Miscellaneous Earnings Call Notes 10.21.16

Hasbro’s (HAS) CEO Brian Goldner on Q3 2016 Results

Strong POS trends

“So you’re right, Drew. We are in fact seeing really strong POS trends entering the fourth quarter, particularly in the US. We saw a little bit of softness in POS in the late summer, July, August period. And then in September given the shift in Star Wars as well as the impact from Jurassic, that impacted our US POS. Internationally, we’re seeing very strong POS, up double digits, in Europe, up in Latin America, up year to date in Asia-Pacific. And then in the quarter in Asia Pacific, particularly in Australia, recently we’ve seen some retail issues with a retailer where there was just less inventory taken, and a little bit less of a sell-through and therefore impacted that HAPM number, the Asia-Pacific number because of Australia. So overall we feel very good about the POS trends year to date, and the POS trends going into fourth quarter, with a little bit of a note in the third quarter due to some of those timing shifts and some of the brands that have come down significantly versus year ago.”

Kansas City Southern’s (KSU) CEO Patrick Ottensmeyer on Q3 2016

Brian Hancock

Mexican customers very aware of peso changes

Chris, this is Brian. I would tell you that for the customers in Mexico, as they look at the peso, that impacts them significantly. And many of them have asked us price in peso and we have done over the last 18 months. There is still a significant portion of our businesses that is priced in dollars because it’s more of a global basis. But we watch that as they do as well. And we’ve tried to do everything we can to make sure that each other understand where the peso is, how it’s impacting the business.”

UnitedHealth Group’s (UNH) CEO Stephen Hemsley on Q3 2016 Results

Medicaid has been ACA’s biggest success

“Medicaid has been a very significant success of the ACA and wherever that has played out, those markets have actually been more stable and better performing. And Medicare continues to be a core program of the country and that funding for both Medicare and Medicaid is something that we have been advocating consistency and stability of it. Kind of those themes are what we have stayed with. I think commenting beyond that, particularly as new administrations take hold and so forth, our posture is to be very constructive about making the marketplace work most effectively and serving the most number of individuals and making that system simpler and more usable for everybody. So I think beyond commenting on that level, I don’t think we are going to get into what’s going to happen going forward on either a state basis or federal.”

Regions Financial’s (RF) CEO Grayson Hall on Q3 2016 Results

Large customers accessing capital markets to pay down bank debt

“Regarding business lending, average loans are down modestly on a year-over-year basis. We continue to experience muted customer demand and heavy competition in the business segment, particularly in the middle market commercial and small business sectors. We are also seeing some large corporate customers’ accessing the capital markets and are using these proceeds to pay down bank debt”

Barbara Godin

Mortgage delinquencies getting back to all time lows

“Yes firstly they’re all within our risk appetite so we’re very comfortable with what’s happening in the consumer book. What we see is real estate continues to improve in particularly we see home equity was down significantly this quarter. Mortgage is really back to with all-time low tracking along the bottom. Some of the other portfolios that we see indirect is pretty stable.”

Burberry FY 2Q17 Carol Fairweather – Chief Financial Officer

Did see a slight improvement in US but still challenging

“In terms of the U.S., in terms of our plans to turnaround, clearly the U.S. market does remain very challenging. It’s an 80% domestic market for us and both domestic and tourist remain down. That said, we did see, and I said just now, we did see a slightly improvement in Q2, but we are still down low single digit.”

Did see improvement in China

“Okay, so in terms of Chinese trends, Luca, what we are seeing is we just seeing an improvement in our second quarter, both at home and when they were travelling. So China, as I said was up mid-single digit or up double digit excluding the rationalization or evolution of the portfolio. ”

Morgan Stanley’s (MS) CEO James Gorman on Q3 2016 Results

I don’t think I’ve ever seen transaction levels lower than this. It has to change

“I think as having watched this business over two or three decades, I don’t think I’ve seen transaction levels lower than this. And just supposed against that that the business had record revenues is a testament to the managed money side of it, the banking side of it, the deposit side of it, things that frankly 15 years ago really didn’t exist to a highly dependent transaction activity. And the world has changed, investors have changed but we’re sitting on $2.1 trillion of assets. And their behavior has changed whether the transaction stuff picks up; I don’t know post the election, post the Fed moving it remains to be seen. My guess is over time it does, I feel just intuitively, it feels like a low but can it go low, I guess it could go low but probably there is a bias to moving up rather than moving down of the next couple of years that said more and more money is going to fee based accounts.”

SUPERVALU’s (SVU) CEO Mark Gross on Q2 2017 Results

Eric Claus

22 states lowered SNAP benefits

“In addition to deflation, Save-A-Lot has been adversely impacted by the reduction of SNAP benefits in 22 states in which we operate, the factor that is compounded by the fact that our level of SNAP sales is meaningfully higher than other retailers. These states have either lowered the amounts paid to individuals or barred them completely from receiving benefits, a fact that has negatively impacted customer accounts and basket size among our customers using SNAP. ”

M&T Banks’ (MTB) on Q3 2016 Results

You’re certainly starting to hear more people worry about concentration limits in CRE

“Well, I think you’re certainly hearing more people worry about the concentration limits. And I think that’s certainly a concern. I read through some of the other comments from other calls and I recognize that’s a concern. We obviously pay attention to that as well. And when we look at where we stand today, we feel pretty good about the headroom that we have there. But I guess the important thing for us is that we try to do business, particularly in the commercial real estate space, with customers with whom we have a long history of doing business. The equity that’s in the deals is still very strong and as strong as it was pre- the last recession or stronger than that.”

Commercial bankers feeling good about the demand that’s out there

“I guess from speaking with our commercial bankers across the region before coming on the call, they are feeling good about the demand that’s out there. You know, as I mentioned before, our pipeline is very, very strong. It’s in line with what we’ve seen in prior quarters. I think there is a little bit of a pause and I expect there will be a pause this quarter, as we go through the election cycle and people digest what that means and with the change in administration.”

Tupperware Brands’ (TUP) CEO E.V. Goings on Q3 2016 Results

Tupperware’s global sales force is 3.1m people

“We are holding our sales force size at 3.1 million. There is really no change from the second quarter.”

Danaher’s (DHR) CEO Tom Joyce on Q3 2016 Results

We have not seen another leg down in industrials

“Yes. Well, first of all, I think we have seen – while not the beginnings of growth on the industrial side, I think we haven’t seen – we have not seen another leg down. In other words, we have seen some stability. ”

Regions 4Q15 Earnings Call Notes

Regions Financial’s (RF) CEO Grayson Hall on Q4 2015 Results

Continue to closely monitor energy portfolio

“With respect to the economic environment, while the U.S. economy is still slow and steadily improving, there is a clear significant pressure from the global economy. Low oil prices continue to create challenges for certain industries while benefiting others. Consequently, we continue to closely monitor our energy portfolio.”

Reserves stand at 6% of direct energy exposure

“We continue to prudently build reserves which now stand at 6% of our direct energy exposure. As a result, we’re cautious, but we expect the future losses related to this portfolio to be managed.”

Focus in acquisition has been in the non-bank space

“Quite frankly, our primary focus has been on bolt-on acquisitions in the non-bank space. 2015, we did two relatively small transactions that you’re familiar with. We continue to look at the marketplace and we still think there’s opportunities in both our wealth segment as well as our capital markets segment and insurance segments for bolt-on acquisitions.”

David Turner

Net charge offs increased to 38 bps of loans driven by energy portfolio

“Total net charge-offs increased $18 million to $78 million and represented 38 basis points of average loans. This increase was primarily related to one large charge-off in the energy loan portfolio.’

We see the domestic economy being okay

“In our discussions with our customers, we still see the domestic economy being okay. We’re looking at 2%, 2.5% GDP and so there is this dislocation that’s happening here of late, but as we see our customers, we believe they need the products and services, the capital markets investments we’re making we think are going to be very strong and looking for that to continue and help us get to that 4% to 6% growth rate that we’re expecting in non-interest revenue.

Barb Godin

I don’t think anyone thinks that oil is going to stay sub 30 for any length of time

“if it’s in the $20 a barrel range and it stays there for an entire year, it could be in terms of charge-offs — this is not provision — could be up to an incremental $50 million and that is based on some back of the envelope versus anything precise, I would have to tell you. But again, that’s not our view and I don’t think it’s the view of the industry at this point that oil is going to stay sub-$30 for any length of time.”

Regions Financial 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Let me talk about energy

“I want to talk briefly about the recent declines in oil prices and its impact on our energy lending portfolio. We’re closely monitoring the price declines for direct and indirect impacts to our overall loan portfolio quality.
We’ve been doing this a long time
Our bank has extensive energy lending expertise dating back multiple decades and through numerous energy cycles. Our core exploration and production loans at present are well secured and provide a collateral cushion to withstand price declines.
We’re keeping a close eye, but not seeing any material weakness
In terms of broader impact, we have been monitoring markets such as Texas and the Gulf Coast for signs of weakness in employment and housing. However, we’re not seeing any material weakness past this point in time.

Continue to expect an increase in short term rates

“As we look ahead, we expect improved growth in the U.S. economy in 2015. Low energy prices should provide a tailwind to consumer spending and the manufacturing sector. However, an uncertain global growth environment does pose some risk. As a result, we continue to expect an increase in short-term rates in the latter part of 2015.

Net interest margin remained pretty stable

“Despite a continuation of low rate environment which exerted pressure on asset yields, both net interest income and net interest margin remained relatively stable with the previous quarter.

Expect mortgage production to be up vs. last year

“Based on what we know today, we expect mortgage production in 2015 to exceed that of 2014.

Expect favorable asset trends to continue but volatility is expected

“based on what we know today, we expect favorable asset quality trends to continue. However at this point of cycle, volatility and certain metrics can be expected.

If the 10 year yield stays here we would expect margin pressure

“with rates at current levels, the net interest margin would experience gradual pressure over the year.
For example, if the ten year treasury yield would remain in the 175% to 2% range throughout 2015, we would expect 10 to 12 basis points of margin pressure.

We still think the Fed is raising rates mid year

“ if you look at where we think the Fed’s going to be towards the middle of the year, we think you’ll start seeing some pressure to increase short term rates, and so we haven’t abandoned that, what we wanted to try to do is put some sensitivities and some extent that that does not happen.

Customers have a desire to borrow online

“all the things we’ve discovered through some of the product innovation we’ve had over the two last two or three years is that the desire for customers to also have the ability to borrow money online and also borrow money at point of sale and so we are introducing a number of new online capabilities as well as some partnership capabilities we have on a sale.
That’s an activity that we’ll be making announcements on as the year progresses and it’s just a way to extend our brand further into market places that we are as dominant today

Third party costs are easy to get rid of

“we think we can get that down and third parties are one of the easiest — third party expenditures are one of the easier ones to deal with because you don’t have to sign a contract.

Loan originations pristine credit quality

“I think what’s going on the books today is some of the most pristine, incredibly we’ve had in a long time

Deep water companies have longer to play out

“marine transportation companies that are serving the deep water, we think that those companies are operating in an environment that has a much longer to play out.

Small number of customers, good experience, good liquidity, good shape

“A lot of it has to do with where the price ultimately bottoms out and then the length of time that it will stay there, but based upon again good liquidity, good experience amongst our management teams, access to different forms of capital and just the credit profile and small number of customers that we have, we say, we feel pretty good about our exposure today.

Lower rates help refianance, but hurt servicing business

“We could see — we could see an opportunity for refinance activity helping our mortgage business, but also that negatively impacts us on the mortgage services rights.
So we have a little bit of a built in economic hedge to some degree there. We need to still see how that plays out over the course of the year.

Energy book is 41% hedged through 2015 and 17% through ‘16

“About 41% through 2015 and an additional 17% I think through 2016.

Having all your key processes in place to make acquisitions is important

“I think ensuring that you have all of your key processes in order to participate in acquisitions is important. BSA/AML has been imported to our country for a long time. It will continue to get the time and attention and it’s incumbent upon us to have all the controls in place.
We invest an awful lot of time and attention in ensuring that and we feel like we have a very robust program relative to BSA/AML and — but that mean we can’t stop here. We have to continue to invest and continue to be diligent in terms of those processes, but we think we have a solid program today.

Regions Financial 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Saw loan demand pick back up in September and continue to strengthen into 4Q

“we saw a moderation of loan demand in the July and August and then we saw loan demand strengthen to some degree in September. We continue to see that strengthening of loan demand into the fourth quarter.”

5 million customers

“we are servicing a little over four million households today. We have about a little over five million customers. ”

Small business formation has been down this year

“let’s take owner-occupied real estate. That generally is our small business customer. And small business formation has been down in 2014 quite a bit. And we really need to see and want to see the demand from that customer. It is our bread and butter.”

The economy is improving

“I think that, we are seeing the opportunity to grow our business. We are seeing in the markets we operate in, given the strengths of the market that we operate in, we believe we have got an opportunity to grow our business. And we do believe that while the economy is improving slowly, it still is improving. And we are seeing signs of that improvement across all of our markets.”

Third quarter was slower, but we’re optimistic

“I think the third quarter was slower, from a loan demand, than we had anticipated. But if the trend continues, we are more optimistic for the fourth quarter, knowing what we know today. So all that being said, as optimistic as we all are, we still have to be prudent and I think that we have to have this balanced approach to both investing to grow but looking for efficiencies around the company that allow us to, if you will be, to be able to hedge that forecast.”

slower loan growth may also be due to the credit culture we’ve tried to build

“I think also given what this organization has gone through over the past several years, we are just very disciplined, very prudent about credit underwriting at this juncture. And so we would attribute part of our differential between some of the peers to be the credit culture that we have tried to build at this company.”

P2P lenders inexplicably get to play by a different set of rules

“we have every one of these, if you will, technology based lending solutions, whether its peer-to-peer or whether it’s just that an origination position. We have taken a hard look at every one of them and I think it’s a good question. Quite frankly, we have got a number of competitors, that their rules of engagement are different than ours. And so you know today in our environment some of that type of lending, I just think we have to stay away from.”

A lot of funding products are moving out of the traditional banking space

“But a lot of financial products are moving out of the traditional banking space and we have got to learn to compete with them but compete under the rules that we operate under.”

Regions Financial at Goldman Sachs Financial Conference

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.

“It is clear that customers like to bank using multiple channels, multiple options as they choose. Approximately, 95% of our customers use multiple channels. Branches, while at the topic of the debate across industry continued to be important, continued to be relevant as banking still is a people business.”

“in the third quarter, almost every loan category in both business and consumer lending experienced growth. And year-to-date, approximately 65% of our geographic markets, the communities we operate in are experiencing growth.”

“Rising interest rates are expected to be beneficial to our net interest margin as our assets sensitive balance sheet reacts favorably.”

“Net charge-offs in the third quarter reached lowest level more than five years as net losses declined 56% from the prior year.

Non-performing loans continue to decline and inflows of non-performing loans have reached lower levels”

“we’ve continued to see loan demand improved albeit modestly. But it’s broader today than it was a year ago. It’s broader from a product perspective and it’s broader from a geographic perspective.”

“We believe ‘14 in lot of ways is similar to ‘13. We hope we’re wrong. We hope the economy accelerates faster. We hope we get a more favorable interest rate environment. We’re not betting on that.”

“As you remember, we reentered the indirect auto lending business. We reentered the credit card business. We tried to diversify revenue streams from our credit perspective”

“So the auto space is doing well for everybody. The forecast for all auto sales is up to about 15.8 million units, so we are getting our fair share of that. We’re not compromising on price and structure. We’re getting good part of loans as well in the books.”

“over the last five years we closed 16% of our branches, we have gone through and done a lot of consolidations over the last four, five years. We will do additional consolidations, but I will tell you the low-hanging fruit is gone. We have recently, this month announced we will consolidate another small number of branches, about 30.”

“significant improvement year-over-year, but non-performing loans have continued to trend down but still high, criticizing classified loans continue to trend down, but still high from what you would consider normal for us and our position as a result continues to be high.”

“certainly today our customers are in a better financial position than they have been in years on both the business side and the consumer side of our balance sheet.”