Coca Cola at Barclays Conference Notes

Sandy Douglas – Executive Vice President and President, Coca-Cola North America

Bifurcated consumer environment

“What we’re seeing broadly is kind of a bifurcated consumer environment. The upper part of the economy is healthy and vibrant, positive expectations for investor performance, tax relief. And then the bottom half is really struggling, which is impacting purchasing habits, trips to retail, et cetera.”

don’t count out the brick retailers

“don’t count out the brick retailers. They’re moving fast. They have significant assets and they’re working to serve the shopper. And don’t think of e-commerce as a channel. It’s a way for consumers to research, to buy, to experience brands and then, ultimately, to have them have fulfilled.”

Digitization good for add ons

“But also, more broadly, think about like restaurant operators. Restaurant operators – think of pizza, for example. Pizza orders that have moved on to apps. Our incidence of beverage attachment, if we’re well merchandised on a digital app, is 50% higher than on telephone.”

Entrepreneurs face common issues around distribution

“And then the other thing we’ve done is we’ve found that – and it gets to this very fragmented innovative category that we’re in, is that the innovators are launching hundreds of new products every year. But once they’re successful, they all have the same kind of issues, issues like buying, procurement, like selling, distributing, manufacturing and capital. And so, we have a venturing group that we started about ten years ago and, basically, it goes out to all the entrepreneurs and says, instead of going to private equity to get money, why don’t we work with you, we’ll invest in you and we’ll help you. And we’ll help you take your idea, solve some of the issues you might have, and we can see how you can be a part of what we’re doing and we can help you achieve your dreams as an entrepreneur…All of that allowing us to kind of source external innovation, so that when you take a healthy core, build strong, new businesses, and then bring all the next businesses in, it gives you a sustainable top line.

The thing that had the highest correlation with success was the number of tries

“Because we’ve analyzed innovation and we did a pretty exhaustive study to try to figure out how we could become more innovative. And the net is that there are a lot of things going on in innovation, but the one thing that had the highest correlation with success was the number of at-bests.

It wasn’t the super brainy process. It wasn’t the eight-page request for authorization form that was better than another. It was, you had the general idea of what you’re trying to do and where the consumer is going and you create the opportunity for lots of tries.

And the only way we could figure how to do that was to get other people to try and then to give us the chance to help them make the more likely winners succeed. But even then, the more likely winners don’t all win.

Coca Cola 3Q16 Earnings Call Notes

The Coca-Cola (KO) Q3 2016 Results
Muhtar Kent

It is a little unusual that developed markets outperformed developing markets

” that it is unusual. What you’ve just said is definitely – the fact that developed markets are growing at a higher pace than the developing and emerging markets, but it’s not a surprise given the volatility that we all know that is taking place. But it is a mixed bag. It’s not just a uniform, all emerging markets. Africa, for example, continues to be a very strong performer, both West Africa, led by Nigeria, but also other markets in Africa. Mexico, to name another one, so it is a mixed bag”

James Quincey

China changes rapidly

“To give you one example, a very small example, but it’s symptomatic of how fast China can change. If you go to the cafe channel in China, there are all the noodle shops up and down the streets. People go there at lunchtime. Last year, they were packed with people. This year, you go, they’re a third empty. You go, okay, maybe the economy has slowed down. No, that’s not what’s happening. The explosion of online to offline ordering and the availability of lots of people on motorbikes to deliver stuff, and the apps and the aggregator apps to buy food has seen an explosion of ordering of online and delivery food, such that there is just as many people buying from these cafes, but sometimes in some parts of China, a third of it’s being delivered to people, whether they be at work or as students. And so we’ve had to adapt our packaging. Having a returnable glass bottle in that cafe doesn’t help you with off-line delivery. So we’ve had to revamp the packaging offer so that we’re there with the right package to go where the consumer is going. And that’s a micro example of the sorts of things we have to do China to adapt to how the market is changing and is contributing to stabilization. But it is, again, as I said, a country undergoing change in its economic model and that’ll throw up new and different consumer behaviors to which we’ll have to adapt.”

Coca-Cola’s (KO) Management Presents at Barclays Global Consumer Staples Conference Notes

All North American operations will be refranchised by the end of 2017

“in North America we are still on track to meet our accelerated objective of refranchising the entire system that we hold by the end of 2017. 2017 will be a big year for transactions, there will be a lot of favorite structural adjustments during that year.” James Quincey – President and Chief Operating Officer

 

Most refranchised US territories continue to outperform even after initial 12 months

“And in the US the vast majority of the territories we refranchise for more than 12 months continue to outperform… And that’s led to North America business in its total aggregate to maintaining what we can see to be top quartile CPG revenue performance not just in beverages but across all CPG in terms of revenue.” James Quincey – President and Chief Operating Officer

 

Globalization, urbanization, and middle class growth are driving growth in the beverage industry, and there is plenty of market share left to aim for

“I think it’s worth saying we continue to see abundant opportunity in the beverage industry. The long-term growth of the beverage industry is being propelled, yes, by globalization, urbanization, the growth of the middle class as much as that gets buffeted in the short term, it is still there as a long-term trend… there are still plenty of market shares to continue to go for and to continue our steady run of gaining market share quarter after quarter.” James Quincey – President and Chief Operating Officer

 

Variation in drink size and ingredient content while maintaining one brand is KO’s strategy for adapting to health trends

“It is about responding to…  people’s desire whether it be more natural ingredients, whether it be for the desire for less sugar, less calories, more of a treat, we have brought all these pieces together… it is about marketing smaller packages, more premium packages, more affordable small packages… They prefer to come in at 6 or 8 or 12 ounces. So the smaller packages works from revenue point of view. It also works to help shape choice from a consumer obesity point of view. The one brand strategy takes us from ineffective way of talking about four different brands and if you grew up drinking Coke Classic and you wanted to switch to Coke Zero you almost have to change brand and change your lifestyle. Now the idea of the one brand is you can enjoy Coca-Cola the whole of your life and you can have it in different product variants as you want to mix and match whether it is caffeine or sugar or whatever.” James Quincey – President and Chief Operating Officer

 

A strong premium category has emerged in water

But while we are absolutely seeing in many parts of the world is the premiumization of stratification of the water category. Whether that in some parts of the world with smartwater so smartwater is a runaway success in US. James Quincey – President and Chief Operating Officer

Coca Cola 2Q16 Earnings Call Notes

The Coca-Cola (KO) Ahmet Muhtar Kent on Q2 2016 Results

Volume and top line fell short of expectations due to weakening of demand

” While we are pleased we accelerated our price/mix from 1% last quarter to 3% this quarter, our volume and top-line results still fell short of our expectations. This was largely due to a weakening demand in certain large emerging and developing markets, which also impacted our company-owned bottling operations’ revenue growth.”

James Quincey – President & Chief Operating Officer

Slowdown driven by challenges faced in China

“. Our volume deceleration from the first quarter was concentrated in a few number of markets facing specific macroeconomic challenges; firstly, China, but also Argentina and Venezuela.’…slowdown was principally driven by the challenges the industry, the broad industry, is facing in China.”

No question the overall consumer environment is weakening in China

“There are three factors impacting our performance in China. First, no question, the overall consumer environment is weakening due to the economy’s economic transition. Secondly, as this is occurring, wholesalers are adjusting to lower expected sales growth and bringing down inventory levels, which has a whiplash effect on our bottler sales. Third, there are some category mix shifts occurring as different consumer segments respond to these new circumstances.”

There are strong affordability needs across rural and blue collar areas in China

“there’s an opportunity here to both innovate with more premium products positioned for the higher income new mainstream consumer segment, as well as opportunities to address strong affordability needs across the rural and blue-collar areas.”

We remain committed to China, we always knew that transitioning to a consumer led economy was going to have challenges

“despite these actions to improve our business, we still expect our China operation to be under pressure for the remainder of the year. This is a key factor driving the organic revenue outlook, particularly the difference between consolidated and core, but I think it is worth finally making a note that we are keeping a long-term perspective with regard to China. We always knew that for a country as large as China, transitioning to a consumer-led economy was going to have its challenges. Those may have turned out to be more than we expected in the short-term; however, we absolutely believe in the long-term opportunity of this market of 1.4 billion consumers with relatively low beverage per capitas compared to the global average.”

Argentina, Venezuela and Brazil are facing difficulties

“Argentina, we believe that the Argentinian government is taking the right steps to secure its economic recovery, but this is resulting in a contraction in the near-term that accelerated in the second quarter, therefore impacting our business. In Venezuela, severe shortages in certain raw materials resulted in us temporarily suspending production at the bottling partners’ plants during the quarter, clearly impacting the results. Additionally, Brazil, the challenges there are well-understood and we think will continue for the remainder of the year; however, we are focusing on key affordability packages and activating a strong Olympic marketing campaign in the coming weeks and months.”

Not every market is under pressure. NA is strong

“not every market is under pressure. In markets with relatively stable economies, we are executing our strategies and seeing strong results. For example, in North America, we grew organic revenues 4% in the quarter, reflecting continued pricing initiatives for our sparkling business as well as the ongoing strength of our stills portfolio.”

There is no sugar in Venezuela

” the most extreme example perhaps is Venezuela, where there was no sugar. And we’ve actually doubled-down on really driving Coke with zero sugar in Venezuela with kind of a full red One Brand look. So there are places where we are adjusting to the need that just because you advertise, doesn’t mean people are going to buy if it’s an affordability problem. And I think China is a good example of where affordability is in there as well, and I think I’ve talked a bit about China.”

Former Coca Cola (KO) CEO Roberto Goizueta on why companies exist

Former Coca Cola (KO) CEO Roberto Guizueta, who was CEO of the company from 1980 to 1997, wrote an essay on why companies exist called “Why Shareowner Value.”  

“At the Coca-Cola Company, our publicly stated mission is to create value over time for the owners of our business. Of course, there are plenty of other missions upon which a company could focus: serving customers; pursuing philanthropy; providing the highest quality of products and services; creating jobs and job security. But I would submit that in our political and economic system, the mission of any business is to create value for its owners. In the wake of huge layoffs at certain companies, this idea has been vilified by many critics, and doubt has arisen in the minds of many business leaders about their purpose. This is incredibly dangerous to the companies whose lead ers doubt their purpose and to the society that those companies serve.  So why is creating shareowner value the right mission for our businesses? There are three basic answers to this question: Increasing shareowner value over time is the job society demands of us.  Increasing shareowner value enables us to contribute to society in meaningful ways.  Focusing on creating value over the long term keeps us from acting short-sighted.”

“Our society is based on democratic capitalism. In such a society, people create specific institutions to help meet specific needs. Governments are created to help meet civil needs. Philanthropies are created to help meet social needs. Churches are created to help meet spiritual needs. Businesses such as ours are created to meet economic needs. The common thread between these institutions is that they can flourish only when they stay focused on the specific need they were created to fulfill. When institutions try to broaden their scope beyond their natural realms, when they try to become all things to all people, they fail.  While society institutions remain healthy when driven by their core purposes, society remains healthy when supported by all of its institutions.”

Miscellaneous Earnings Call Notes

PepsiCo (PEP) Indra K. Nooyi on Q1 2016 Results

It’s a difficult environment indeed

“Most of the developed world outside the United States is grappling with slow growth. GDP growth in developing and emerging markets is also challenged with many D&E markets experiencing significant political unrest and high unemployment. Key energy-producing countries are dealing with significant budgetary gaps; and high levels of local inflation in many of these markets are eroding disposable income and dampening consumer spending. It’s a difficult environment indeed.”

Hugh F. Johnston – Vice Chairman, Chief Financial Officer & EVP

Incrementally less optimistic in South America and Eastern Europe

“I think the two places where we’re probably incrementally less optimistic, number one is South America, not Mexico. Mexico, I think, we’re quite positive on, but the balance of South America obviously is a challenge. And then number two is Eastern Europe. Eastern Europe is obviously continuing to be challenged from a GDP perspective and that flows through to disposable income and therefore to consumer spending on our products. The balance I think were probably roughly in line with where we’ve been.””


Hasbro’s (HAS) CEO Brian Goldner on Q1 2016 Results

Seeing impact from ongoing economic challenges

“While consumer demand remains robust, we are beginning to see an impact on some retailers from the ongoing economic challenges.”

Retailers are excited about toy category

“I would say this is the second year of strong growth year-to-date; we are seeing high single digit growth rates, both in developed economies like U.S. and also throughout Europe. Retailers are very excited about the category, as we continue to have more story driven brands, more integrated play brands and more innovation in the category. Overall, POS was very strong, as I said, but as we’ve noted before, online POS was even stronger, and many additional retailers that have been historically brick retailers are doing a very good job in omni-channel.”


Morgan Stanley (MS) James Patrick Gorman on Q1 2016 Results

Seeing a better turn in markets now

“where are we now? Though it’s impossible to predict the future, we’re seeing a slightly better turn in markets, certainly, in comparison to what was evident at the start of the first quarter, leading into the early days of February. The M&A pipeline is strong and some green shoots suggest the equity underwriting calendar may open up. The S&P level at the end of the first quarter will help with asset pricing in our Wealth Management business, where we continue to grow our lending book and see flows into managed accounts. ”


Brinker International’s (EAT) CEO Wyman Roberts on Q3 2016 Results

QSR is taking share with promotions

“I mean there’s just such a strong value proposition being played out there. And we don’t think that that’s sustainable or it’s a long term issue, I think it’s more of those are limited time offers, but they also are interesting that the QSR category is kind of showing us that they’re rethinking how they deliver value and their value propositions ”


The Coca-Cola (KO) Ahmet Muhtar Kent on Q1 2016 Results

James Quincey – President & Chief Operating Officer

The degree to which our industry was affected by the slowdown in China was worse than expected

“In China, we are adjusting our plans to reflect these realities. China’s macro environment was challenging in 2015, and that continued to be so in the first quarter. While the economic slowdown is not new, the degree to which the NARTD industry was impacted this past quarter was worse than expected.”


Chicago Bridge & Iron NV (CBI) Philip K. Asherman on Q1 2016

Customers aren’t canceling work, just delaying

“I would have to say if there’s customer impact in today’s environment, it has to do with just again a delay in making financial commitments and we’ve seen that. However, we haven’t seen any cancellations in current backlog or in prospective work. So, that’s good. It just seems to be pushing out a little further.”


Knight Transportation (KNX) CEO Dave Jackson on Q1 2016 Results

April has been better y/y

“if I were to look into April thus far, we would say what we have seen so far in April has been more of the same where we’re seen our trucks run a little bit better in terms of miles’ year-over-year and we’re seeing — so therefore we’re seeing decent volumes on a year-over-year basis.”


PulteGroup (PHM) Richard J. Dugas, Jr. on Q1 2016 Results

No V-shaped rebound

“We have believed since the outset of this housing recovery that it would be more gradual than the V-shaped rebound, typical of most housing cycles. Our thesis is unchanged as we expect an extended recovery will continue to unfold for the next several years supported by improving economy, favorable demographics, years of relative under-building and a supportive mortgage rate environment.”

Inventory of available homes remains tight

“The inventory of homes available for sale remains tight in most of our markets; and at least on the new home side it will likely remain that way for a while given the limited supply of finished lots available. ”


Fifth Third Bancorp (FITB) Gregory D. Carmichael

Would grow investment portfolio at slightly higher rates

“So, frankly, if rates were to stay at these pretty low levels, you could expect from us just to reinvest cash flows because the entry points don’t look real good. But if rates were to have a little bit of a sell-up here and present more opportunity, then you would expect our investment portfolio to grow in line with earning assets. But I don’t think you’ll see a lot of movement in the book one way or the other throughout 2016.”


Cohen & Steers’ (CNS) CEO Bob Steers on Q1 2016 Results

The asset management industry is no longer a growth industry

“The simplest takeaway from the letter is that the asset management industry in its current form is no longer a growth industry for a majority of traditional active asset managers. Overcapacity, chronically poor investment performance, high fees, competition from passive strategies, growing barriers to entry for access to distribution and the rapidly growing cost of regulatory compliance, taken together will challenge future growth and profitability for most legacy investment managers. However, we’re convinced that asset managers who are focused on a limited number of historically inefficient markets, with strong brands and track records of consistent outperformance, will be among the relatively small number of big winners.”

Real estate is under-allocated in retirement plans but not among institutional investors

“I would say that large institutions are not under-allocated to real assets. The largest endowments in sovereign wealth funds have had a 10% to 30% allocation to real-assets for some time. However, most of those allocations have been executed to private equity strategies. Where the under-allocation is more pronounced is both in the wealth and what I would call the retirement channel, the fine contribution channel which as you know we’ve been adding to our DCIO team because there’s virtually no representation in the 401(k) market in real assets.”


Reliance Steel & Aluminum (RS) Gregg Mollins on Q1 2016

Rising steel prices for the first time in over a year thanks to positive trade case filings

“for the first time in well over a year, we’ve begun to experience rising metal pricing for carbon steel products as well as stainless steel flat-rolled products. This pricing improvement, which accelerated towards the end of first quarter, was mainly result of the recent trade case filings by U.S. steel producers. We continued to support these trade actions which seem to be having a positive impact on reducing the overall level of imports in the United States marketplace and on metal prices.”

Not seeing anyone build inventory in anticipation of higher prices

“You have to realize that our average order size is about $1,600, so we are dealing with a lot of small to mid-size job shops. That’s probably the vast majority of our businesses is not with large OEMs, and so therefore they are really not buying in advance. We have not seen or heard from our guys in the field that anybody is building inventory in anticipation of higher prices. So I’d have to say basically its business as usual with our customer base and we don’t see anybody really trying to build inventories ahead of price increases.”


Coca Cola 4Q15 Earnings Call Notes

Ahmet Muhtar Kent – Chairman & Chief Executive Officer

Feel confident that wont have to buy bottlers back again after re-franchising them

“when we announced the acquisition of CCE, it was, essentially, kind of a 25-year-old problem, and we said it would take a while to basically course correct. The level of investment was not where it was needed, and also the level of customer service was not where it was needed. And, essentially, we believe that having more than just one bottler essentially having that big a territory was a better way. Scalable size bottlers, right ownership values, right structure and right capability, and that’s what we have today in North America. And so, we feel very good that this is a model that is going to stay where it is and continue to add value. It’s not going to require any further – all of the time, there will be tweaking necessary, but not the scale that was needed when we did the transaction back at the end of 2010. And so, that was a core decision that was needed. That was a major surgery that was needed, and that’s really what took place.”

James Quincey – President & Chief Operating Officer

The global economy remains challenged and is not improving rapidly

“Our performance in 2015 gives us confidence that our strategies are working and that our underlying performance will be within our long-term targets in 2016. However, let me be clear. The global economy remains challenged and is not improving rapidly. We do see slightly better GDP growth rates for 2016 as compared to 2015. But to be fair, forecasts continue to be revised downwards and there is still much uncertainty. Notable are Brazil and Russia continuing to deteriorate, while China’s growth rate does also slow, putting pressure across many of the emerging and developing markets. Now, while helpful to consumers, the lower price of oil is also causing volatility in the Middle East and other oil-driven export economies, with further implications for those nations.”

The environment in China has pretty clearly slowed down

“in terms of China, clearly not as much as we would have liked to have grown in China in the first quarter; I think that the environment in China is pretty clearly having slowed down, but we think we had a strong momentum over the last couple of years coming back into China.

Kathy N. Waller – Chief Financial Officer & Executive Vice President

Fully hedged on major currencies for 2016

“In terms of coverage, we are fully hedged on the euro, yen and sterling for 2016. We also have near-term coverage in place across several other major currencies.”

Miscellaneous Earnings Call Notes 11.19.15

El Pollo’s (LOCO) CEO Steve Sather on Q3 2015 Results

We’ve seen reduced visits from some of our more price conscious consumers

“it was reduced the visits from some of our more price conscious consumers.”

It’s going to take some time for consumers to come back in and see these value initiatives

“I think it’s going to take some time to as consumers come in and see these value initiatives that are on the menu now as well as the service improvements that we’re making. And I think that’s just going to take more time to bring those consumers back. Let them experience that both on the price side and the service side and regain those customers.”

We’re fortunate that minimum wage headwind is being offset by lower commodity prices

“In terms of then managing pricing versus margins, I’m not ready to get into a full discussion about 2016 margins. One thing I will highlight is obviously we do have a minimum wage impact. Fortunate thing is on the commodity side, as we highlighted it worked 3% to 4% deflation, which were actually offset the minimum wage impact on our business”

Value conscious consumer is trading down

“when we did the research what we found is that we saw that the fact — the frequency has declined in our business, especially among we call more value conscious consumers. And we ask them where do you go instead of El Pollo Loco, it was pretty clear where they’re going, which was down to the lower end called the Taco Bells, In-N-Out Burgers and McDonalds.”


Burberry Group’s (BURBY) CEO Christopher Bailey on Q2 2015 Results

Impacted by weaker Chinese Consumer

“given the importance of the Chinese consumer to the luxury sector, our retail sales were affected by a slowdown in total Chinese spending. This reflected weakening consumer sentiment following the stock market turbulence and economic uncertainty over this summer.”

The US slowed markedly in the second quarter

“the U.S. slowed markedly in the second quarter. This reflected uneven demand from both the domestic and tourist consumer. The drivers here remain hard to read against a backdrop of a generally positive economic picture. However, we believe recent stock market volatility may have influenced local sentiment, and that the strong dollar discouraged tourist spend.”

The fundamentals of the luxury industry are changing. Growth is slowing

“current macroeconomic uncertainty, notwithstanding, there is no doubt that the fundamentals of the luxury industry are changing. Growth in Chinese luxury spending is moderating, competition in digital is intensifying, pricing leverage and space growth are tempering and customer behavior is rapidly evolving. For these reasons and more, sector growth is now forecast at just 1% to 2% in 2015 compared with 7% just a couple of years ago.”


Xinyuan Real Estate (XIN) Q3 2015 Results

Xinyuan Real Estate says that Chinese government policies continue to favorably impact business

“With respect to our operational effort on the government policies to continue to favorably impact our business. In the fourth quarter, we remain committed to driving performance of our shareholders with our quarterly cash dividend program. We will execute our sales purchase program as appropriate based on valuation.”


Bancolombia (CIB) Q3 2015 Results

Saw a significant depreciation of the Colombian peso against the US dollar

“During this period, we saw a significant depreciation of the Colombian peso against the U.S. dollar, which caused Bancolombia balance sheet to grow faster when presented in pesos. Let’s remember that the depreciation on an annual basis, it is 53%; and in a quarterly basis, it is 19%.”

Minimal impact though because operations are dollarized

“Nevertheless, despite every expression of assets and abilities into Colombian pesos, the impact in shareholders’ tangible equity is very small. This is due to the fact that all of our operations in Central America are dollarized and the assets that we have in U.S. dollars in Colombia are funded with liabilities in U.S. dollars as well.”

NIM was impacted by a raise in rates by the central bank

“A third topic that drove, and is driving the business environment today is of the monetary policy in Colombia. The Central Bank increased rates by 75 basis points over the last couple of months, which currently proceeds at a level of 5.25%. These increase coupled with our lower growth in deposits in the Colombian system and the higher stock of long-term debt caused the cost of funds to increase during the third quarter. As a result, we experienced a compression in the net interest margin during the quarter.”


Cresud’s (CRESY) CEO Alejandro Elsztain on Q1 2016 Results

Low commodity prices affecting our portfolios

“The low commodity prices are affecting all of our portfolio in all the region and there was a big drop that we saw on the prices mainly on the corn and soybean is effecting margins in all region too. ”

Good weather conditions for crops

“we can see how good weather condition in the region allows a positive start during this planting moment. Rainfall for this summer is above average as we’re going through a New Year. As we can see in the map Argentina presents good weather conditions in general particularly good in the Northeast of the country. In Brazil, even though the rainy season got delayed, the rains went back to the average levels along the normal soybean and corn productions.”


Copa Holdings SA (CPA) Pedro Heilbron on Q3 2015 Results

Latin America continues to be affected by slower economic growth

“Financial results for the quarter were in line with expectations, as Latin America continues to be affected by slower economic growth and weaker currencies. We expect the situation to continue in the short to medium term.”

We expect things to stabilize next year, but not expecting dramatic improvement

“we’re not building into our guidance an economic – an improvement in the economics of our region, we are expecting currencies to be stable, to stabilize, but we’re not building in a dramatic improvement to the economies.”


The Coca-Cola’s (KO) Management Discusses on Morgan Stanley Global Consumer & Retail
Sandy Douglas – President-Coca-Cola North America

Now expecting 4 point worse headwind from FX than expected on 3Q call

“Since our third quarter earnings call, the U.S. dollar has continued to strengthen. So while our business results are on track, we now expect a greater headwind from currency. After considering our hedge positions, current spot rates, and the cycling of our prior year rate, we now expect a seven point headwinds on net revenue and 11 point headwind on income before taxes for the quarter. Now, this is a four percentage point worse than the guidance that we provided.”

Consumers are moving to smaller packages which is higher revenue per volume

“The consumer is now changing. The consumer is moving to smaller packages. A 12-ounce can traded to a 7-ounce can is a 30% reduction in volume, but it’s an increase in revenue.”


TJX Companies’ (TJX) CEO Carol Meyrowitz on Q3 2016 Results

Carol Meyrowitz – Chairman and Chief Executive Officer

We like competition

“there is always competition and our job is to be outrageous value every day and have a very unique eclectic mix and that’s what we strive for. We don’t harp on we move forward, we don’t harp on the competition, we like competition, we like when we are next two, I won’t name certain stores, but we’re fine with it, it brings traffic and our job is to do a better job.”


JPMorgan Chase’s (JPM) Management Presents at the Bank of America Merrill Lynch
Daniel Pinto – Chief Executive Officer, Corporate and Investment Bank

IN fixed income trading you need to have scale and diversification

“when I look at the fixed income business, I think that, in my view the key of success in fixed income is scale. It’s a relatively expensive business to run and if you have scale, you can make it profitable. The other component that is important to me is to have diversification because when you look at what has happened for the last couple of years, two, three years, one of the challenges in business was the rate business. This year is doing very well. So credit has done very well in the last few years even though the climate this year has a bit more challenge than before.”

I do believe the Fed will move in December

“I do believe that the Fed will move in December. I think that, as you look at where the market is pricing today, is probably pricing 75% probability of that were to happen. So I think that the impact in trading will be not very relevant at all. I think that the Fed is starting to cycle.”

M&A is still healthy. Companies have to show growth somehow

“The M&A process is still very healthy and will continue to be so in the sense that companies will – the S&P earnings growth this year is zero when you look at the evaluation. So you would argue that companies need to demonstrate some growth. At this level of growth, in the United States for the economy, there will have to be a bit more inorganic than organic, so therefore the M&A will continue as long as funding and capital is available. I think that funding and capital is available. I think that the risk appetite overall has dropped recently.”


Walgreens Boots Alliance’s (WBA) Management Presents at Morgan Stanley Global Consumer & Retail Brokers Conference
George Fairweather – Chief Financial Officer

This whole industry is going to see reimbursement pressure

“I think specialty like other parts of market will continue to come under reimbursement pressures. I don’t think there is any part of the market that’s going to escape. And this is just the way of – the way of our industry. The healthcare expenditure here in the United States is still a high proportion of GDP versus perhaps what you might see in Europe where I come from. And I believe that what we are going to see in our market is continued pressure on growth in healthcare expenditure. We will see pressures in various reimbursements and then what we have got to do is continue to drive efficiency, drive the front-end profitability.”


Micron Technology Presents at UBS Global Technology Brokers Conference
Ernie Maddock – Chief Financial Officer and Vice President, Finance

It would be pretty silly for the Chinese to try to compete in DRAM

“I would tell you that if you aren’t in the DRAM space, it’s kind of tough to imagine finding that a particularly appealing space to want to deploy a lot of capital and a lot of effort in and certainly as has been released in the press over the last couple of days, I think there’s been some commentary made about at least one particular Chinese entity having not being interested in DRAM per se. But it’s a business that is quite mature. It’s hard to envision that capacity expansion will be required based upon what we know of bit growth and where we think folks would be on the technology curve. And I think whether your perspective is that DRAM technology is very near the end of its technical capability or not quite to near the end. I think there is at least some amount of finite lifetime that certainly [indiscernible] if I were thinking about a rational economic investment in an industry, it wouldn’t be one that is in this state of maturity, because I think the opportunities for success there would be pretty low.”

Still in the very early stages of understanding the potential of 3D X Point

“because it is arguably the first new memory technology in 20 years, we’re having to learn how that market is going to develop. And of course, there is a relationship between how quickly the market develops, how quickly output ramps up and what happens to cost as a result of that. So there are still a lot of variables at pay that are quite different than the visibility, the understanding and comprehension we have of the NAND business or the DRAM business. So we are at the very early stages of learning here”


E-House’s (EJ) CEO Xin Zhou on Q3 2015 Results

Next year’s real estate market wont be much different from this year’s in China

“Overall, we don’t think next year’s real estate market will be very different from this year’s. The main theme is still efforts encouraged by the government to reduce inventory, reduce the overall level of inventory. And we continue to believe the Tier 1 and Tier 2 market overall will be healthier relative to the Tier 3 and Tier 4 business, which will continue to experience difficulties.”


Staples’ (SPLS) CEO Ron Sargent on Q3 2015 Results
Ron Sargent – Chairman and CEO

Markets softened across all categories early in the quarter

“Early in the quarter, the markets softened across all categories relative to the trends we had seen during the first half of 2015. We also saw deceleration in our contract print business as we cycled a couple of large customer wins from last year and continue to feel pressure from the ongoing digitization of our forms business.”

I don’t know if there’s been a lot of change in corporate spending behavior

“from my perspective, I don’t know if there’s been a lot of change or differences in corporate spending behavior. I know in general, technology has been weak and we have had great success in selling products beyond office supplies.”

Office supplies down to only 45% of sales mix

“You look at the total company mix, gosh, it wasn’t that long ago, we were probably 75% to 80% office supplies and today I think that number for the whole company is probably about 55% office supplies and 45% BOS or beyond office supplies, and obviously, as BOS continues to grow, at some time point those lines will cross and will be more non-office supplies than we are office supplies.”


Macy’s Management Presents at Morgan Stanley Global Consumer and Retail Broker Conference
Karen Hoguet – Chief Financial Officer

Clearly the consumer isn’t doing as badly as our industry

“clearly the consumer isn’t doing as badly as what my industry, our industry is doing, because of some of the shifting in spending patterns of the customer. But that didn’t change between Q2 and Q3.”

Top malls are still going to be fabulous shopping experiences

“one of the thought from the industry that I hear most often is what is the future of malls? And we kept hearing ourselves saying, we have absolutely no doubt that the top malls are going to continue to fabulous shopping experiences.”


Wells Fargo’s (WFC) Management at BAML conference
David Carroll – Senior EVP, Wealth and Investment Management

I’m bullish on financials

“Personally, I’m very overweight financials; I have it for a long time. But seriously, I’m pretty bullish on the sector. I think institutions are very positively positioned relative to raising rates. I think if we do get any kind of economic expansion, financials are going to be the beneficiary of it. But, we are better capitalized more liquid than we have been in a decade. I think in our case, given the breadth of our business mix, whatever parts of the economy, you are experiencing growth we are going to benefit from it.”

DOL proposals on fiduciary standard have unclear impact

“Again we don’t know. There is speculation that this could be the catalyst for the demise of 12b-1 fees and other types of network — networking fees. We don’t know. So it’s kind of pointless to speculate on it. At the end of the day, we have enough confidence in our platform and in our client relationships. We think we’ll be successful.”


Tractor Supply Company’s (TSCO) CEO Gregory Sandfort Presents at Morgan Stanley Global Consumer and Retail Brokers Conference

There’s a lot of things that can’t be delivered to a customer via drone

“Omnichannel for us is a growing business but there are a lot of things that can’t be sold on omnichannel and delivered to the customer through a drone or through an easy methodology. And some of these things are things that are unique to Tractor and we have to find ways to get it to our customer.”


Philip Morris International (PM) Management Presents at Morgan Stanley Global Consumer and Retail Brokers Conference
Jacek Olczak – Chief Financial Officer

Russian market responding to price increases reasonably well

“So far the total industry volumes are responding to the price increases within the sort of acceptable elasticity ranges, but we’ll have to – I think Russia will remain one of the least of the countries to watch the next year. I mean so far everything seems to be working well. There is some down trading, but with the price increases which we are taking there, I mean obviously you will have some down trading.”

No Macro environment that really concerns me

“Nothing today stands in the least which would worry me. There are few places to watch, but I think it’s pretty manageable going forward.”


General Motors’ (GM) CEO Mary Barra Presents at Barclays 2015 Global Automotive Conference

More change in this industry in the next 5 years than we’ve seen in the last 50

“I believe that we’ll see more change in this industry in the next five to 10 years than we’ve seen in the last 50, but we are not waiting to follow, we are not waiting to be disrupted, we are disrupting ourselves because with all these changes and challenges there is also opportunity whether it’s the strength in the U.S. market whether it’s the growth potential in China although China is moderating and even with the non-traditional entrants coming in the space when you look at the assets that we have and I’ll cover them as we go through the presentation, we feel we are well positioned.”

Will be launching the Bolt 200 mile range

“And we’re very excited about the next generation Volt which is the foundational technology that enables us to be able to be launching the Bolt, and the Bolt will go 200 miles on a charge, this really starts to change the equation in all electric, remember the Bolt is extended range electric vehicle because once you get to 200 miles you really get to a point for most drivers most days even with unexpected, you’re not going to create range anxiety”

You could make the argument that sharing cars will expand the market

“”when you look at sharing you can look at it and say, hi that’s going to be less cars sold. But you can also say it’s going to enable people either the use or people who have some impairment or at an age where they are not able to drive. And so I think it expands the market.”


Coca Cola 2Q15 Earnings Call Notes

Grew double digits in China despite headwinds

“despite a soft macro environment in China, we grew brand Coca-Cola volume double-digits. A record 20 million consumers participated in China’s Coca-Cola Break consumer promotion, which along with the third edition of the Share a Coke campaign, fueled our growth.”

The global economic recovery remains uneven

The global economic recovery remains uneven. Given the continued slowdown of the Chinese economy, the prospective U.S. tightening cycle, as the U.S. prepares to increase interest rates, and the ongoing uncertainty surrounding Greece and its place in the Eurozone. Additionally, many emerging markets, large and small, remain challenged, as evidenced by our low single-digit volume declines in both Brazil and Russia this quarter.”

We estimate an increase in the currency impact

“We estimate an increase in the currency impact in the back half of the year based on the latest exchange rates, and after considering our hedge position, current spot rates and the cycling of our prior-year rates, we now expect an approximate six point currency headwind on net revenue, 11 point headwind on operating income, and a seven point to eight point headwind on income before tax for the full-year 2015”

Diet and frozen categories have been struggling for years now

“the Diet and frozen parts of the food and beverage industry have been struggling for a number of quarters, it’s getting into years now, as the consumer, the U.S. consumer moves really strongly to fresh. It’s a good dietary change, actually, for the country, but the impact on categories and particularly categories that are appealing to diet-oriented positionings has been pretty negative.”

The science and safety of diet sweeteners will be reinforced by one of our competitors

“Our largest competitor is changing their formula and they’ll be launching that in August and that’ll create a lot of buzz in the category, some of it good, as the good science of the safety of non-nutritive sweeteners gets out in the marketplace and is reinforced.”

Coca Cola 4Q14 Earnings Call Notes

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.

New quarterly performance scorecard

“For those of you following our Web cast, you can see our quarterly performance on our new scorecard on Slide 4”

Opportunity to capture more beverage occasions

“Today the average household globally consumes 26 beverages per day and of these 26 beverages only 1.4 are Coca-Cola company brand. Our opportunity to capture more beverage [occasions] is just immense.”

challenging environment

“As we look ahead to 2015, we anticipate continued challenging macroeconomic conditions in many markets around the world”

A transition year for the company

“2015 will be a transition year for the company as we implement our new operating model and our incremental media investments in both 2014 and 2015 taking time to pay off in full. ‘

Comparable currency EPS growth

“While in 2015 we expect to grow comparable currency neutral EPS mid-single digit, from 2016 on we intend to be back to delivering again a long term target of high single digit comparable currency neutral EPS growth.”

7-8% drag on profits from currency

“we now expect an approximate five-point currency headwind on net revenues with a seven to eight-point headwind on profit before tax for the full year 2015.”

A little more volatile macro environment in 2015

“just at a very high level 10,000 feet, 2015 I think we expect the macro environment to even become a little more volatile versus 2013 and 2014.”

Yes it does make sense to invest in marketing

“your question about doesn’t make sense to invest in media and marketing. And the answer is absolutely yes, when we are able to target our investments in media and the way we’re doing it, segmenting them by the different countries and the different regions of the world and improving not just the quantity but also the quality of the media that’s what one of the main important factors that we see driving a better revenue number — a better price mix number. ”