Fastenal 4Q14 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. Full transcripts can be found at Seeking Alpha

Double digit sales growth

“I’d like to report that it was a good quarter for our company, 13.8% sales growth, that’s 15% or 15.7% on the daily average and there will be some questions I am sure on Christmas and December was in line with the rest of the quarter.”

Continue to add people

“we continue to add people at the company and especially in the part-time ranks and I would say in 2015 with the good economy we are committed to putting selling energy into our stores”

Retail presence is the best way to reach industrial customers

“again when we talk internally we are committed to a store-based model, we are committed to the fact that we really believe being close to our customers offering a high level of service is really the best — is best way to really approach the industrial market.”

Fuel costs are a source of margin expansion

“We get couple other positives on the margin. We do have a couple tailwinds. One is we still have a tremendous opportunity on upside for our exclusive brands, our private brands. And other is our transportation costs with fuel where it is or oil situation is going to drop.”

It takes time to train people

“we made very heavy investments at the end of ’13 in our district managers, a lot of outside — sales people outside of the stores and so we’re in a heavy investment mode. We can — we don’t have to do much of that this year. In fact, in the leadership roles, district, regional, outside sales people were very set for at least the first six months of the year. And so we’ll able to — that will come through in the P&L and incremental gross margins or incremental margins.”

About 12-13% of our sales are effected by oil

“When you look at our sales about 12% to 13% of our sales, I would say are effected in some way shape or form from oil dropping, especially under 50 bucks barrel…Now what happens is I think, when you look back in time when oil drop, by the time it drops to the net effect where it hits us, it could be six months out there or something. There is that lag. So we are keeping an eye on it and we are definitely going to feel it in those regions.”

But what does it do to our other customers

“The flipside is we don’t quite understand what it’s going to do to our other customers because it actually puts a little wind in their sales so to speak from a bottom line. So that’s kind of how we look at it and how it affects company today.”

I always like to note when a company mentions other companies

“Metal working continues to do well. Our relationship with Kennametal is good. People, I think, had too high of an expectation going in thinking we are going to be as big as MSC in overnight and that doesn’t happen. Our metal working business has grown not double digit, but almost double digit above the Fastenal growth over the last — over 2014.”

“although Kennametal is a very good supplier, they don’t have full spectrum of what the customers need and neither does any of the other suppliers.”

Energy sales may really only be 6% of sales

“10% to 12% of our sales are in those geographic areas and shooting from the hip, I would say probably half of that would be closer to the energy piece. But that’s somewhat anecdotal talking to our regional leaders in those geographic areas. ”

There’s still plenty of room to consolidate MRO markets

“Well, things have changed. But if you look at the big players and whoever you throw into that group, we’ve all grown nicely, but so maybe we’ve gone from 25% market share to 28% or 30%. So it has consolidated at pretty slow rate when you look at the — combined if you look at us, MSC and Grainger combined and there is others I know, but our growth is probably 10% if you add us all up.

Takes a long time to consolidate the industry. It’s always been competitive and I think it will remain competitive, but there is a tremendous amount of opportunity out there”

General Cable 2Q14 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. Full transcripts can be found at Seeking Alpha

Tough economy for wire and cable industry

“The wire and cable industry have been waiting through an uneven and lengthy global economic recovery over the past several years including 2014, where growth momentum continues to be inconsistent. We continue to face uneven spending for utility and construction products in North America and Latin America, as well as persistent challenges in Spain and Thailand.’

Better construction season failed to materialize

“While the momentum we anticipated going into the construction season failed to materialize, we are still planning on a solid second half of the year as the burden of selling higher average cost inventory subsides and the initial benefits of our restructuring program are realized.”

Strong pressure from a competitor who wants market share

” We are seeing strong pressure on the aluminum building wire business. A competitor entered the business and seems intent in growing that business. We’re going to defend our position strongly. It’s where we have a wonderful brand name, STABILOY and NUAL in Canada, and that’s an unfortunate element of people taking strategies and that’s their strategy. So we’ve seen a lot of value add be erased, as well as volume from that business. And we will defend our position vigorously, and I would say that cost us volume and price over the first half of the year, and we expect that pressure will be there, but we will meet it.”

Copper prices are neither headwind nor tailwind

“Right now, copper is around $3.23. So it’s broadly neither a headwind nor a tailwind. Again, the issue has been the industry is not running at capacity, so there is — it’s pretty far from capacity other than in a few segments. So the ability to recover up or down is more limited, but it would be a push broadly if it stays where it is today.”

Got to drive the costs lower in a commodity business

“So all in all, in Europe, we’ve got to keep driving our cost and driving our cost and driving our cost, and then work the niches, which really are communications and a lot of the utility cables, as well as the turnkey business.”

General Cable 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.

“our estimated results for the third quarter fell short of our expectations, principally due to certain of our businesses in North America. Seasonal demand as it relates to grid reinforcement and maintenance activities were lower than anticipated. Delivery schedules for aerial transmission products shipments shifted from Q3 into Q4 in early 2014, and construction activity, while stable, fell short of expectations.”

“as noted in the press release, we determined that an indicator of potential asset impairment is present in our Mexican business due to a history of losses and the continuing difficult local market environment.”

“Overall, our second half volume is expected to be weaker than we anticipated. Utility, mining and construction-driven spending has been generally below expectation.”

“Over the last 10 years, we have transformed the company through more than 20 acquisitions from a U.S. and Canadian-centric player, primarily dependent on copper telephone cable. The wait for renewed infrastructure spending has been a long one.”

“We were talking macro and prudent planning would say that we see the early part of next year sort of as a macro standpoint similar to the, what we’re seeing in the second half year.”

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”

Cummins 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. 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.

“weakness in global mining and power generation demand offsetting higher revenues in truck markets in North America and Brazil.”

“Power Generation revenues declined 13% year-over-year, as continued weakness in most international markets offset higher demand in North America. Third quarter revenues and new order intake were well below our expectations as demand fell sharply in India due to declining business confidence.”

“For the full year we are adjusting our forecast for the market size to 223,000 units, down from our previous forecast of 229,000 units. Demand for the new trucks — demand for new trucks has not grown as much in the second half as we expected.”

“The biggest negative impact in this quarter was India where it was not doing well up until now, but it really fell off a lot in Q3 much more than we expected as it seemed like the economy just kind of hit a tipping point. All of a sudden people started to say we have to reduce orders and we have to preserve cash now and that was frankly a surprise to us how quickly that happened and so a whole bunch of orders were cut or pushed out towards the second half of the quarter and it looks like we’ll extent into Q4, so that also impacted us.”

“there’s a whole bunch of stuff going on for Cummins which is not related to the economy that we think drives some level of growth next year. For example Euro 6 and Tier 4 Final both emissions regulations hit next year. That will have a positive impact on our components business significantly positive.”

“I think India is a big factor in us taking a more prudent position in the fourth quarter than what we may have done in the past. The drop off really in the last couple of months in the third quarter did catch us by surprise and there’s no signs that those markets are going to recover anytime soon. The other area I would throw into the mix here would be the North American truck market, the heavy duty truck market which we’re seeing weaker demand than what we envisaged three months ago.”

“right now it appears and we talked to the same people you do to the fleets, I mean the bigger fleets are kind of in a replacement mode and generally folks are not expanding fleets despite some pretty positive things if you look macro at the market, used truck prices look good, the ages of fleets, freights up.”

“the only thing I would add, broadly speaking in the truck market I think we’re seeing the same thing we’re seeing in most business-to-business environments in the U.S. If conditions are okay and they’re growing slowly, but business confidence is not very high for major investments. Basically people are making small investments and conservative investments, they’re not hiring that much. So it’s not that they’re not doing anything, but it’s pretty conservative and pretty slow versus as you know we see in the consumer economy is a little bit more robust. But business-to-business is not”

” nobody was getting ahead of themselves, they’re all kind of just staying within their – within the fairway here about what they think they can afford, they’ll buy trucks when they have a new route, they’ll replace trucks that look like their past and that’s what they’re going to do.”

“I mean it’s a tough economy and you got to figure out where you think the opportunities are. But we are getting more positions at more OEMs than ever. Why is that? Because we’ve got global scale especially in our mid range business. We make more mid range engines than anybody by 10 times. I mean we are so much larger and we’re in every market with every technology. Plus because we’re launching all these new emission products that means when you buy one of our engines at any size range, you can launch it in Brazil, you can launch an earlier version in China,”

ABB 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. 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.

“It’s a pleasure for me to present the results for the first time as ABB’s CEO. It’s an exciting time to take on this challenge, and I’m looking forward to talking to all of you in the coming months and quarters about how we see the business developing, as well as hearing your views on the company.”=

“We are really encouraged to see orders up strongly in some key markets, for example, in China and in Germany, both at double digits, and steady order intake at high levels in the U.S.”

“Europe looks like it has reached the bottom, but a meaningful upturn is not yet reasonable at this point. Southern Europe is still weak despite a relatively easier comparison this last year. Asia looks more positive, led by China, but India will probably remain challenged until the next year’s election that are coming.”

“it’s a pretty broad pickup and we have to stick with that. We see some hesitancy in some of the process industries, doing more than the typical replacement in maintenance fees, which is not surprising given the large order and the overall demand on there”

“if you look longer term ahead, the subsea area is really an area where you have an opportunity or high opportunity to technologically differentiate yourself from others. To really come out with unique solutions, that technology really matters. There’s a big difference. So I believe putting money into this kind of market makes a lot of sense for us”

General Cable 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“Our overall business feels a bit more sluggish than previously anticipated. In addition, metal prices are falling materially over the last couple of months, perhaps causing some customers, particularly distributors, to work that inventory.”

“This anticipated increase principally reflects improvements in aerial transmission and specialty product shipments in Brazil, a growing construction products business in North America and increased project activity in Thailand.”

“I would say, generally, the residential world is just waking up and it impacts, as you know, our utility business as well. So we’re seeing some of that occurring, some better demand in Florida and Arizona. But I would say, generally, we haven’t really felt the full impact of housing starts, single family, beginning to return to the kind of equilibrium level that we’ve seen over the last 15 or 20 years. The non-resi, as you know, has been lackluster with some puts and takes, with mining a bit down and government down and then some up in some other sectors”

“as we look forward to the second half, I would say utility spending is okay, but a bit weaker than we thought. We are seeing the wind orders come back and we are likely to have a one of the best years in transmission”

“Latin America is okay, it’s going to be stronger in the second half than the first half. And Asia Pacific is still paced primarily by our performance in China, Thailand and the Philippines.”

“I will say the non-resi feels sloppy, OEM production feels sloppy. The residential is beginning to have some impact, but it’s — you’ve got to create the house, wire it, et cetera, you see people building out existing developments that were sort of stopped.”

MSC Industrial Direct 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. 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.

” combination of a weak demand environment, particularly in metalworking manufacturing, a soft pricing environment and the timing of our significant infrastructure investments is producing a picture that’s remained consistent over the past few quarters, basically flat organic revenue growth yielding a slight erosion in earnings.”

“what we continue to see and hear from customers. They’ve indicated that there’s been no catalyst for increased demand. And that in the meantime, while they’re business remains sluggish, they’re tightly controlling metalworking and MRO spend.”

“More and more, my discussions with supply chain executives that are a key customers give me growing confidence that significant manufacturing growth is likely for North America over the next decade. As the focus of supply chain moves from strictly a low cost country sourcing mindset to one centered on supply chain speed, flexibility and proximity to customers, the premium is high to keep the manufacturing supply base local to the North American market.”

“I would tell you that with what we see and hear today, we don’t see anything changing. I think the ISM and kind of historical correlation would support that, but I’d also give you the caveat that our line of sight is not all that far into the future.”

Fastenal 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“Looking at the results for the second quarter, I think the main story is slow sales growth, and we believe that’s really caused by a few things. One is a slow economic condition. It’s very slow out there from an industrial side…

the other would be that we have just become too tight — or we were too tight on adding people in the fourth quarter and for the — basically the last 3 quarters…Our plan going forward to try and address that is to add between 100 and 150 FTE per month for the next 6 months throughout the rest of the year, adding 600 to 900 FTE for the year.”

“we can’t do anything about the economy, but we do have the balance sheet and the strength to go out and add the people to grow the stores.”

“we’ve spent time talking to our store managers and asking them what it would take to free up some time or to get out there and make more calls, and that was the common theme, was, “Hey, give us a little help, we’ll grow the business.””

“The only other item that stood out for me that frustrates me a little bit is on Page 15, our AR grew a little faster than it should. And there’s really 2 dynamics going on there. One is the calendar. Now both June of 2012 and June of 2013 ended on a weekend. So the calendar is similar, so my comment about the calendar might sound a little odd. But what we’re — and I don’t know if this is a post office, logistics thing or what’s driving this, but we’re slowly seeing more and more of our cash come in, in the first 2 and 3 days of the week than what’s historically the norm. Historically, we had a big cash come in on Monday, which is really weekend processing of mail coming through the post office because the goods — most of our cash still comes in via the U.S. mail…So if we held our books open until Tuesday instead of closing on the weekend, our AR would look a lot better. But bottom line is calendar is impacting and just the way the mail comes in is impacting our days…But we’re also getting a lot of hard push from our customers on extending some days, and we’re working on that on a case-by-case basis.”

“part of the — where we went wrong with the decision was I thought that vending was going to be automatically more — it was going to automatically increase the efficiency in our stores. What I was missing on that is the tremendous amount of work to get to the position where it becomes more efficient, which it does, but there’s a lot of work of introducing it and training it and setting it up. And all that work was taking away from sales calls. And that’s what we’re hearing from our managers when we spend time with them. So we’re really getting back on the Fastenal model, the pathway to profit model, add 15% to 20% more — or 15% more hours in the store, and you should get close to 20% more growth. “

ABB 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“I think all the mess in the United States, on the sequester and everything else, it just creates a level of anxiety and concern there, but I think it helps to mute a construction cycle that started to gain some momentum in the second half of last year that we were hoping for.”

“Let me start mark, on the mining side, just to stay there. I don’t claim to say that I can see the future in this sense, but we’ve been pleased with the level of CapEx that we’ve seen in these kinds of things like mine hoist and gearless mill drives. And remember, they’re around ore bodies. So you see them around — you’ll see it specifically around copper, around nickel, things that really — that have been precious, and even though the costs or the prices come down from a commodity standpoint, there still is historical reasonable highs from a return standpoint. So what the mining companies tell us that the ore bodies are not as rich in specific minerals. It’s what they’ve in the past, so they have to pound them harder to get them out, and that’s what a gearless mill drive does, just take a bunch of rocks and crack them up and take it down to the ore body and then you just drill it. Mine hoist just means you’re going lower or you’re bending your mine. So it just says that they’re working the mines harder. And I think we’ve seen the whole issue with the write-offs of what went on in the mining industry last year, the changing of a lot of the CEOs and leadership there, and I think the leadership teams that are put in place around the mine companies today. And I’m not talking, Mark, at all about coal. Okay, coal has its own set of cycle. I’m talking about ore, okay? I think that leadership that’s in place is really dedicated in to sweating assets more, not dong greenfield, being more responsible from an operational standpoint and so am I optimistic we can keep this going? I’m not telling you I am or not. I’m just reporting on our performance so far and the reason for it and some of the underlying drivers for it, and we’ve certainly hoped that it does.”

“Remember, these dollar-to-yen ratios are not historically. I mean, it’s — obviously, the yen has been much higher in that sense, but we, from an overall historical standpoint, we see kind of yen levels before, so I think it’s just taking some of the pressure of the Japanese exports, but I don’t think it’s a phase change at all.”