Miscellaneous Earnings Call Notes 10.28.16

SunTrust Banks’ (STI) CEO Bill Rogers on Q3 2016 Results

Regulatory and compliance costs are not likely to abate

“But in terms of overall regulatory and compliance costs, if I look forward, John, I don’t think that in the short- to medium term I would think of regulatory costs in general abating or declining. I think we’re in an environment, where we would expect regulatory and compliance costs to be generally stable or increasing over time. And just the environment that we’re in, I don’t see realistically that anybody in the industry is going to see regulatory and compliance costs fall off.”


Potlatch Corporation’s (PCH) CEO Michael Covey on Q3 2016 Results

Eric Cremers

No rollover in land pricing

” Pricing remains firm. There is a lot of money on the sidelines looking to invest in the asset class. People have an expectation that prices will move higher over the next several years as we continue with this housing recovery that generally gets built into the models that are used to value timberland. And in a low interest rate environment high timberland prices are supported. So we’ve not seen a rollover in timberland pricing at all.”

Lumber prices well supported here. Moving from mid to upper 80s capacity utilization”

” As I think Jerry mentioned in his opening remarks, we might see a real slight rollover in lumber pricing in Q4, and that’s consistent with what the external pundits are forecasting maybe 1% or 2% rollover in pricing. You know generally speaking markets are well balanced, our order book is solid. As you know we sell forward our lumber production. So we’re out into the first or second week of November at this stage. And so we feel very good about where lumber markets are at, at this stage of the game. Just the general backdrop here, if you think about it, we’ve got demand, which has remained strong. Of course the housing market data, there is starts data is volatile from month-to-month. But generally we’re seeing starts increase, we’re seeing strong R&R repair in the model activity, and we’re seeing strong commercial and industrial activity as well. And with industry wide capacity utilization now moving up from the mid to the upper 80s and supply-chain inventories as Mike had mentioned remained very well, we think, lumber prices are well supported here.”


Brown & Brown’s (BRO) CEO Powell Brown on Q3 2016 Results

Hurricane Matthew will have little impact on rates

“We believe Hurricane Matthew will have limited impact on rates, if any. There will be more discussions around flood and wind deductibles, rate for cat property continued downward affecting retail, wholesale, and national programs, and that will continue into Q4 and into 2017.”


Honeywell International’s (HON) CEO Dave Cote on Q3 2016 Results

A favorable setup for 2017

” Darius and Tom will provide more details about 2017 during our annual outlook call in December, but we have a favorable setup. The fourth quarter momentum continues, our long cycle businesses are improving and our inflections start to kick in.”

Tom Szlosek/Dave Cote

A salesperson isn’t productive in his first year on the job

“A salesperson really isn’t productive enough in his first year on the job, so we have to ensure we have enough sales employees in place today to support tomorrow’s business… when you hire salespeople there’s training and familiarization that has to go on. So they’re not immediately productive. It’s the sort of thing that shows up in the future.”


Heidrick & Struggles International’s (HSII) CEO Tracy Wolstencroft on Q3 2016 Results

Rich Pehlke

Improvement in September/October

“we can’t really point to one thing because as we saw July and August kind of soft we really did worry a little bit about was it a sign of some kind of a cyclical trend or a movement but you know September bounced back pretty well and so – and as we talk to our folks and see what’s out there and see how October is progressing. You know there is nothing we can really point to that says that you know there is one – there is one driving factor. So whether or not it could have been client decision caused by things like Brexit et cetera certainly is certainly one of the factors that would have fallen into play but there isn’t any one thing that we can put to, and I don’t know if you want to leverage.”


Zions Bancorp. (ZION) Q3 2016 Results

Harris Simmons

It was a softer quarter for C&I loan demand than we would have hoped for

“I think that’s consistent with what we saw during the third quarter. The third quarter has generally been a softer quarter. You get kind of the summer vacations and everything else baked into it, but this was softer than I think we would have expected. And so we’ll see what happens through the remainder of the year. But it was a softer quarter in C&I than we would have hoped for.”


Brinker International (EAT) Q1 2017 Results Wyman T. Roberts – Brinker International, Inc.

Challenging times across casual dining

“Just as we said last quarter, these continue to be challenging times across casual dining. We’re already seeing some of the weaker players struggle with their viability in this choppy environment. ”

There are some examples of concepts that are shrinking

“We don’t have great metrics around capital spending in the category. But there are some examples of concepts that are shrinking. And in some numbers that are reasonable, we’re talking now in tens and hundreds. So that does make a difference. We’re also hearing from some competitors a dial back, which I think is again encouraging that people are starting to say, hey, listen let’s address the overcapacity and slow things down a little bit. And I heard something recently from a competitor that the expectation was that would also maybe take some of the steam off some of the real estate market, which has not really come back in our opinion kind of represented the softer overall economic situations out there. Still paying a pretty good premium in this environment we think for real estate. So all of those things I think bode well for getting the economics right and getting the supply and demand situation more in line”


United Technologies (UTX) Q3 2016 Results Gregory J. Hayes

China Otis sales down 10%

“We also continue to make good progress at Otis. Our China new equipment orders and units were up 2% in the third quarter and 3% year-to-date. This is in the face of an overall market, which is down more than 5%. I would remind you though, the pricing pressure remains intense, so despite unit orders being up, new equipment orders on a sales basis in China were actually down 10% in the quarter. A tough market right now, but we remain focused on increasing our installed base and converting those units into our service portfolio, which will deliver recurring revenue for decades to come.”

Have seen a slowdown in construction activity in UK

“In Europe, we have seen a slowdown in construction activity in the U.K., we think as a result of the Brexit vote, but the rest of Europe appears to be improving slowly, more than compensating for the slowdown in the U.K.”


Freeport-McMoRan (FCX) Q3 2016 Results
Richard C. Adkerson

It’s clear there’s going to be a need for copper

“Is just, unless you see the world really turning upside down economically, it’s clear that there is going to be a need for copper that’s going to require a significant price increase to justify the spending, and that’s why we feel very good about our long-term strategy.”]


C.H. Robinson Worldwide (CHRW) Q3 2016 Results Andrew Clarke

Carriers raised rates when Hanjin filed for bankruptcy

“Hanjin filed on August 31 and what happened shortly thereafter is the other carriers that remained in the Trans-Pacific eastbound lane began to raise rates. I think what happened then shortly thereafter was that they doubled them. They were up as high as $750 as I mentioned earlier, $750 to $900 a box. Now, we weren’t able to immediately pass those rate increases along to our customers. As I mentioned, our account managers are out there right now having those discussions with our customers to reflect the rates that are now in place in that trade lane. We would expect the impact to trickle into the fourth quarter, but not much beyond that.”


Applied Industrial Technologies (AIT) Q1 2017 Results
Neil A. Schrimsher

October a little softer than September

” I’d say on our sales per day trends – did include expected seasonal softness in July with improvements then in August and even stronger in September. Order trends for October, as expected, developing a little softer than September. However, we still have a handful of days to go. And I’d say year-over-year October is just kind of down low single-digits, which, again, is what we expected looking at the comparables. And, again, that’s got still a handful of days for us to positively impact it.”

Mark Eisele

Foreign exchange rate impact down to zero

” That’s exactly the expectation. If you look at foreign exchange rates, let’s say, for September and if those would stay relatively stable through December, when we look at our overall sales, we would expect to have a 0% impact of currency translation in the December quarter. Then if you keep going on through the rest of the fiscal year, you’d actually see a small positive impact probably in the March quarter and then more flattish in the June quarter. So, our view is, for the entire year, we may end up at virtually zero on FX. Obviously, it depends upon how the rates move from today forward, but that’s our perspective. We’re seeing some stability.”


Range Resources (RRC) Q3 2016 Results
Jeff Ventura

Supply and demand for gas could be more balanced into 2017

“On a macro level, there are signs that later this year and into 2017, supply and demand will be more balanced and pricing could improve. We expect natural gas production in the U.S. to continue declining for the remainder of the year. Based on available data, it appears 2016 will be the first time that natural gas production will decline on the year-over-year basis since 2005. This supply decline is happening while demand for natural gas is increasing, driven by Mexican exports, power generation and LNG exports. Looking towards 2017, the NYMEX Strip has moved above $3 and we think it can continue to climb. Based on where strip pricing is today, we believe that we can grow the combined company at 33% to 35% for 2017. This equates to an organic growth rate of 11% to 13% for 2017, coupled with the full year of the North Louisiana division versus roughly a quarter in 2016. Importantly, this preliminary plan for 2017 also results in strong growth for 2018, assuming a $3.25 per mcf and $60 per barrel, we are projecting that we should achieve organic growth for 2018 of approximately 20%


Zions 2Q16 Earnings Call Notes

Zions Bancorp. (ZION) Harris H. Simmons on Q2 2016 Results

Credit quality great outside of oil and gas

“Credit quality is a little bit of a tale of two cities. We consistently tried to be very transparent about the credit quality challenges of the oil and gas portfolios through this energy cycle. It remains challenged, and we’ll discuss that in a little more detail later. Outside of oil and gas, the loan net charge-offs were only $1 million on a portfolio of approximately $40 billion of non-oil and gas loans. So when you get outside of the oil and gas portfolio, we’re actually really, really pleased with quality that we’re seeing there.”

Paul E. Burdiss – Chief Financial Officer & Executive Vice President

Remain positioned to benefit from rising rates

“We remain positioned to benefit from rising rates, particularly short-term rates, as shown in the box at the bottom right hand side of the slide. Although we have deployed a substantial amount of cash into securities and loans, the interest rate risk characteristics of those assets, combined with continued deposit growth, have resulted in a somewhat stable interest rate sensitivity position. Using the midpoint of the range shown, a 25-basis point rate increase would improve annual net interest income by $25 million to $30 million, we expect.”

Made a decision to decrease CRE growth

“We are downgrading our loan growth outlook to moderately increasing from increasing, due primarily to internal decisions to constrain some of the commercial real estate growth we have recently experienced, although the quality of what we’re producing remains very strong.”

Scott J. McLean – President & Chief Operating Officer

Have to take both oil and gas prices into account when looking at the energy space

“Sure, Brad. Happy to respond to that. The other thing that I would note, we don’t comment about it enough, but natural gas prices also have rallied significantly since early March. Recall that they declined quite a bit in the fourth quarter of last year and through the middle of March. Oil prices really declined kind of January-February and the first part of March, and then both have really made a very nice recovery since then. I only note that because, recall that in our reserve-based lending activity, about 50% of the reserve is – I mean of the borrowing bases are natural gas reserves. So you really kind of have to focus on both.”

Stressed portfolio to $30 oil so can withstand some decline here

“But what I would say is that the underwriting that we did in our spring redetermination generally had prices, oil prices, around kind of in the mid-$30s to high $30s. And the sensitivity would have been down – in the high $20s, excuse me. High $20s, $30ish. And so if prices retreated here back to the high $30s, I don’t think that would really impact our reserve. If we saw prices go down into the low $30s, high $20s, well then it might change how we would think about it. But I think there’s a lot of room between where we are and that kind of really negative environment because fundamentally, the supply and demand curves have improved since six months ago, and that’s fundamentally driving the price changes.”

We’ve seen a large injection of capital from the PE funds into the energy space

“I would also note because the vast majority of our charge-offs on to the energy side are coming from the oil field service fees. Recall that we’ve significant private equity sponsorship with our 70 some-odd service-based companies, our larger service-based companies that we finance. And to date, last year and through six months this year, they’ve injected about $250 million of capital into our borrowers. Just back of the envelope, that would be 15% to 25% in increased equity to those existing deals, which generally were 50% equity, 50% debt; I’m using some broad generalizations here.”

Zions Banc 1Q16 Earnings Call Notes

Zions Bancorporation’s (ZION) CEO Harris Simmons on Q1 2016 Results

Strong loan growth has been an emerging trend

“Another item that appears to be an emerging trend in the last six months is stronger loan growth. In the first quarter, loans increased at an annualized rate of 7.6%, accelerating from the prior quarter’s rate of 5.3%. It was one of the best first quarter growth rates Zions has posted in the last decade.”

Excluding energy credit quality is solid

“excluding energy loans, credit quality is really solid across the Company by various loan types and geographies. Total classified loans increased to 3.7% from 3.4% in the prior quarter, but aside from energy, classified loans declined slightly to 2% of total loans.”

Loan growth has been encouraging so far in the second quarter

“loan growth for us has been a little bit of a fickle kind of a thing the last several quarters. What we can tell you is that we have seen quite a lot of consistency over the last six months and so far what we’re seeing into the second quarter is encouraging. But it’s hard to extrapolate that out very far.”

Paul Burdiss

Continue to be cautious on rate sensitivity

“We continue to exercise caution with respect to the impact on overall balance sheet sensitivity, interest rate sensitivity, as we purchased fixed-rate investments, and with respect to duration extension risk inherent in the investment [ph] portfolio. The securities we are adding are relatively short in duration, just over three years. The duration of the entire securities portfolio is about 2.6 years today.”

Loan growth coming from strength in C&I and CRE

“As shown, Zions is generally growing where we want to grow, while owner-occupied C&I and residential mortgage remain opportunities for additional growth. Compared to the prior quarter, period-end loans grew 7% on an annualized basis, with particular strength in C&I and term CRE. It is important to note that we have accomplished this growth while maintaining our underwriting standards.”

Many criticized energy loans are still current on payments

“it may be helpful to understand that the vast majority of our criticized and classified energy loans, and even non-accrual loans, are still current on their payments. Only 9% of non-accrual loans are past due.”

If oil were to hover in mid 30s…

“if oil were to hover in the mid-30s area, we currently expect losses in 2016 to be in the $100 million area. Recall, our prior outlook was for a range of $75 million to $100 million for the year. Clearly, prices today are above the mid-$30 range level. However, we always want to be prepared for lower prices. ”

Scott Mclean

Erring on the side of caution for oil modeling

“We’ve seen $40 before. We saw it coming down. And so now we’re seeing it going up. But we could be back at $30 again. So we’re just — prefer to err on a more conservative side.”

Even if prices come back, oil service will be under pressure for a while

“I would also say on the — as it relates to oilfield service, the longer this goes, which it’s going to go, you know, even if prices improve, there is general understanding in the industry that the oilfield companies will not come back as quickly as the E&P companies do, there are a lot of reasons for that, and so we feel pretty confident that oilfield service will be under considerable stress for the remainder of this year and a fair amount of next year.”

Banks are putting in anti-hoarding provisions to prevent defensive draws

“Well, first of all, the — in terms of kind of the second part of your question, in terms of mitigating it, most banks are putting in anti-hoarding provisions and you don’t have to wait for the maturity of a transaction to do that. It’s generally almost everything in the energy space right now is being amended, renegotiated, etcetera, every six months or so. And so we’re having pretty good luck at getting these anti-hoarding provisions in, number one.”

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.”

Miscellaneous Earnings Call Notes 10.22.15

Advanced Micro Devices’ (AMD) CEO Lisa T. Su on Q3 2015 Results

Not anticipating that Windows 10 will drive PC refresh

“While we are not anticipating Windows 10 will drive a dramatic near-term PC refresh cycle the continued adoption of Windows 10 which has already been installed on more than 110 million PCs to date, provides a great opportunity for AMD over the coming year based on a semi-consumer and commercial refresh cycle environment”


Suntrust Banks’ (STI) CEO Bill Rogers on Q3 2015 Results

We’ve been in the lower for longer camp for a long time and think it stays that way in ’16

” We, as you know in our case, we have sort have been in the lower for longer camp for some time and set ourselves up appropriately for that type of an approach. As we look forward into ‘16, I think also lower for longer stays, I think if there are Fed increases, they will be very deliberate and the pace of rate rise will probably be slower now than the market had been thinking six months ago.”

Capital Markets activity should be better this quarter

“M&A had another really good quarter and pipelines are still good there. The volatility numbers are in sort of high yield bonds and the equity sales and trading and that’s better. Spreads have come in. I think things will get done more this quarter than they did last quarter if things stay stable. And based upon what I see in terms of our pipeline, I feel good about our pipeline”

CCAR has changed the way that the whole banking industry is thinking about risk

“I think one of the other benefits also that you see for SunTrust and perhaps for the industry overall is the benefit of CCAR. The CCAR has changed the way that companies think about their overall risk. They apply a stress test to all their portfolios now and think about how portfolios would behave during a stress test.”


Kansas City Southern’s (KSU) CEO David Starling on Q3 2015 Results

Volume continues to improve in October

“volume so far in October continue to improve. And subject to ongoing uncertainty in energy markets, we feel good about the trajectory of demand as we head into the end of 2015. Through the close of business, Wednesday, average daily carloads for October were running about 1% higher than September and 1% higher than October of last year as well.”

Business demand still feels very good to us

“business demand still feels very good to us, with the obvious caveat about the uncertainty in energy markets, which you have seen across the entire rail sector, have made it more difficult to forecast demand and provide guidance.”

Mexico is probably linked to the US, but they’ve done a good job managing their inflation and unemployment rates

“I think, Mexico ends up being fairly tightly linked with the U.S. economy, given the amount of goods that end up going north into the U.S. But they’ve done a really good job managing their overall inflation rate, which is now running below 2%, unemployment is below 5%.”


Hasbro’s (HAS) CEO Brian Goldner on Q3 2015 Results

Toy industry growth is strong ytd

“The trends that we see and the data that we have would indicate that the Toy industry year-to-date is up high-single digits, and we see that as boding well as we get into the holiday season and continues our trends.”

Labor is the biggest cost input to our COGS and it’s up in the double digit range

“The single biggest cost input to our cost of goods is labor. And we continue to see labor inflation rates in the double-digit range. We have seen a slight decrease in the cost of certain types of resins over the period since the end of 2014. But they tend to be more nominal and they run in arrears to whatever the petroleum or gasoline costs prices are out there as you know.”


Flextronics International’s (FLEX) Mike McNamara on Q2 2016 Results

Partnering with Nike for connected products

“Last week, during NIKE’s Investor Day, NIKE announced a partnership with Flex to accelerate the introduction of advanced innovation to NIKE’s manufacturing supply chain. Working together, NIKE and Flex will deliver innovation that enables product to reach consumers more quickly with customized solutions and increased performance innovations.”

There’s an electrification of the world going on and we can help mechanical companies adopt that

“the amount of electrification in the world, the amount of smart products in the world that are going into what’s not typically electronic products that are now moving forward, whether it’s anything from a shoe to a shirt to a door lock is tremendous. So you’re getting a tremendous amount of this electrification of the business. And as we look forward, the value to us is if we can create more value for these customers whether it’s automation or engineering or making a non-connected product connected or providing electrification where they’re more traditionally a mechanical type company”


Zions Bancorporation’s (ZION) CEO Harris Simmons on Q3 2015 Results

Energy chargeoffs are from borrowers that were already weak in the last cycle

“the charge-offs have fundamentally been borrowers that were weak in the last cycle, they’ve been kind of limping along, and for whatever reason, you know, we have not been able to get totally out, and this recent downturn was just kind of another very difficult blow to them.”

Restraining loan growth because concerned that we may find ourselves in another downturn before things get better

“I think that, you know, I for one have a concern that we may find ourselves set [ph] into another downturn before we see the economy strengthen a great deal again, I mean. So we’re trying to be very careful.”


Hawaiian Holdings’ (HA) CEO Mark Dunkerley on Q3 2015 Results

Hawaiian airlines has had a tough time getting flights in on schedule

“It’s been a poor summer operationally as reflected in our having recently posted our worst monthly punctuality in over a decade. The culprits have been several; the combination of a burgeoning flight schedule of Honolulu and airport construction has meant that during the peak hours of the day there have been insufficient gates. This has been exacerbated by congestion in customs, resulting in our not being permitted to de-plane arriving international passengers promptly. And lastly, an abrupt change in the traffic control procedures at Honolulu gave us no opportunity to make schedule changes to address the lengthen block times that have resulted.”


Yahoo! (YHOO) Marissa A. Mayer on Q3 2015 Results

Experiencing continued revenue headwinds

“our Q4 outlook, which Ken will return to later, is not indicative of the performance we want. While there are some well-known headwinds, year over year and even quarter over quarter like the loss of the Alibaba TIPLA, we are also experiencing continued revenue headwinds in our core business, especially in the legacy portions”


ACE’s (ACE) CEO Evan Greenberg on Q3 2015 Results

Underwriting environment continued to grow more competitive

“I want to now say a few words about current commercial P&C market conditions. The underwriting environment continued to grow more competitive in the quarter for our commercial P&C business globally. With some exceptions, price declines accelerated modestly. They were varied by class of business and geography.’

Large account more competitive, wholesale and property

“Large account business, particularly shared and layered is more competitive than midsized. Wholesale is more competitive than retail and property more so than casualty related”


Kimberly-Clark’s (KMB) CEO Tom Falk on Q3 2015 Results

The rate of currency deterioration hasn’t been as severe as it was

“The rate of currency deterioration hasn’t been as severe as it was, say, a year ago. On the other hand, there’s still some opportunity for price in some markets.”

Not seeing trade down in EM

“so far we are not seeing as much as a trade down as you would think. And we are still seeing — we launched boy/girl diaper pants in some of the super premium kind of tiers. We are seeing good response and growth there… particularly the economies that are in recession like Brazil and Russia, we are watching that see how the consumer performs and make sure we got the right offer, but we are also seeing really good innovation. Mom still wants the best for her baby.”


Texas Instruments, Incorporated. (TXN) Q3 2015 Results

It’s a weak environment but some segments were stronger than we expected

“our revenue declined 2% from a year ago, and we obviously would describe that as a weak demand. That’s actually similar to what we saw last quarter. But, inside of that, certainly it was stronger than what we had expected. There were a couple of areas that were stronger than we had expected. Wireless infrastructure and industrial were both stronger than what we had expected. ”


Kinder Morgan’s (KMI) CEO Steve Kean on Q3 2015 Results

By 2030 gas should be 39% of electric generation mix

“Its projected increase from today’s level of 76 Bcf a day to about 110 Bcf a day by 2025, that’s an increase of 40%.”

” If you look at the 15 mix of generating output and this is according to the EIA, 32% is gas and 33% coal. For those of you who have been in this industry a long time or followed it you know that that represents a dramatic shift to the positive for natural gas. If you flash ahead again these are EIA numbers to 2030 their projection of the mix of generation is 39% gas, 18% coal’

Renewable energy will need natural gas facilities as backup

” reliable flexible natural gas facilities are absolutely necessary to back up wind and solar. So to sum up the idea that we could move directly from coal to renewables without increasing natural gas usage for electronic generation is an unrealistic pipe dream with the substance and the pipe being legal only in Colorado and Washington State.”


Danaher (DHR) Thomas Patrick Joyce on Q3 2015 Results

Seen some incremental slowing, but in pockets

“Overall, we have seen some incremental slowing in the macro. That being said, it’s in pockets. There’s some pockets regionally where we’ve seen some of that slowing, clearly, and in some of the more industrially oriented markets.”

China is still one of our better markets

“we’ve actually seen China, while slowing incrementally, it’s still one of the better markets where we play today. Our growth rates continue to be very good in a number of our businesses. ”

Zions 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

We feel like we’ve done a good job on the energy side

“We expect some deterioration in the portfolio as a result of the sharp decline in energy prices, particularly if price levels remain low for a long period of time. However, we’re also feeling very confident that we’ve maintained strong underwriting discipline and risk management throughout the last several quarters and several years for that matter, and that in combination with our strong capital position and loan loss reserves, we should navigate this bump reasonably well.

Our capital ratios are among the best in the industry

“Today our capital ratios are among the best in the industry, both in quality and quantity and we’ve made significant progress in reducing the cost of such capital. To the extent that we see further slowing in the global economy, we believe we are very well positioned to weather that well.

Technology driving labor efficiency

“On the expense front, related to our technology initiative, we’re very focused on expense control. As technology advances we’re able to reduce certain labor intensive tasks.

We expect loan growth in 2015 to be in line with 2014, although Texas may be slower

“We also expect growth in 2015 to be about in line with 2014. We see improved economies in most of our footprint, although Texas and Amegy Bank may likely produce slower growth this year than last, in part due to potential effects of the decline in energy prices and energy related activity.

Worth noting that gas declined this much and never came back and everything was ok

“it is also worth recalling that natural gas prices also fell significantly in the 2008-2009 period, and those prices have not rebounded fundamentally. Gas production was a very significant component of most exploration companies and impacted energy service companies’ revenues as well at that time. And in many cases, it was more than 50% of total production back then. So losses from that period are certainly relevant to the current outlook.

Only 30% of exposure is to public companies, the rest is to private sponsors

“Approximately 30% of our exposure in the energy portfolio is to public companies and approximately 45% have private equity sponsors. And the private equity firms we partner with have exceptionally strong experience in the industry and understand the cyclicality as opposed to generalist firms or younger, less experienced firms. Additionally, the remainder of our portfolio generally has private sponsors, very high net worth families that have been highly involved in the energy industry over the years.

People pivoted from gas to oil in ‘09

“ would say then if you looked at the entire portfolio, it was probably 60% gas in terms of the borrowing base collateral, 40% oil and you’ll recall the word pivot was used significantly following that. People were pivoting away from gas and they pivoted to oil. You’ll now start reading about people pivoting back away from oil ever so slightly.

We wont really know the impact to credit quality until Q3 or Q4

“One possible pattern over the course of the year is that there will be some shift from the qualitative into the quantitative part of the reserve, as we get financial information from the borrowers. But the — that process won’t be complete certainly by the end of Q1. We’d probably get the first real financials that began to show an impact sometime in Q3 — Q2 and I would expect even if prices don’t move at all, we’ll — we won’t have fully kind of seen the impact until maybe Q3-Q4. But again there may be some, there potentially will be some downgrades, but some of this will be absorbed potentially by a shift from the qualitative into the quantitative portion of the reserve. We just don’t know yet.

If prices stay low for a couple or three years then we’ll start to see some impairments

“If this goes on for — as Scott said, for an extended period of time, a couple of years, three years, where oil prices remain very low, there will almost undoubtedly, based on our sensitivity analysis be some additional increments to the provision related to that, and some [indiscernible] classified — more criticized and classified loans and it will begin to shift again toward the quantitative side is as we

4Q was strong for energy companies because everyone was using up their budget for the year

“he fourth quarter for many energy services companies was one of the strongest quarters in their recent history; and secondly for reserve based companies, most of our reserve base clients had very robust drilling budgets in 2014, and generally in the industry, they are drilling hard in the fourth quarter to drill up the budgets that they have.

Zions Bancorp 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

We’ve substantially upgraded our credit rating process over the last several years

“During the past several years, we have substantially upgraded our credit rating process and reviews. We’ve enhanced credit monitoring, we’ve greatly enhanced our concentration risk management, and of course introduced stress testing and refined that process several times.”

Construction loans have dropped significantly

“At the end of 2009, construction and land development loans, plus CDOs equaled $8.3 billion, or about 240% of our tier one common equity. Today, such assets equal only about $3 billion or about 56% of tier one common.”

We’re expecting continued improvements in credit

“Regarding provision expense, given our expectation of continued improvements in the credit metrics that drive the ALLL methodology, we expect provision expense to remain modestly negative in the near term, although any reserve releases in this and future quarters are expected to be significantly smaller than those in the second and third quarters of this year.”

We’re watching capital markets closely

“We’re closely watching the recent turmoil in capital markets and abroad. While we do not see anything that would cause the quantitative portion of our models to reverse course, we note that the rate of reserve release from the qualitative portion could slow down, depending on what we see in the external environment.”

Good growth in corporate cards

“We’re seeing good growth in commercial cards. We’re seeing revenue increasing there at a pretty good clip. We continue to see growth in our treasury management income. Mortgage banking is something we’re focused on doing more of, but it’s obviously a tough market to be actually gaining traction in. But we expect that through the cycle we’ll be doing more of that. And wealth management has been another area of focus for us.”

Service charges on consumer accounts probably not much growth there

“probably one of the risks on the horizon for anybody who’s really heavily consumer oriented is going to be overdraft income, and so we’re not trying to push that pedal any further. We think that that’s probably not going to be a growth area. Service charges on deposit accounts generally is not going to see a lot of growth”

The federal reserve is putting increased emphasis on upgrading systems

“I would note that the Federal Reserve is placing renewed emphasis on all banks, if you look at the CCAR 2015 instructions that just came out. Look at the range of practices document that they published last year. They’re focusing ever more intently on the quality of bank systems, noting that many are antiquated and need to be upgraded. They cannot meet the data requirements with the versatility that they expect going forward.”

Branches don’t look like they add a whole lot of value right now because deposits don’t add a lot of value

“I think all banks are wrestling with right now, we’re in this very low interest rate environment, and the nominal value of branches today, in a lot of cases, doesn’t look great, because the value you attribute to deposits is not very significant today.”

Zions 2Q14 Earnings Call Notes

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

Zion not committing more capital to construction loans

“We are hearing from our lenders that some of the other large bank competitors in our markets are backing away from the loan type that receives the most significant losses in the stress test, in this case, the construction and land development category. So, we probably are not alone in this redirection of capital allocation. Although Zions construction and development loan balances grew in the second quarter, commitments declined. Our loan growth outlook remains unchanged on the whole and that is for slightly to moderately increasing loan volumes.”

NPAs below 1% for the first time since 2007

“Non-performing assets improved by about 14% from the prior quarter and equaled 95 basis points of loans and REO the first time it’s fallen below 1% since 2007.”

Experiencing loan growth in July and expect that to continue

“We are experiencing loan growth in July and expected to continue based on reports from various lending groups.”

Loan demand is there

“we are constraining loan growth in some cases by self imposed risk concentration limits particularly on some types of commercial real estate loans. If we did not have these risk management limits, but we do, loan growth rates would be stronger as there is demand out there.”

We probably will have gains on CDOs from these prices, but losses on original price. Still we may sell anyways because it can improve our capital ratios

“Our models also indicate that we should end up recognizing values greater than amortized cost on non-performing CDOs, but it’s substantially less than the par value of those CDOs. And the realization of that income would likely take many – being many years in the future assuming we continue to hold them for that long. Although we may hold these securities to realize some of the gains I just described, we may also elect to sell some of them from time-to-time in order to maximize our capital ratios under the stress testing process, a well-defined benefit today in exchange for a less certain benefit sometime in the future.”

The Fed doesn’t give out all the methodology of the stress tests…

“while the Fed does not provide a breakdown between construction and development and term and owner-occupied, we and investment banks and consultants have all tried to estimate what that breakdown might be. And it looks like that construction and development are maybe doubled or more, the loss rates that the Fed published is for overall CRE, which makes it pretty painful from a capital utilization standpoint relative to as I mentioned pricing that has actually come down over time.”

300 extra personnel hired just for compliance

“we have added something over 300 full-time equivalent staff…it would appear you have got another maybe another couple of years of continued heightened expectations. Well, not having to add as much staff to meet those expectations, just redeploy them into addressing the current year’s level of top concerns is they are expressing to us in the industry.”

We’re going to pay off the debt

“Our current expectation, Ken, is that we will pay-off that debt, the senior debt in September and the additional two tranches of sub-debt in the latter half of next year as they mature. And that the total amount of unsecured debt issued by the parent would come down over that time period, but probably we may issue small amounts of senior debt during that process, but the net amount of debt should come down. We are basically going to pay it off.”

We agree with JPM that deposits are going to flow out

“I will refer you to the CFO of JPMorgan Chase, who laid out pretty explicitly what she thinks is going to happen, but I think kind of we are directionally in the same place she is, which is that the Fed will drain a lot of liquidity out of the system and that rates may rise. When rates rise, they may rise faster than people are expecting and a lot of this, I don’t know, we have laid out some modeling assumptions about how much of our non-interest bearing DDA would have – would flow out and be replaced by interest bearing funds, but it’s – and I think we are being more conservative on that front than a lot of peers and more explicit in publishing what we are modeling. “

ZION 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.

“These C&I loans have grown at a 10% compounded average interest rate for more than 2 years, but primarily because of elevated repayment activity in the third quarter, we experienced virtually no loan growth in this category”

“Loan pricing remains competitive.”

“Credit quality is very encouraging.”

“we actually experienced attrition in C&I loans in Utah and Texas, while California, Arizona and Nevada experienced relatively healthy growth”

“Line utilization rates on revolving C&I loans declined further relative to the prior quarter, and we’re at 32.2% compared to 33.2% at the end of the quarter. And again, for reference, we were kind of precrisis running in the 38% to 40% was a more normal utilization rate.”

“new construction commitments have been fairly strong for the last several quarters during a period when pricing terms and covenants were very good. These loans are now in the funding stage after the equity has gone into the project. Total new unfunded commitments increased only 1% sequentially as we’re hitting self-imposed concentration limits in some construction loan types in some markets.”

“because of the strong appetites by nonbank entities, such as life insurance companies and pension funds, which we don’t expect to abate, we’re probably going to modestly lower our outlook on loan growth to slight to moderate, instead of just moderate over the 1 year time horizon. But I will tell you that loan growth through the first 3 weeks of the quarter has been pretty good, and the fourth quarter generally is a pretty strong one for us, particularly in the last few weeks of the year, which then reverts in early January.

The bottom line is, pipelines remain fairly strong, line utilization remains fairly weak. And it’s just really hard to figure out. There’s no compelling change in the direction either — certainly not getting dramatically weaker. But there’s no evidence that the sentiment in loan demand is growing stronger out there that we can see, either.”

“we don’t want to drive deposits out by driving customers out. And it’s basically existing customers leading more cash with us, and we’re going to assume we’re providing — let’s just say about as little an incentive for them to do that as we can conjure up. So it remains a struggle to — because, I mean the fundamental cycle here is that the Fed is pumping — continuing to pump liquidity into the economy, and it piles up when people and companies that are cautious and undecided and uncertain about what to do with it. So here it sits. And we, in turn, park it, give it back to the Fed, I guess, so they can buy more bonds. And wash, rinse, repeat.”

“Real estate demand, commercial real estate demand remains reasonably strong in a lot of areas. I think the big change this quarter was the softening in C&I demand in Texas in particular, which had been a driver of growth. ”

“I’m pretty sure that our total consumer portfolio is probably still less than 20% or in the neighborhood of 20% of total loans. Strategically, that is — we would like to grow consumer to a somewhat larger percentage of the total, and the 2 natural areas for us to do that are to focus on some 2 product lines that really had not been a focus previously. One is resi mortgages, both first and equity lines, the other is credit card, where we’re starting off a much smaller base but plan to grow in both cases within our footprint, kind of serving our community regional bank customer base. And that’s what you can expect as the offset to what clearly will be less concentration than, if you go back to the mid-2005, 2006 era in commercial real estate, particularly in land lending and early-stage development lending. So less CRE, more consumer and lots of C&I is what we’d like the portfolio to look like.”

Zions Bank 2Q13 Earnings Call Notes

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

“Loan pricing remains competitive, although the yield on our overall production was pretty stable compared to the prior quarter, and this trend was confirmed by recent reports from our relationship managers suggesting that pricing today is not significantly worse than a quarter ago.”

“The pricing on smaller loans, although down in the last 6 months, has been much more stable than the pricing of larger credits.”

“Interestingly, for the first time in quite a while, line utilization rates on revolving C&I loans experienced an increase over the prior quarter. They were about 33.2% compared to 31.8% at the end of the first quarter”

“We resolved about 25% of total nonperforming assets during the quarter. The overwhelming majority ended up going our way, i.e. favorable resolutions reached a new high at 79% of total resolutions.”

“we’ve decided to go ahead and launch a major upgrade to our core loan and deposit systems and accounting systems. We’ve been studying this for probably a couple of years now, thoroughly vetting different alternatives and different vendors. And we have pulled the trigger to go forward on those projects, although there are a number of off-reps or we can turn them off or scale them back if we don’t like what we’re seeing as we phase it in….We believe that much of the incremental costs can be offset by reduced so-called environmental costs, such as credit-related noninterest expenses and regulatory assessments and FDIC premiums and the like.”

“if you look at kind of what differentiates us from some of our peers, it is that we are more small- and middle-market business-oriented, and that’s where we’re seeing a lot of the activity. We have missed out on a number of larger deals because we won’t match the pricing that some of the bigger banks are throwing out there on those deals.”

“I don’t think the market is not yet liquid enough that we’re likely to sell material amounts [of our Trust preferred CDOs] unless we see further improvement. But I mean one of the things that motivated us to do that was we did want to kind of test the pricing for — on a variety of tranches at different points in the waterfall. They were directly securities that we own to make — to kind of further validate our pricing of the whole portfolio. And so we selected 6 securities that were representative of various — very, very different parts of our risk exposure. And generally I would just say, those prices tended to validate exactly what we’ve been doing.”

“one point that is probably worth making here is that Nevada seems to have turned the corner. Nevada had net positive loan growth for the quarter”

“we’ve been — I think we’ve been very clear about this, too. We’ve made a strategic decision in this company not to let the CRE portfolio grow back to anything like the proportion of the total portfolio that was in circa 2006 and ’07.”

“The system that we are going to implement is a modern integrated banking system that is used in probably by I think it’s something like a couple hundred institutions around the world. Parts of it are used on Wall Street, but we would be the first U.S. implementation of a full integrated system. So there has to be some customization of that system for the U.S. market. The vendor, Tata or TCS, is obliged to undertake that on their own nickel. That’s not our cost. We will, on the other hand, have to work with them and incur some costs to basically implement our product set and our operating methods on their system as you would with any other platform. But our overall goal here is to minimize the amount of customization that we have to do and pay for as we go through this rollout.”