McDonald’s 4Q16 Earnings Call Notes

Steve Easterbrook

Strong results in China

“Let’s turn to the High Growth segment, where performance was driven by strong results in China. We saw increases in comparable sales in the fourth quarter across all markets, resulting in a positive comp of 4.7% for the segments. For the full year, comparable sales were 2.8%. Notably, China had a strong quarter with comparable sales of 7.9%. We ended the year with solid momentum, due in part to contributions from the core menu and the strong value offerings.”

Last year’s Q1 results included a leap day

“, we are dealing with varying macroeconomic pressures and general economic volatility in many markets, including Russia and France. In Q1, well, results have included a leap day, favorable weather in many places around the world and a continued benefit from the launch of All Day Breakfast in the U.S. ”

Probably going to bring pricing back carefully

“It is a delicate balance, 2016 was a – there was a lovely cycle from the cash flow with commodities at an all-time low and probably as aggressive as we would be want to be on pricing. I think we are going to bring – you will see us just bring just carefully bring pricing back more in line with food away from home, which we begin to see now.”

We’ve got to simplify

“Yes. No. Thank you. Thanks David. Speed of service has declined slightly, it’s handful of seconds slower by the end of ‘16 and we were by the end of ‘15. So I guess there is a number of things we are trying to do. You will hear me talk about or heard me referring the thoughts around net simplification where if we are going to introduce new menu items, new ideas, we got to reduce the complexity by at least, if not more than the same amount. So our operations teams, particularly in the U.S. are deeply focused on that and just simplification isn’t just on the menu, it could be on different operational processes.”

Kevin Ozan

Food deflation will probably not be as favorable as it was in 2016

“Hey, Nicole. Thanks for the question. Yes, we do expect kind of the food at home, I’ll call it deflation to ease or not be as favorable as it was in 2016. The IEO industry is still projected to be relatively muted in 2017. But I think what it does is, as you know, we look at various factors when we look at pricing. We will look at food-away-from-home inflation and food-at-home inflation and competitors to determine the right kind of approach to our pricing. I think it gives us an opportunity to potentially gain some customers back that are right now eating at home.”

McDonald’s (MCD) 3Q16 Earnings Call Notes

90% of restaurants have self-order kiosks in Canada

“In Canada… We now have dual point service and self-order kiosks in almost 90% of our traditional restaurants” Steve Easterbrook – President and CEO

 

Self-service kiosks and “Experience of the Future” will be substantially integrated into US market by 2018 or 2019

“In terms of modernized restaurants, it’s just over 50% of the U.S. state is modernized; we’ve got some work to do to complete that. And then of course within that we want to layer on top of the other elements, the broader [ph] elements, consumer facing elements of Experience of the Future, integrating that into the self order kiosk, offering different ways that customers can be served, they can place their orders, they can customize their food. So, we expect to start seeing that wrapped up through 2017 and literally the minute you convert the restaurant, we see a sales lift. So, yes, it’ll be a contributor, but we’ll probably be getting that full rate through 2018 and 2019 as well, which I think is a very strong program.” Steve Easterbrook – President and CEO

 

Commodity prices are favorable, but labor costs are rising globally

“While we continue to benefit from favorable commodity costs around the world, we continue to experience rising labor costs in many of our markets.” Kevin Ozan – CFO

 

Spread between eating at home and eating out is larger than it’s been in 30 years

We are also mindful that the current 450 basis-point GAAP between the costs of eating at home versus dining out is the largest spread in more than 30 years and maybe impacting consumer behavior. We continue to track these metrics and expect our overall menu price increase at year-end to be more in line with food-away-from-home inflation. Kevin Ozan – CFO

 

Restaurant industry is experiencing a squeeze because of broader economic issues, not just drop in cost of home dining

“I think there are broader macroeconomic issues of consumer confidence and just uncertainty of wage increases, the slight squeeze on discretionary spend with gas prices aging back up and healthcare costs going back up. So, I think those are sort of things that we see affecting customers and basically the spare cash they have in their pocket” Steve Easterbrook – President and CEO.

 

Mcdonald’s position in lower-end dining offers a buffer from the drop in cost of home dining

“The gap clearly plays a role but it’s not the reason for the broader softening, it’s not the sole reason. So, I think it is an element. But when you are lower average check business like we are, I don’t think that magnifies out the same as if we were a mid scale dining or fine end dining. So, yes it’s probably in the mix but it’s certainly doesn’t explain.” Steve Easterbrook – President and CEO.

 

Stability of McDonald’s value menu differentiates it from the more variable promotional offerings of the industry

“I’d say you can see out there, there is still some promotional offerings certainly around the industry. I think all of us certainly including us would like to see kind of just a stable platform where you can — that’s why we put McPick 2 in. The idea is to have an ongoing value platform that customers can count on and not have to come up with some discounted promotion, if you will, every now and then.” Kevin Ozan – CFO

 

Terror and security concerns have slowed tourist traffic and even domestic traffic in France

“we know that GDP is down in France but the different dynamics and given some of the situation and the security, terror situations they faced there, it really is creating some very significant dynamic changes in that market. Tourism, which has always been a substantial part of this fuel of the economy in France has really softened. And you see it in the hotel bookings and you can see impacted in certainly the more tourist areas where it’s the Southern France or Paris within our business where we do have a heavy concentration of restaurants. But you’re also seeing effect of the way that consumers live their lives, French consumers. So, there is a slight reticence to go into high density tourist areas because they’re slightly concerned at environment.” Steve Easterbrook – President and CEO

 

Delivery plays a substantial role in Chinese market

“China is a challenging market… As they are seeing, just as one example, they now have a substantial part of their business is the delivery business. And not just — originally we set up and established our own McDonald’s delivery service and that proved to be very successful. We’re now integrating into third party delivery providers and that has way further accelerated our momentum in business and customer satisfaction, as more people are getting used to ordering and eating at home.” Steve Easterbrook – President and CEO

McDonald (MCD) CEO Steve Easterbrook´s Interview With Fortune

A competitive industry and a customer base living under uncertainty

“I think there’s a lot at play at the moment. First of all just the [restaurant] industry anyway is very competitive. There’s a lot of businesses that are working hard, who are at the top of their games. Therefore it’s always going to be a market share fight. But then you’ve got to think about the consumer. The consumer is going through a period around the world of uncertainty—whether geopolitical uncertainty, economic uncertainty—and that makes them a little nervous as well. And then there’s a number of dynamics at play, but ultimately at the end of the day if we can deliver a better experience day in and day out in our restaurants, we’re confident we can win that market share fight.”

On the turnaround strategy

“It was a fairly straightforward turnaround structure that we devised. The first pivotal piece was to get the business back to operating growth. We have now delivered four quarters of growth across all four operating segments around the world..”

http://fortune.com/2016/08/20/mcdonalds-ceo-easterbrook-transcript/

McDonald Earnings 2Q16 Call Notes

McDonald’s (MCD) Stephen J. Easterbrook on Q2 2016 Results

The most recent customer satisfaction scores reflect improvements in seven of our nine largest markets

“Customers are noticing the steps we’re taking to build a better McDonald’s. The most recent customer satisfaction scores reflect improvements in seven of our nine largest markets. In the U.S., we are seeing further evidence of improved brand perceptions according to a recent YouGov report that measures consumer perceptions across 1,400 brands. McDonald’s was ranked fourth most improved brand across all brands measured, and the most improved within QSR.”

Recent softening of the IEO industry

“Beginning with the U.S., comparable sales for the second quarter increased 1.8%. Whilst modestly positive, this growth was not as strong as the last two quarters. This is due, in part, to the recent softening of the IEO industry, which experienced minimal growth for the trailing 12-month period ending in May at only 40 basis points”

We’re expanding our delivery business

“In addition, we’re expanding our delivery business by tapping into growing digital channels, as well as other vendors, to offer added convenience to Chinese customers.”

Kevin M. Ozan

80% of our global restaurants are franchised

“With more than 80% of our global restaurants franchised, the largest driver of operating income continues to be our franchise margins.”

Benefiting from favorable commodity costs but facing rising labor costs

“While we are benefiting from favorable commodity costs around the world, we are facing rising labor costs in many of our markets. As a result, we are carefully balancing price increases with a focus on maintaining our strong value proposition, which remains a key pillar of McDonald’s brand, to drive guest counts. In the U.S., second quarter pricing year-over-year was up about 3% compared with food away from home inflation of 2.6%.”

McDonald’s 2Q16 Earnings Call Notes

McDonald’s (MCD) Stephen J. Easterbrook on Q2 2016 Results

Expanding all day breakfast menu

“Over the past few quarters, we’ve heard from customers looking for more choice in the All Day Breakfast menu. Those with muffin sandwiches on the menu asked for biscuits. Those with biscuit sandwiches on the menu asked for muffins. We listened, worked through the operational challenges, and this fall, we’ll begin offering muffins, biscuits and McGriddles all day in all U.S. restaurants.”

Brand is improving

” In the U.S., we are seeing further evidence of improved brand perceptions according to a recent YouGov report that measures consumer perceptions across 1,400 brands. McDonald’s was ranked fourth most improved brand across all brands measured, and the most improved within QSR.”

Comps not as strong as previous quarters because of softening industry growth

“Beginning with the U.S., comparable sales for the second quarter increased 1.8%. Whilst modestly positive, this growth was not as strong as the last two quarters. This is due, in part, to the recent softening of the IEO industry, which experienced minimal growth for the trailing 12-month period ending in May at only 40 basis points.”

Consumer slowdown across most consumer segments

“on the industry, well, clearly, it’s been fairly well documented on the consumer slowdown across most consumer segments, to be honest with you, through the second quarter. And therefore, we are very mindful of our competitive position, the competitive gap. So it was important to us that we maintain that competitive advantage and fought for market share. We’re not immune from what’s happening in the outside world at all, but nor are we letting that deflect our focus on what really matters to us and our customers.”

There’s better value to eat at home currently

“I think the general sense is there’s a couple of things at play. I mean, first of all, there is a widening gap between food away from home and food at home, where the commodity decreases are being passed through by the grocers. So the food at home, there’s value to be had for families there, whereas eating out, there is a price inflation environment. So that’s a small part of it.”

Broader level of uncertainty in consumers’ minds

“I think generally, there’s just a broader level of uncertainty in consumers’ minds at the moment, both trying to gauge their financial security going forward, you know, whether through elections or through global events, people are slightly mindful of an unsettled world. And when people are uncertain, when families are uncertain, caution starts to prevail and they start to hold back on spend.”

We are affected by lower spend elsewhere

“clearly, we generate a lot of our own business directly, but also we do benefit from people moving around, going to the malls, driving around, going on vacations. And if people are reining in their spend across broader categories, that will have a little bit of a flow-through to us as well.”

Getting close to lapping all day breakfast launch

” From the All Day Breakfast launch in October of 2015, we’re now almost lapping that, that time and it’s continuing to give us strong incremental sales, strong incremental margin and cash flows and incremental visits as well, and the same with McPick 2. So I think these are now platforms that are just going to continue to work hard for us at that kind of steady-state ongoing level.”

Kevin M. Ozan – Chief Financial Officer & Executive Vice President

Facing rising costs in many markets

“While we are benefiting from favorable commodity costs around the world, we are facing rising labor costs in many of our markets. As a result, we are carefully balancing price increases with a focus on maintaining our strong value proposition, which remains a key pillar of McDonald’s brand, to drive guest counts. In the U.S., second quarter pricing year-over-year was up about 3% compared with food away from home inflation of 2.6%.”

McDonalds at Bernstein Conference Notes

We have a number of legacy comparative advantages

“our iconic brand is clearly an advantage, we are one of the most, if not the most recognizable valuable brands in the world. Our size and scale makes us comfortably the biggest player in a highly fragmented $1.2 trillion global informal eating out category. Our geographical diversification gives us a broad base of markets with different economic and social conditions. And our franchising model is also a competitive advantage. Our independent local owner operators get us closer to the customers in the communities we serve and unleash more entrepreneurial spirit, risk taking and innovation.”

Next phase of the turnaround will be to strengthen and lead

“The next phase of the turnaround will be to strengthen and then to lead. I’m certainly energized by the opportunities ahead. We will be evolving the menu the right way, which will be balancing our core menu, new products and customization. And like we have done with McCafe around the world, we will be creating platforms that sustain and provide sustainable growth, whether that’s value, All Day Breakfast and digital strobe technology strategies.”

We see technology as an enabler and driver of growth

“We truly see technology as both an enabler and a driver of growth into the future, and as we look to the longer term, we really see technology as being an opportunity to really allow us to personalize the entire McDonald’s experience for our customers. ”

Redefining what it means to get customers what they want and when

“We are redefining what it means to get customers what they want and when they want it.”

Technology opens up new service paradigms

“Service to us is a huge opportunity, because technologies suddenly provides us with a whole range of ways that we can put more choice and control in the hand of the customers. So, instead of them having to fit around our business model, which is either line up at the front counter in a way that we prescribe or go for the drive in a way we prescribe. That’s really the only two service options we provided for 60-years.

In the next three to four-years, there could be another four or five different ways that customers can choose to order and you put control in their hands. That could be through, if it’s family with two young kids and you want to go to self order kiosks and take more time putting the family altogether and having some fun with that.

You can do it that way, you can maybe order ahead on your mobile App and save your favorites, and just scan it over the kiosk, sit straight back down and we will bring the food out to you. so it becomes a very seamless experience. So those we say, if we can enhance the customer experience, modernize it and make it either more fun or more convenient for customers, we see that as being another platform that gives sustaining growth.”

The order accuracy is going to shift markedly higher

” the order accuracy is going to shift markedly higher as there will be no miscommunication between the ordering and the person receiving order would be pre-order and it just goes straight into our operational system. So we see speed advantages, we see accuracy advantages, we see smooth and more relaxed customer experience, quite all pieces together that’s what we are working on.”

Over the last 60 years pretty much all good ideas have been generated at the market level

“the reality is over 61, 62-years, pretty much all the good ideas have been generated at a market level. That’s where we are closest to our customers, that’s where we are more nimble, that’s where the innovation happens and really our role in the center if you want to describe that, is to make sure we got the right talent in the markets just delivering that kind of incubation of ideas and nothing smart at the sport level.”

Our size puts strain on the supply chain when we make changes

” I think for a fair while we have used sometimes our size and our scale as a barrier to stop innovating as food, because of our size, the pressure we do put on not just the our supply chain, but industry as a whole sometimes when we make significant moves. Is huge, the supply can’t necessarily meet demand. I mean Cage-Free Eggs is a great example. So yes, we made a commitment, so over a period of time we will move to 100% Cage-Free Eggs simply because the supply isn’t there presently.”

McDonalds at Bank of America Conference Notes

Kevin Ozan — CFO

Working to develop a national value platform

“we are focused on working with our franchisees to develop a national value platform that will help have an everyday predictable value platform going forward. Those are the key drivers of our sales that should continue to help us grow sales in the near-term.”

Breakfast was an accelerator of momentum

“All Day Breakfast certainly was a catalyst I would say and I will call it an accelerator of momentum. It’s certainly been well received by customers. It was the number one customer request that we have gotten over the last several years. So, it really was a focus on meeting customer needs. ”

Customers have higher expectations related to quality of ingredients these days

“I think it’s a longer term strategy of knowing that our core menu items are significant part of the menu, and customers have higher expectations these days related to quality and ingredients in those food items and so we are focused on that for the long-term versus just taking advantage of a short-term commodity swing”

It’s a competitive marketplace right now

“I think it’s safe to say it’s a competitive marketplace right now. The positive is that if I think back to the fourth quarter of 2015 that we grew obviously our sales. Our sales were pretty strong in the fourth quarter, but the QSR market also grew. And so that’s a positive. It isn’t like it’s a zero-sum game that people are just trading off customers, but the market is still growing.”

Trying to figure out mobile app pick up

“you have got to figure out if someone orders on their mobile app how do they pick it up, because they are not going to want to get into the same line in drive-through that everyone else is in. So, we have got to figure out from an operational standpoint how can we best deliver that order than to someone who has ordered on their mobile app.”

Food at home inflation is a limiter to pricing power

“I mentioned that we look at food away from home inflation. I should also mention the other thing we certainly keep an eye on is food-at-home inflation, because if food-at-home inflation gets to be too low or deflation, the grocery store becomes our competitor just as much as any other restaurant, if you will. So, we keep an eye on both of those as we think about and look at pricing power. We will keep an eye on both food away from home inflation and food-at-home inflation to make sure that we don’t get too much out of line with that.”

Food inflation isn’t that high

“It’s relatively benign just like all the other food. It’s relatively low, I guess, inflation and so that’s why I say there is a risk of us having the pricing power that we are hoping to have, because both food away from home inflation and food-at-home inflation isn’t very high these days.”

I think the economy is doing fairly well in general

“I think the consumers right now I think are feeling okay, obviously with gas prices down, consumers I think generally are feeling alright. Having said that, we don’t always see a direct correlation between gas prices and our business, so I know some people think that there is a big correlation as gas prices come down, the QSR industry and McDonald’s specifically will see an impact in sales. We haven’t seen a direct correlation with that other than on specific highway stores, I will say, where you see people traveling more by car. But I think in general, what we are seeing consumers are spending a little bit and feeling okay, I think right now, they are certainly a little cautious with – unemployment isn’t too bad right now. The economy I think in general is doing fairly well. People aren’t sure what to make of the political landscape and I won’t even try and enter that arena, but I think in general, consumers are feeling okay. And I think that, that’s contributing to our business certainly. The weather also being positive over the last 6 months around the country probably has helped consumer psyche and our business also.”

We are not the low cost provider in China which makes it a more difficult competitive environment

“It’s a competitive environment in China. It’s very competitive there, more so from local Chinese QSRs even than globally branded QSRs. So, it’s very competitive and we are not the lowest cost provider in China. It’s a little bit different environment than here in the U.S. We are a little bit higher priced compared to some of those Chinese QSRs. And so it’s a little bit more difficult competitively there, but we are extremely bullish on long-term growth aspects.”

It has gotten more competitive in China in the last couple of years

“Yes, it has gotten more competitive. And again, I think a lot of it is the local Chinese QSRs. You have a lot of street vendors there that are competitors. There is a lot of choices there and a lot of low cost food choices that make competition there difficult and competitive. And it has gotten more competitive over the last couple years I think is fair to say.””

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.”

McDonald’s 3Q15 Earnings Call Notes

Our turnaround plan is working

“our turnaround plan is working. Customers are beginning to respond to the actions we are taking and this progress is reflected in our third quarter results”

Goal is simplification

“Our goal is net simplification. We have established screens to evaluate operational complexity versus the expected impact on the customer and the business. And ultimately, we want to focus our efforts on fewer, bigger decisions would generate bigger rewards. ”

+4% comps

“third quarter global comparable sales were up 4% reflecting positive comparable sales across all segments and positive guest counts in all segments except the U.S.”

All day breakfast has been a successful rollout

“we launched officially nationwide on October 6, and I would say the enthusiasm levels from customers and from our teams and the restaurants are high. It’s been a successful rollout.”

It’s been easier than people feared

” the operators have been really again infused at the fact that this has created. It’s been a lot smoother from an operational perspective than perhaps people had feared. ”

We are running better restaurants

“we are running better restaurants than we were a year ago. So if – and that is ultimately what customers respond to. And then as we innovate around the menu and have promotional activity and have fun with that, that would increment the sales, but running better restaurants day in and day out.”

We need a 2-3%+ comp to maintain margin. Commodities really aren’t the concern right now

“we generally need a 2% to 3% comp in the U.S. to maintain margins. With these additional labor costs, certainly the comp needed to maintain margins in the near-term would be higher than that. Commodities right now aren’t a big pressure on us. And so commodities really aren’t the concern. It’s more of a comp needed to kind of overcome these near-term labor costs.

Cultish appeal to breakfast in college towns, but you’ll see people eating breakfast mid afternoon too

“if you are in a college in town, you are seeing a lot, a lot of activity into the evenings and the overnights around breakfast items that is just cultish amongst the students, but you can go directional mid-afternoon to see a more mature group that we are sitting there who can now enjoy the product with Egg McMuffin mid-afternoon and having to watch – clock watching and try and make the 10:30 a.m. deadline.”

We’re focusing on food quality too but success is coming from focusing on day to day operations

“I don’t want to underestimate just the investments we are making in food quality. The investments that consumers care about such as the announcement to go to free range eggs, for example, such as the quality cues that you deliver with a buttermilk chicken. I mean, that is getting strong. But underpinning it and I will never ever move away from this, any market that’s successful around the world is because they are focusing on the day-to-day operation and just delivering at that moment of truth for the customer.”

McDonalds 2Q15 Earnings Call Notes

Regain trust and loyalty

“Our number one priority is to return critical markets to sustainable growth by regaining customers’ trust and loyalty”

Disappointing results by positive momentum

“While financial results remained disappointing in the second quarter, we are seeing early signs of momentum.’

Results in the US have been disappointing

“Let’s now transition to the U.S., which represents over 40% of our business. Results here have been disappointing. We are committed to changing the trajectory of the business and are resting to nearly 3 years of decline. We are working to promote discipline back in the business, adapt more quickly to changing trends, offer more compelling value across the menu of bringing new energy and tenacity to simply running better restaurants.”

Focusing on customer service

“we are enhancing the customer service experience. This starts with the basics. We have reduced the number of menu items in restaurants to make it easier for teams to deliver better service. We are improving the speed of our drive-throughs with simplified menu boards.”

Implemented new cooking methods

“We have implemented new cooking methods in our restaurant, so we are seeing strong growth changing how we sear and grill our beef to deliver hotter, juicier sandwiches”

New products are quality over quantity

“I don’t want to lose sight of the fact that toasting of buns, better searing of beef, taking care of the dressings and the packaging and the rest of it, that gets noticed by customers. With regards to, if you like, new product development, I would say, at a national level, we will be looking at, if you like quality over quantity. It’s not about having lots of national LTOs, because that does complicate the business. ”

There certainly are labor pressures around the world

“there are certainly labor pressures around the world from a wage standpoint. I don’t know that we think of it as kind of an undue pressure anything that’s going to harm our business. But certainly, labor costs on a pressure right now. In several states, as you know minimum wage has increased. For us, margin is essentially our top line gain. So we need to grow sales. Certainly, we need to grow comp sales in order to grow our margins. And the specific labor moves that we have taken are what we believe we should be doing as a business to make sure that we attract, recruit and retain the best employees we can for our business.”

We’ve been losing the value customer

“if you look at our product mix and where we have seen a loss in the competitive gap open up is we have lost of the value end of our menu. So breakfast remains very resilient. So it’s really through the daytime daypart where we have seen that gap open up over the last probably 12 to 18 to 24 months. “