Las Vegas Sands (LVS) Q1 2016 Earnings Call Transcript

Las Vegas Sands (LVS) CEO Sheldon Adelson seeing Macau gambling market stabilizing 

“Last quarter, I commented that we are beginning to see the first signs of stabilization in our Macao operations. It is therefore very encouraging to report that this quarter, we experienced our first sequential increase in mass gaming revenues in Macao since quarter one of 2014. Our Macao portfolio-wide mass revenue per day was up 5% sequentially. And at Venetian Macao, mass table revenue per day was up 10%, which is no small feat considering the arrival of new competition.”

Even though their stock price declined during the quarter, they deliberately chose not to buy back any stock 

“We will remain opportunistic in returning excess capital via our share repurchase program. While we chose not to repurchase any stock in the quarter ended March 31, we look forward to continuing to utilize the stock repurchase program to return excess capital to shareholders and to enhance long-term shareholder returns in the future. Our industry-leading cash flows, geographic diversity and balance sheet strength enable us to continue to use recurring dividend and stock repurchase programs, while retaining ample financial flexibility to invest for future growth, and pursue new development opportunities.”

The month of march was disappointing in Macau 

“March was obviously disappointing. We had a really great January, February. March certainly softened up. Worldwide, I think Chinese tourism and consumer numbers are pretty depressing across the globe. And certainly, it was a little bit soft than we hoped in Macao. That was not the case in Singapore, but in Macao, we saw a downturn. But we feel great. Cumulatively in the quarter, our mass revenues, both our premium and the mass-mass side continued to grow.

Not interested in attracting visitors who are looking for cheap hotel rooms and are price sensitive.  They’d prefer to host tourists with bigger pocket books 

“Our focus is not to sell rooms cheaply in Hong Kong to people looking for the best deal. That’s what’s happening a lot in that market is deep discounting where you can buy a room for sub-$100 a day. Our goal and our team’s goal is to stay occupied with mostly people coming from further away, a larger shopping/gaming budget, and I think that’s going to prove to be a very big advantage for us in The Parisian and throughout the entire portfolio. We’re longer doing this, we’re better at it, so we have more experience. And again, we have the convention space as well. So we’re very focused on maximizing our retail non-gaming portfolio in Macao.”

Las Vegas Sands (LVS) CEO Sheldon Adelson reminded investors the casino business is cyclical 

“Everything is cyclical. We’ve been in Macao for 12 years now. And there have been times over the 12 years that people thought that the business is going down, and then it’s going to go up. I remember somebody saying that things are going to hell in a hand basket because the growth that year was only going to be 50% and people were projecting 70%. I mean everything is cyclical. It’s going to change. People that come from China that aren’t coming now will come again.”

JS Earnings Call Notes – Lazard, WR Berkley, Potash, Cimpress, Autonation, Hershey, Mead Johnson, Las Vegas Sands, Visa, Rollins

Lazard (LAZ) CEO Ken Jacobs said the company benefited from a robust Mergers & Acquisitions environment

“In advisory, we had our best year ever with broad-based activity across practices and regions, and record annual M&A operating revenue. Lazard advised or continues to advise on six of the 10 largest M&A transactions announced globally in 2015.”

At the same time, they are seeing increased deal flow in the bankruptcy area particularly in the energy sector

“And while the restructuring market continues to operate at historically low levels, an exception is the energy sector where we have taken a commanding market share representing distressed companies. Lazard was the top advisor in 2015 for completed restructurings globally.”

And that one of their key competitive advantages is their relationships

“Our leadership and the largest transformative transactions across industry sectors worldwide highlights one of Lazard’s key competitive strengths, our unrivalled global network of relationships with key decision makers in businesses, governments, and investment institutions. Almost half of our announced M&A assignments in 2015 were cross border.”

Lazard (LAZ) CEO Ken Jacobs said the sluggish start to the calendar year may affect near-term performance and deal flow

The long-term transfer of business remained favorable. That said, the volatile market conditions at the start of this year could affect our 2016 performance. In asset management, we begin the year with lower AUM. In our M&A business, while we’re off to a good start, it’ll be several months before we know whether volatility has affected deal announcements for the year.”

Lazard (LAZ) CEO Ken Jacobs said corporates are now having a harder time generating revenue growth

An additional catalyst driving the current M&A cycle is the disinflationary/deflationary back drop. This continues unabated. For most companies, achieving sustainable organic growth in a period of low inflation or declining prices is challenging. Since the financial crisis, virtually all companies have undergone a steady pace of restructuring to drive earnings growth, yet additional savings are becoming more difficult to find. M&A remains an important tool for driving top line growth and also for driving additional efficiencies to propel earnings growth.”

Surprisingly, they’ve seen investor emerging market inflows during the month of the year even in this difficult environment

And then with regard to year-to-date, actually overall for Lazard we’ve seen inflows of about $700 million.”

Lazard (LAZ) CEO Ken Jacobs thinks we’re in for a significant restructuring cycle

So first, I think you’re going to see the pickup in revenue and restructuring in 2016 wasn’t much reflected in 2015, and it is concentrated in a couple of sectors. That’s the oil and gas, commodities, natural resources arena. I don’t think you’re going to see the full restructuring cycle unless you start to see a turndown in the economy. Hopefully, what we’re going to see is a constructive M&A environment with some pick up in restructuring, which would be kind of a nice combination for us.”

Lazard (LAZ) CFO Mattieu Bucaille said their investors are primarily institutional which allows for a more stable asset base

And the one other point I would like to sort of get across is our primary business is institutional. That’s why we haven’t sort of dealt with the flow that some of the retail funds have. And for institutions, this is a strategic allocation, runs in the tactical allocation. So what you’re likely to see is as markets stabilize, more money come in than go out because people are underweights their strategic allocation at this point.”





WR Berkley (WRB) CEO Robert Berkley said the pace of pricing erosion in the reinsurance market seems to be slowing
By and large, market conditions were consistent with what we’ve seen over the past several quarters. The reinsurance marketplace remained seriously competitive, though the pace of the erosion seems to be slowing, particularly on the domestic market. We’re also seeing a slowing in the entry of new alternative capital providers in the reinsurance space. And having said that, we’ll have to see if that trend continues.”
WR Berkley (WRB) CEO Robert Berkley said M&A in their sector is creating opportunities 
The fact of the matter is, by and large, whenever there is a meaningful merger or acquisition, that creates a degree of overlaps or uncertainty or potential dislocation, that impacts both the people within the organization and it also can honestly impact people outside of the organization such as the distribution system and customers. So we certainly have seen opportunities as a result of the M&A activity. We expect we will see more.”
And they said insurance remains a people business
“From our perspective, as we’ve suggested to some in the past, insurance business is fundamentally two things. It’s capital and it’s people. We believe capital is ever more a commodity and people are what makes the difference. So the opportunity to attract talented people from other organizations is certainly something that we are focused on.”
They’re looking for niche opportunities to underwrite insurance
“We are trying to find niche opportunities in other markets where it makes sense outside of the United States to achieve reasonable risk-adjusted returns. In several markets that we participate in, Latin America would be an example, I think we have achieved that consistently for more than a decade.”

Potash (POT) CEO Jochen Tilk said the global agricultural nutrient market remained strong yet pricing of the product slumped

“Global shipments of approximately 60 million tonnes were the second highest total on record, a reminder that even with less than ideal economic conditions, food production and soil fertility remain a priority for farmers.  While demand was strong, prices were less resilient. The decline was most visible in granular markets with prices declining more than 30% over the course of the year.”

Yet he cited China as the swing market
The market that garners most attention this time of the year is China. While current inventory levels are expected to reduce annual shipments from 2015’s record levels, we continue to see strong consumption trends and the need for contract settlements to meet spring planting requirements.”
Potash (POT) CEO Jochen Tilk said they reduced the company’s dividend yet remain bullish on the long term prospects of agricultural nutrient demand
We have decided to reduce our quarterly dividend by 34%. We believe this level, which represents a payout ratio of close to 100% of 2016 earnings remains highly competitive, but also protecting the long-term financial health and financial flexibility of the company.  Looking forward, it can be difficult to look beyond near-term headwinds that may continue in 2016, but our long-term confidence is underpinned by food demand, the quality of our assets and strong market position. This global mandate will largely be met in the coming years by improvements in crop productivity, a challenge to that can’t be achieved without the products we produce. We believe that we’re uniquely positioned to respond in any market conditions.”
Potash (POT) President Stephen Dowdle said demand from Brazil resilient despite the geopolitical turmoil in the region 
When you look at what happened in Brazil last year, it was a second best year in terms of just looking at, let’s say from potash imports and if you look at all the turmoil that that country was going through and the agricultural sector was really a bit of a shining light in the country.”
Cimpress (CMPR) reminded the investment community that they focus on growing their business for the long-term
 Even as we report results on a quarterly basis it is important for investors to understand that we manage to a much longer-term time horizon and that we explicitly forgo short-term actions and metrics except to the extent those short-term actions and metrics support our long-term goals.”  
And the lifetime value of a customer using their services continues to increase
This quarter we saw continued traction in gross profit per customer as we continue to acquire higher-value customers and our repeat rates improve. We also saw good year-over-year growth in Net Promoter Score. We draw the conclusion from the combination of these trends that our business continues to strengthen as a result of the many changes and investments we have made over the past several years.”  

Similar to Amazon, the company is willing to forsake near-term profitability of certain transactions in order to create a positive customer experience

In that specific example is that we have begun to test shipping prices within the Vistaprint business unit and we have been very pleased with the early results. Now those results definitely reduced near term revenues and near term profits, but when we look at the change in customer satisfaction and loyalty improvements driven by that, we have a strong hypothesis which we’re continuing to test around that it pays off in a financial sense from a DCF perspective because of the future cash flows or the gross profits from those happier customers.”

Cimpress (CMPR) CEO Robert Keane mentioned their new partnership with Amazon but said he has no idea what it may lead to

Amazon is very much in a small test phase right now. You can see that on the site.  It is not something that is doing anything material this year in revenues. We do think that the opportunity there is material, but we do not plan for that right now. The way Amazon works which is quite impressive, is a very rapid iteration of new ideas. It’s very hard for us to say where that’s going to go.





Autonation (AN) CEO Mike Jackson said the firm’s profitability per vehicle sold decreased during the quarter

The fourth quarter industry sales environment was more push than pull resulting in significant new and used vehicle margin declines on a combined basis of $217 per vehicle retail, which is 11% lower than the fourth quarter of 2014. During the quarter we experienced particular weakness in Premium Luxury, which had a significant impact on our fourth quarter financial results.”

The company called out the Texas region as having relatively weak sales

Coupled with the margin pressure in the fourth quarter we also began to see a slowdown in Texas, due to collapsing energy prices which are hurting the local economy. In Texas the new and used unit sales were down compared to the fourth quarter of 2014.  I think Texas is about 24% of our business so that’s a significant overweight.”

Autonation (AN) Executive Vice President Jon Ferrando reviewed the company’s acquisition strategy

As of today our store portfolio number 342 franchises and 254 stores in 15 states, representing 35 manufacturer brands. We are one third domestic, one third Asian and one third Premium Luxury. Looking forward we will continue to actively pursue acquisitions and new store opportunities with a focus on enhancing brand representation within our existing markets and markets that can be supported by our existing management infrastructure.”

Autonation (AN) CEO Mike Jackson cautioned automobile manufacturers from overproducing which could put additional pressure on car prices

Well I think any time the industry moves from a period of exceptional growth secures of it to beginning to plateau and we see significantly higher inventories year-over-year that’s going to put pressure on front end gross. So we’ve taken steps to begin to bring our inventories.  But even after we do that if the industry overproduces and keeps inventory at a high level that means the overall environment is still very difficult.”

Autonation (AN) CEO Mike Jackson remains optimistic about truck sales in 2016 due to lower gas prices

I think domestic [auto manufacturers] are very well positioned to exceed in 2016, almost all the excess inventories is in cars, not in trucks, to the stand that you have strength in trucks and can produce more trucks you want to drive in 2016. I think Sergio’s decision to switch over factories from our production to truck production shows you the sense that the consumer has that they are totally committed to cheap gas and to trucks it’s really become a strategic question not a tactical question. So wherever you stand on trucks is your position of strength in the marketplace.

Autonation (AN) CEO Mike Jackson wants auto manufacturers to remain disciplined on price incentives and not chase market share at the expense of profitability

I really would not want to see incentives go beyond on the manufacture level they are about 10% suggested retail price at the moment. So we’re approaching double digits and I really hope we don’t go beyond that.”

Autonation (AN) CEO Mike Jackson is excited about their digital storefront 

We now generate fully 25% of our business from AutoNation site, which is a spectacular success, the customers like the ability to be able to transact on the site. We still have capabilities that we’re adding step-by-step that continue to roll out I think the most difficult piece remains the documentation that may push into 2017.”





Hershey (HSY) CEO John Bilbrey said the company continues to take market share from competitors

Hershey U.S. CMG retail takeaway sequentially improved from Q3 to Q4, and increased plus 2.5%, although market share was up about 0.2 point. Seasonal performance was good and we gained market share in both Halloween and holiday.  Hershey U.S. market share was an industry-leading 31.3%.”

Much like others in the retail food space, the company’s products continued to be impacted by shifting consumer trends

As we previously discussed the category is being impacted by many of the same issues facing other food categories, including changing shopping habits like channel shifting, increased competitive activity and some retailers adjusting their merchandising practices, and a proliferation of broader snack SKUs.”

Their China chocolate business remains challenged

Our China Chocolate fourth quarter net sales results were less than our expectations.  Similar to what we discussed over the last year, category performance is being impacted by macro economic issues and the related impact it’s having on consumer shopping behavior and confidence.”

Transitioning their products to more natural ingredients has increased their expenses

Competition for this space in the store is robust. And we continue to listen to the consumer and invest in simple ingredients, which were currently purchasing at a slight premium to traditional ingredients.”

Hershey (HSY) CFO Patricia Little said some of their chocolate sales are a seasonal business that centers around holidays

We also know chocolate is really a destination for the seasons, during the seasonal periods, and that will continue. So I think, we kind of think about it, that’s a solid foundation and base that consumers are looking for chocolate in particular around those times.”





Mead Johnson (MJN) CEO Kasper Jacobsen said the slowing of several international economies hurt volume growth

We were challenged by a strengthening dollar and the general weakness in many economies throughout Asia and Latin America. GDP growth across Asia and Latin America was lower than prior year, and this affected both consumer and retailer confidence.”

And they ran into increased price competition and execution issues 

Additionally, in China, we saw increased price-based competition and channel shifts that adversely impacted sales growth and required us to boost investment to protect our competitiveness. Combined with some company-specific executional issues, this resulted in lower volumes through the year.”

Mead Johnson (MJN) CEO Kasper Jacobsen said they signed partnership agreements with Chinese company Tencent & to expand distribution 

In a sign of our commitment to strengthening our presence in web and app-based commerce, we recently signed joint business partnership agreement with Jingdong, owner of leading e-commerce like and Tencent, owner of WeChat, the leading social app in China.

Mead Johnson (MJN) CEO Kasper Jacobsen highlighted the most important factors that will affect company performance in the coming year

Through last year, I repeatedly pointed to four important factors that critically influenced company performance. To remind you all, I’m referring to currency movements, dairy cost evolution, our ability to evolve our strategy and portfolio in China, and our momentum in North America, particularly in the United States. All of these four variables remain as relevant in 2016 as they were to our performance in 2015. But I should add pricing to the list. Our ability to offset partially or in full foreign exchange weakness with price increases will be very important. I’d add that I see some encouraging signs that price increases will become easier as we move through the year.”

Mead Johnson (MJN) CEO Kasper Jacobsen discussed raising prices in Asia

I think the pricing environment will become somewhat more friendly. What we saw in 2015 was that there were still – particularly, I would say, in Asia, there were still governments in Asia that were very resistant to price increases in our sector as they still focused very much on kind of inflationary pressure or perceived inflationary pressure, which I think we all know was really a threat that evaporated some time back in 2014. And they would repeatedly point to the fact that we were seeing significant upside from dairy costs coming down as we discussed price increases.  I think now that dairy prices have stabilized, I believe that as both us and our competitors lap the low-dairy costs, it will become a little bit more straightforward to raise prices. But we obviously have to do that in a responsible manner.”





Las Vegas Sands (LVS) CEO Sheldon Adelson said the company increased its market share in certain geographical zones such as Singapore

In Singapore, our share of EBITDA of the duopoly market increased to 68% in the first nine months of 2015, up from 65% in 2014. Because of industry leading investments in Macau and Singapore, we are unique in the absolute scale of our cash flow as well as our dominant share of the industry’s cash flow.

Las Vegas Sands (LVS) CEO Sheldon Adelson mentioned that their employees base is now predominately locals as opposed to hired hands from other countries

 And no less important is the decade-long effort we have made in developing to promoting the local talent that is necessary to operate and grow our business over the long term. In 2004, only 7% of 900 or so managerial staff were locals. Today, 86% of our 2,700 or so managerial staff are locals.  In summary, we regard it as a privilege to contribute to Macau’s success in realizing its objectives of diversifying its economy, supporting the growth of local businesses, providing meaningful career development opportunities for its citizens and reaching its full potential as Asia’s leading business and leisure tourism destination.”

Las Vegas Sands (LVS) Senior Vice President Patrick Dumont says its tough to tell what impact a devalued Chinese yuan currency may have on the company’s performance

I think long term, it’s really hard to call. I think it’s hard for anyone to figure out exactly what the impact will be and how the currency may continue to devalue. The only thing is we’re looking at hedging programs, we’re speaking to economists and doing our best to evaluate the impact to the business. But in terms of long-term impact on our customers, it’s hard to say. A devaluation of currency could impact manufacturing economy there and drive further growth in the economy. Other people have different views. So now we’re just studying it and hopefully we’ll continue to grow our business in the face of any currency changes that may occur.”





Visa (V) CEO Charles Scharf said consumer spending patterns are changing

Ecommerce continue to grow at a much higher rate than the spending at physical stores. We saw mid teens eCommerce growth during the holiday period versus mid single digits growth in the physical world. More than 25% of all spending on Visa Cards during November and December was online up from less than 20% just three years ago.”

And people are delaying their shopping until later in the holiday season

Also the pattern of spending during the holidays has changed, while Black Friday and Cyber Monday remain important shopping days, less spending is consolidated on these two days than recent years and more people delay their spending to later in the season this year.”

Visa (V) CEO Charles Scharf said their Visa Checkout product has better online completion rates than some of its competitors 

Visa Checkout customers completed 86% of transactions compared to 73% for PayPal Express Checkout and 57% for the traditional merchant checkout. Visa Checkout customers are more active online shoppers in general, completing 30% more transactions per person than the overall population of online shoppers and 95% of Visa checkout customers say sign up was easy and 96% feel secure making purchases with Visa Checkout.”

Slightly less than one half of all Visa credit cards now have EMV chips which greatly enhance security of the network

43% of all credit cards representing 72% of purchase volume, 21% of all debit cards representing 45% of purchase volume, over 750,000 merchant locations have enabled EMV representing 17% of the total face to face locations in the U.S. Based on our recent client survey we expect 50% of locations to be enabled by the end of this year.”

Visa (V) CFO Vasant Prahbu said they were able to issue low cost debt to fund their Visa Europe acquisition 

In December we issued $16 billion in debt with maturities ranging from 2 to 30 years. The weighted average interest rate was 3.08% with the weighted average maturity of 13.1 years. This is the low end of the 3% to 3.5% interest rate range we indicted last year.”

Visa (V) CEO Charles Scharf discussed the intensifying competitive landscape

Domestically, across the world there are local networks that we compete with. And there are emerging global competitors such as Chinese Union Pay in the traditional space as well as a series of people in the eCom whose names you know that we continue to compete with.  I think when we think about what we have at Visa in the quality of the network, the safety, the security, the global acceptance and now the capabilities that we built in the world of digital commerce and the value-added services, we feel terrific about our ability to continue to compete.”





Rollins (ROL) CEO Gary Rollins said the company could see increased sales from a more substantial outbreak in the Zika virus

Although Zika was first diagnosed in Brazil in May, it is been linked to more than 3500 cases of infant deformity. The leading experts predict that the USA needs to be prepared for a similar scenario. This situation is unfortunate. However based on our experience with the West Nile outbreak, publicity concerning mosquitoes risk will accelerate.”

And that they’re using iPhones to make their technicians more efficient

This time last year we discussed that one of the important advantages of BOSS was the feature of issuing iPhones to our technicians to help them better complete their customer administrative requirements.  At the end of this past year, 2600 of our technicians were using our iPhones to provide customer better communication and acknowledgment of their service, while improving our branch administrative productivity.”

Rollins (ROL) CEO Gary Rollins said they are in the “people business”

The service business is first and foremost a people business and our employees are our most important asset. A major priority for us every year is to prove on the retention of our employees. Our employee retention rate again improved in 2015. We continue to work with our employees to ensure that they are receiving the very best training if they need to be successful and to advance their career.”

Rollins (ROL) CEO Gary Rollins said they are using data and an in house analytics team to change pricing dynamically

Well we are learning more about our business, I mean we have the capability now of better utilizing our data. We have the capability now of experimenting more. We have a wonderful laboratory with our call center because virtually we can change the prices just almost instantaneously and look at our closure to see if our closure is improving or not and seeing if we’re selling more units to the extent that to offset the price reduction.”

Miscellaneous Earnings Call Notes

McDonald’s (MCD) CEO Steve Easterbrook on Q4 2015 Results

Our turnaround is starting to take hold

“I am confident in the actions we are taking and attraction is beginning to take hold. Most importantly, customers are noticing a difference. Our customer feedback systems are showing improvements in many important aspects of the customer visit, including food quality, order accuracy, speed and friendliness.”

Zions Bancorporation’s (ZION) CEO Harris Simmons on Q4 2015 Results

Paul Burdiss

Don’t expect credit deterioration in anything besides energy

Well I mean, I guess the short answer is until we see the non-energy economies start to really fray, but we’re not seeing that we — and I don’t think we’re going to venture a guess as to when the cycle really starts to et cetera, we’ll actually do that but I think suffice to say that at the moment we continue to see improvement and even in markets like, in a market like Texas the non-energy portfolio remains very healthy. We are looking at a lot of indicators in each of those portfolios to kind of watching for problems and so far it is not really showing up.”

Michael Morris

All domains continue to perform well and metrics are all solid

No, I can’t add anything to that, all domains consumer, retail, mortgage, small business, large commercial they all continue to perform well and metrics are all solid.

W.W. Grainger (GWW) Q3 2015 Results

Macroeconomic conditions are well understood

“The macroeconomic conditions faced by our industry in 2015 are well documented and largely understood.”

DuPont’s (DD) CEO Ed Breen on Q4 2015 Results

There is always cost saving

“Look, there is always cost savings. I mean I am a believer that they occur every year in a few percent range, as you keep streamlining your company, I would say. So, you are never done with it.”

Dow is already on IT systems that we were implementing

“we’re on a very fragmented IT system. One of the benefits it looks like we obviously get here with the Dow merger is Dow is on the IT platform that we were going through the global — actually latest revision of the SAP platform”

Fourth quarter was actually our best organic quarter of the year

“It’s interesting to note though that — and I don’t want to say there is a trend here, but our fourth quarter organic revenue was actually our best of the year. We had been running kind of minus 3% through the first nine months of the year and we are minus 1% in the fourth quarter. And if you kind of look at it around the geographies, it was kind of flat in Latin America, flat in North America, pretty flat in Asia and our one down market was Europe which was down about 2%. So, we’ll see how the trend goes here in the first half of the year but that was little bit encouraging that we saw that lift.”

Brown & Brown (BRO) Powell Brown on Q4 2015 Results

Small businesses still trying to understand ACA

“We define small employee benefits as employers with less than 100 employees. For this segment we are continue to see companies be very focused on managing their costs and trying to understand the implementation complexities of ACA, specifically how they manage costs via exchanges and/or private plan.”

Do expect rates to remain under pressure. A lot of activity in M&A but prices remain high

“We do expect rates in ’16 to remain under pressure and are watching the economy very closely for signs of further expansion or contraction. From an M&A perspective there’s a lot of activity out there. We’ve seen a number of announcements in 2015, maybe the most active year of acquisitions ever. We can tell you that prices remain high, some at levels that don’t make sense to us. However, we continue to look for partners that fit culturally and make sense financially”

AK Steel Holding’s (AKS) CEO Roger Newport on Q4 2015 Results

“the steel industry continues to face significant challenges as we enter 2016. These challenges include continued pressures in the global steel industry as the result of the massive oversupply steel primarily from China, that direct and indirectly impact others oversupply in all regions of the world and otherwise AK Steel is not a major player in the oil country tubular goods business, the significant downturn in that market is contributing to the excess capacity in those markets in which we do compete and to the overall steel market. As we have been stating for several quarters now, the steel market in the United States has been flooded with what we believe are unfairly traded imports. While the import levels have indeed began to decline for many of those countries where preliminary duties are being levied, we still face significant ongoing import pressures.”

Tupperware Brands (TUP) CEO Rick Goings on Q4 2015 Results

Turkey very weak

“Turkey, very disappointed. It was down 25% and much like France it’s been heavily impacted by externals, particularly the terrorist attacks, military activity, there is political instability which has just been almost bipolar from the President almost being voted out of office in June to getting a majority back again just over the last two months. So that’s we’ve seen weakened concurrency and there is a lot of change in consumer behavior in spending.”

I might be concerned if I were selling cars in China, but I think we’re ok

“Also I would say in China for all the news you really hear about that, I think if I was selling cars I might be concerned, but at the lower, we’re again a multi-local business, I think we’re in good shape there.”

It isn’t business as usual out there

“we don’t look at it as a crisis but isn’t business as usual out there”

Qualcomm’s (QCOM) CEO Steve Mollenkopf on Q1 2016 Results

Qualcomm talking about strong volumes

“QCT chipset shipments were near the high end of expectations, with low tier strength across OEMs particularly in China, offsetting some weakness in thin modem sales at a key customer. QTL revenues were higher than expectations on strong 3G/4G device volumes and ASPs and we continue to make progress in signing up Chinese licensees, although there is still more work to be done on that front.”

Lots of industries are looking to leverage mobile technology into their products

“At the Consumer Electronics Show earlier this month, it was clear that many industries are looking to leverage mobile technology into their products and businesses are looking to the leaders in communications and computer systems, such as Qualcomm, to make the world more connected and smarter. Our many announcements at the show reflect our progress extending Qualcomm technology into adjacent and new areas, including automotive, IoT and networking.”

PulteGroup’s (PHM) CEO Richard Dugas on Q4 2015 Results

The volatility does change the way management teams think about their businesses at the margin

“All that being said we are well aware of the volatility in the world today. From concerns of our global economic conditions to the swoon in oil prices, to gyrations in the stock market, the day-to-day swings can be violent. The reality is however that we can’t control any of these factors, what we can do is focus on running our business, consistent with the goals we have established and disciplines we’ve demonstrated. This means acquiring well-located communities that we believe can deliver high returns on investment. It also means hedging our bets by using more land options, where possible and focusing in on smaller, shorter duration projects, where we can get our capital back quickly. It also means, not over leveraging the balance sheet and keeping one hand on the lever to slow investment if housing demand begins to change. And finally, it means having the discipline to systematically give excess funds back to shareholders, rather than trying to force investments in the system. ”

Ford Motor’s (F) CEO Mark Fields on Q4 2015 Results

We are a mobility company

“Well to answer your question Joe when you look at where we’re heading we said we were transforming into an auto and a mobility company because it’s really important that we don’t lose sight of our core business as I mentioned on our remarks upfront.”

China is going from an industry led economy to one that’s consumer led

“In China obviously as we mentioned, when you look at the stock market volatility, that’s endemic of the country that’s moving from an investment and industry led economy to one that’s consumer led. And actually when you look at the components of GDP growth there, the services in the consumer portions of that are actually growing while some of the industry ones are coming down and we view that as a good sign.”

Marion Harris

Not seeing any uptick in delinquencies in the US

“Colin, this is Marion. No, we’re really not. I know there is a lot of discussion about this, but with the exception of the trend in longer term financing we’re not seeing any weakness in the consumer alone. In fact delinquencies which are a leading indicator were at an all time record low for us.”

Las Vegas Sands’ (LVS) CEO Sheldon Adelson on Q4 2015 Results

Adelson thinks we’ve seen stabilization in Macau

“We do see stabilization in gaming revenue trends. In the mass gaming segment, our non-rolling drop was down just 1% over the prior quarter, despite new competition that has predominately focused on the mass market. Our VIP rolling volumes were actually up 5% over the prior quarter outperforming the 2% sequential increase in the Macau market.”…”I thought we had either hit bottom in the mass market or we are bottoming out. Ever since I said I’ve been reading the issues, I’m been reading from analyst reports and from other Sands China reports that I get daily, other clippings that people are starting to believe that and some of the numbers put out and experienced through December and January indicate to me that that’s the case.”

Steel Dynamics (STLD) Mark D. Millett on Q4 2015 Results

I think there’s positive momentum

“Well, I think there’s positive momentum, generally. I’m sure Dick can speak to some of it, but the inventory overhang, there’s continued destocking there and it’s becoming balanced. It’s still relatively high, particularly in hot band. But in coated products, in coated sheet, I think it’s getting into a good position. And you speak to a seasonal uptick. I think we’re seeing that as well.”

Theres tightness forming in cold roll sheet

“On cold roll sheet and coated, I sense a tightness forming in that arena. I think it’s a combination of – the automotive arena is strong. So, the integrated mills got a relatively good order book. Construction continues to come back. There’s some destocking going on. And we have some relief from the trade cases and erosion of import levels.”

United States Steel’s (X) CEO Mario Longhi on Q4 2015 Results

Automotive continues to be a good market, appliance and construction markets should also grow

“Now I would like to give a brief summary of what we are seeing in our markets and our guidance for 2016. The automotive market continues to be a very good market for us and we expect it to remain strong throughout the year. We also expect growth in demand in the appliance and construction markets compared with last year. Industrial equipment market is mixed with a slight improvement in demand for construction equipment, steady demand in the railcar markets and weakness in mining equipment. In the energy markets, low oil prices and rig counts remain a significant headwind. At this time, we do not see any catalysts other than increase in oil prices that would drive significant improvement in tubular demand and pricing with impacts to both our tubular and flat-rolled segments. We continue to expect slight growth in the automotive, appliance and construction markets in Europe as compared to last year but tin mill products may be facing increasing challenges from imports.”

JS Earnings Call Notes 7.23.2015 – Las Vegas Sands, American Express, Nasdaq, Graco, General Motors

Jeremy S., an investment analyst here in Southern California, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Jeremy has read this week.

Las Vegas Sands (LVS) CEO Sheldon Adelson said the company saw its market share of the Macao casino market increase during the quarter

“In addition our gaming revenue market share in Macao reached 24.6 for the quarter, our highest market share in any quarter since quarter one of 2009.”

And the firm continues to try to secure the first mover advantage in various geographies

“At the heart of our company’s success, is having the right strategy at the outset. We have the courage of our convictions to build early and aggressively. We developed critical mass to scale and diversification and we offer products and amenities that are best positioned to capture long-term tourism and consumption growth in Asia  I remained steadfast to my belief that we will grow and prosper in the long-term, while continuing to contribute to the economic development of our host jurisdictions.

Las Vegas Sands (LVS) CEO Sheldon Adelson stated the company’s hotels remain a highly desirable destination for Asian tourists

“The scale of our hotel room inventory remains one of our key strategic advantages. It allows us to target higher value overnight visitors from Greater China and the rest of Asia and to grow the base of high value visitors from Macao.”

Las Vegas Sands (LVS) CEO Sheldon Adelson called out the weaknesses of his main competitors in the casino environment

“Take for instance Galaxy, they have little experience in their executive ranks.  SJM, I don’t see that they have the ability, they’re not used to living in a competitive environment all over.  And Wynn is used to competing but he is specialized as we all know, he has specialized and done an excellent job in the high end of the market.  And what’s the last one MGM, MGM the only thing they have ever developed was City Center and for those of us in the United States, particularly those of us who live here in Vegas it doesn’t need any further comments. So from our standpoint, we are very pleased we’ve worked in competitive environments all of our life. We have been never, not worked in a competitive environment.  But other people are making mistakes we’re not making the same mistakes.”

Las Vegas Sands (LVS) CEO Sheldon Adelson thinks there will be another opportunity to build a casino in a new country in Asia

“There’s a lot of conjecture about what a new development opportunity in an emerging market like Japan or somewhere else in the Far East, keeping our powder dry so we can go after that aggressively and we could build, what it takes to build to win the day, to win the competition. We are keeping our powder dry in our borrowing capacity.  We as I said earlier, we’re beginning to feel vibrations that a development opportunity is hopefully around the corner.”





American Express (AXP) CFO Jeff Campbell said a number of headwinds are impeding profitability and the company won’t return to earnings per share growth until 2017

“We also believe our outlook to return to positive earnings per share growth in 2016 and to be within our target range of 12% to 15% earnings per share growth in 2017 remains appropriate. As you recall this outlook does not contemplate the impact of any restructuring charges or other contingencies.”

The company’s termination of the Costco deal is starting to impact the business

“Another driver of the sequential change in billings growth the U.S. CS segment was our Costco US portfolio. Historically, Costco billings have tended to generally grow in line with the U.S. CS average growth rate, but in the quarter, while still positive, Costco co brand car growth rates slowed to well below the segment average. The slower growth is in part due to a decrease in new card acquisitions. As you would expect during a wind down period, we have agreed with Costco to reduce our joint marketing efforts.”

In contrast to competitors Visa & Mastercard, American Express makes loans to its customers and CFO Jeff Campbell said defaults are at historically low levels 

“you can see that our lending credit metrics remain at or near historically low levels with our write-off offering declining slightly versus last quarter and our delinquency rate remaining flat. As you can see on Slide 11, the steady lending credit performance as well as lower write-off and our charge card portfolio and benefits from FX helps drive a 4% decline in provision versus the prior year.  Moreover, as we discussed at Investor Day we did build into our multiyear financial outlook and assumption that we would see some steady upward tick in write-off and a modest build in reserves over the outlook period.”

American Express (AXP) CFO Jeff Campbell said the company is unique compared to other financials in that a rising rate environment is overall negative for the company

We of course are unusual in that raising rate environment in isolation if you hold everything out steady, is a negative for us and we put a number in our 10-K just use round numbers that says all else being equal, 100 basis point rise and all interest rates will cost us around $200 million a year, when you look at the outlook we provided, we built it, we’re trying to be realistic in that outlook and so we built a steadily rising rate environment into that outlook for that matter I remind you we also built a little bit of steady uptick in some of the provision costs as well.  In terms of how we think about offsetting the impact of those rising interest costs, if you look historically there is hugely some natural hedge here because as a general matter Central banks and the Fed tend to raise rates more when there is a little bit stronger economic environment and raise little less when the economic environment is not so strong and obviously the rest of our business benefits tremendously when there is a little bit stronger economic environment.”

American Express (AXP) CFO Jeff Campbell said the competitive environment with respect to cardholder rewards has increased and the company will have to spend more on rewards which will hurt profitability

The rewards environment in general has always been competitive and is pretty competitive right now, what we really try to focus on sure are a couple of things. Number one, ultimately this is about broad customer value proposition rewards is one component of that. We have a brand, we have a reputation for security and trust and service and try to leverage those things.”   






Nasdaq CEO (NDAQ) Bob Greifeld said that the company’s private company marketplace continues to gain traction as companies are staying private longer for a variety of reasons 

“Another good example of where our strong commitment to our clients has enabled us to drive new opportunities is Nasdaq Private Market. While we continue to experience one of the most robust IPO and listings environments in recent memory and we are the leading venue for IPOs with a 70% win rate, we also in addition to our continued strong progress in Nasdaq Private Market during the quarter, we added 25 companies to NPM in the second quarter expanding the user base by one-third. NPM now has over 100 customers worldwide, including leading companies such as Pinterest, DocuSign and Business Insider to name a few. And it is still very early days.”

Nasdaq CEO (NDAQ) Bob Greifeld reiterated that his firm plans to stand disciplined on acquisitions given what they see as currently high valuations 

“So one is we continue to see a deal market where the valuations are frothy. Some could argue are irrational, so we’re not going to participate at that level. But there is a lot of deals that we do look at. We have a firm discipline in place in terms of how we evaluate these transactions.”

Nasdaq CEO (NDAQ) Bob Greifeld said the exchange listing business is seeing momentum as more companies are going public more than just a few years ago

“With respect to the U.S., we are here at the market site today and it’s been a wonderful week. We had the PayPal spinout happen and then yesterday Blue Buffalo had obviously a very successful IPO. And we’re also very happy to win Pure Storage a week or so ago and as we said before, we have a 70% win rate. So we have a high degree of issuance. We have an increased win rate and that certainly is contributing to our performance.

 And they switched their listing pricing model to an “all in fee”

The most notable change really is at the top end of our fees where we are now allowing issuers to opt into an all-inclusive fee, which means that they will no longer be subject to any listing of additional shares fees or any other administrative fees and there is a maximum charge for a listing based on their shares outstanding is $155,000 a year.  And frankly a lot of support for that all-in all-inclusive fee.”





Graco (GGG) CEO Patrick McHale said China remains a weak geography

“We continue to experience difficulties in Asia Pacific in the Contractor business, with the region down high-single digits in Q2. This is driven by ongoing underperformance in China. We recently made some leadership changes in the region to try to get to back on track. We believe that the remainder of 2015 will continue to be challenging.”





GM CEO Marry Barra highlighted the firm’s intense focus on financial discipline and return on capital based metrics going forward

“We have also committed that each quarterly broadcast or earnings broadcast we will talk about our return on invested capital. Our trailing fourth-quarter average is 23.4% and I think it demonstrates our disciplined capital allocation is paying off as we look across the globe on how we invest.”

GM CEO Marry Barra said you can now connect any Android or iOS mobile phone to your car

I think another important area in this space is with our GM smartphone integration technology. It allows your smartphone, whether it be Apple or Android, to project certain things that you are very used to using on your phone on to the car, not everything, but some key areas. This is really listening to customers and putting them at the center. And you are going to see us expand this to global markets very quickly.”

GM CEO Mary Barra emphasized the importance of cyber security in cars

“Really when you look at cyber security you’ve got to look at levels of security, because you look at vehicles on the road today, they are on the road for 11 years.  And so as we move into a world that has more connectivity you’ve got to make sure not only do you have many layers of protection in the design of the vehicle, but then also what’s very important is our over-the-air capability as well. That if something happens you are able to quickly go in and prevent and correct if that’s necessary.”

Much like many other companies that reported this earnings season, GM has seen a materially slow down in their China sales 

“At the beginning of the year, we had a really planned for some industry moderation and increased price competition. Our initial assumptions as we entered 2015 were 6% to 8% industry growth overall and 3% price deterioration on a year-over-year basis. It has been clear to us for some time that the moderation is stronger and the pricing environment more challenging than we anticipated.”

Las Vegas Sands 2Q15 Earnings Call Notes

EBITDA grew in Macau despite double digit market revenue decline

“Our EBITDA in Macao grew sequentially by 6%. Against a backup of double-digit market revenue decline new competition in general wage inflation. Our Macao operations managed to improve the EBITDA and profit on a quarter-to-quarter basis. ”

People said Cotai wouldn’t work and now they’re “cutting off their arms” to get in

“The other guys can’t catch up to us, that train has left the station. When I first invisioned the idea of Cotai Strip other people criticized me and said it’s never going to work and now everybody is cutting off their arms to get into Cotai.’

We’re doing better than other operators

“I think that the other hotels really — the operators are really having difficulty and challenges confronting the situation being the challenges for all of us in Macao. We are maintaining the higher ”

Macau is now premium mass market, not just junket

“We built these malls a long time ago and they get stronger year after year, visitation is stronger it’s a reason to come to properties, we’re very proud what’s happening on the retail segment, how it translates down to the casino and the room occupancy. What you see in Macao, very clearly is that it’s mass market. It’s a premium mass, it’s no longer driven by junket GGR.”

We’re getting more vibe that a new opportunity is going to open in Asia, so we’re not paying as big of a dividend

“We’re getting more and more vibes that something is going to open up in Asia. And clearly if you talk to anybody in any of the countries where we’ve been, let’s use the word lobbing for a number of years. There isn’t anybody doesn’t thing that we’re in the pole position in any one of these countries. So it’s getting to smell like something is going to be coming up soon. And we’ve considered that in our cash flow vis-à-vis estimating the dividend”

Tough to get a room on weekends, but everyone is struggling mid week

“So, just like the fight when the MGM guys brought the fight late in May, you couldn’t get enough room, and enough gaming tables, that’s happening on weekends in Macao, that’s where demand is and that’s where the market is moving to. Everyone is struggling mid-week to my opinion, it’s the weekends where the money is being made, so that’s my take on the loose demand.”

When Momentum Stocks Break

Tesla is now down 38% from its peak and appears to be suffering the same fate as many other momentum stocks before it.  In order to help chart what $TSLA’s decline could look like, below is a list of the number of weeks that it took 11 other broken momentum stocks to lose 50% of their value from their peak.

It took these stocks 12 weeks on average to lose half of their value.  If Tesla matches that pace it could be below $100 by mid December.  On average, these stocks lost 91% of their value before their declines were over and the average duration of decline from peak to trough was 100 weeks (about 2 years).

Of course for every example here there is probably another example of a momentum stock that appeared to break but then recovered.  Chipotle and Monster Beverage are two that come to mind that came close to 50% declines before recovering.  Indeed, several of the stocks on this list (Netflix for example) have recovered quite a bit from their drawdowns.  In the end though, valuation always wins.

Related reading: Where do growth stocks peak?; Anatomy of a Short Squeeze

Broken Momentum Stocks

Las Vegas Sands 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.

“We delivered outstanding growth in revenue, cash flow, net income and earnings per share this quarter…Take that you guys who underestimated us. ”

“he confidence we have in our business and the reliability and predictability of our cash flows has allowed us to raise our recurring dividend for the 2014 calendar year to $2 per share, an increase of 42.9%, compared to the $1.40 recurring dividend we will have paid this year. Yay dividend! ”

“let’s review strategic objective #4, the return of capital to shareholders. Yay return of capital!”

“we have a convention-based business model that is unique in the Integrated Resort industry. That expertise sets us apart from others and positions us extremely well to win the most promising future growth and development opportunities”

“we are long-term strategic developers in our business. When we developed the Cotai Strip, we were building for the future market. The market that will develop with the emergence of the Asian middle class and the completion of the major infrastructure projects that provides them greater access to the [indiscernible]. Our focus on building non-gaming amenities, dining, retailing, entertainment, convention and exhibition facilities as vital components of our Integrated Resort properties, is another example of our long-term strategic vision.”

“Let me emphasize one final important point. The scale of our business and the strength, reliability and predictability of our cash flows allow us to return capital to shareholders while maintaining balance sheet strength and the ability to develop large, iconic projects that will generate great utility for our host markets and outstanding return for our shareholders.”

“Japan would obviously be the most expensive investment we’ve ever made from a single property standpoint. The estimates range anywhere from $6 billion in Tokyo and up. There’s been some comments, recently, about construction costs going up in Japan because of the Olympics. So it’s likely to potentially run higher than that. In Korea, we would not expect to spend that kind of money at all, would probably be less than the Singapore property and significantly less than Japan. In countries like Vietnam, we’d expect lower construction cost there because labor and construction are both lower. And if, per chance, Taiwan would take place, it will probably look like something like Korea. So we’re pretty well in touch, through our development department, in every one of those places to understanding the exact economics involved from a construction standpoint. What we don’t know in Japan is what the tax rates will be or in any of these other countries at this point. So we can’t estimate the bottom line. But we can, in fact, estimate not only construction, but cost of operation, which we’re doing all the time.”

“Our CapEx, on an annual basis, for the products we have today, represents close to $500 million annually. That CapEx is divided into property maintenance, which essentially is keeping the products where they are, and a combination of other investments which involve profit opportunities that we find within the properties to upgrade.”

“as far as the ownership structure, we do not have any news at all, about partnerships or what have you, at this point. There’s been some rumors in the market about having a Japanese partner, all the way to Japanese majority that I’ve seen in print, but there’s nothing that our people on the ground know about any significant, really, indication as to what the Japanese ownership, if any, would be at this particular point in time. On the legislation, you probably know the same things we know. They’re talking about, by December, having the first phase of the legislation done. Our best knowledge, today is, we’re not sure. It could be December, it could be January. All the press has been favorable, but Japan has been trying this for many, many years and it’s not really — we really just can’t predict when that legislation will happen. And then there’s talk about a year to 2 after the legislation, lots of talk now, about 1 year, before a final decision. But once again, that is not known either. So at this point, we’re optimistic. I think everyone is optimistic that Japan will do something, but at the end of the day, I don’t think anybody is able to really predict it.”

“There’s no company in the world that has the convention experience like we do. Anybody, any journalist, any analyst, anybody in the politics, in government, says that the frontrunner by far in the close position is Las Vegas Sands Corporation, because we’re the experts in both of what they’re looking for. They’re looking to create tourism. Our Integrated Resorts, in the first 24 months, increased tourism in Singapore by 41%. They generally acknowledge, we have changed Las Vegas with our business model and convention base. We changed Macau, everybody in the government would acknowledge that. We’ve changed Singapore, and we can easily change any other city in which we have a MICE focus, MICE-based business model.”

“As you know it’s a challenging — collecting money in Singapore has always been something essentially, we [indiscernible]. We feel it’s difficult, we’re in Singapore. It’s difficult because we are dealing with mostly Mainland Chinese customers.”