp, but it’s highly dependent on the success in the marketplace, which is still a little bit of an unknown for us. But we’re pretty bullish, we’re starting to see some of those products today. We’re excited about what the future might be this quarter is for sure, a trough quarter for them and for us. But I would expect maybe to think about it, it being kind of a trough quarter than over the next 3 quarters.”

“what we don’t see is networking, server storage, computing, the industrial business, any of the telecom entity, all of these categories, which I’d call a big core part of our business”