Cash America 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.

“the general trends for our business have not changed much from the trends that we’ve been discussing for the past several quarters. Mainly, the retail services segment continue to work its way through the transition of our U.S. pawnshop business, precipitated by significantly lower volumes and margins on the commercial sale of scrap gold, coupled with ongoing soft demand for both pawn loans and the consumer loan offered through our storefronts, which have kept our same-store loan growth in check.”

“I got to admit that at this point that the transition the U.S. pawnshop business has been a bit more abrupt and dramatic than I anticipated when I first began discussing this topic around this time last year. And, for me, that’s both good news and bad news. It’s obviously bad news from the substantial impact that it’s had on our year-over-year profitability comparisons. But good news in that it has seriously motivated us to make some operational changes that will better equip our field personnel to succeed in what I refer to as a new normal of a post gold rush period.”

“In addition to soft demand we are experiencing for our secured pawn loans, which continues to be an issue throughout the country, you also notice continued soft demand for our unsecured consumer loan products in retail services segment.”

“we’re being very cautious with our outlook on the business. Quite frankly, until we begin to see strengthening loan demands segment we have shifted to consumer behavior, we will not be forecasting our traditional growth rates for our retail services segment.”

“these acquisitions reflect our absolute confidence in the long-term prospects of the pawnshop business in the U.S. In our view, the transition is underway in the industry today is a momentary blip in what otherwise has been a stable and positive trends of the U.S. pawnshop business since starting with our first shop in 1984.”

“Increasing healthcare cost, higher payroll taxes and potential entitlement reform could bring well add to the basic consumers, seeking help from non-bank financial institutions in the future periods.”

“t’s pretty clear today that our — with our unsecured lending products regardless of what form they take will likely always be subject to regulatory scrutiny whether be here in the U.S. or international markets.

Enforcing I finally found the wisdom to quit lamenting that reality and embrace it as an aid in helping us create more attractive products for our consumers than as a gateway for claiming competitive advantage. Also, I recognize that the new regulatory scrutiny has consistently and equitably enforced will ultimately eliminate many of the French competitors that remain a nuisance for both us and the consumers.

From day 1, we’ve always been committed to playing by the rules in an honorable fashion. While that approach has consistently cost us market share, we always believe it would pay off for us in the long run. It’s a rewarding to now see some of the noncompliant lenders in both the U.S. and U.K. fall out under a more intense regulatory regime. I want to downplay the degree of difficulty we and our customers must face in adjusting to periodic changes introduced by the regulatory agencies, but I do continue to believe we are better equipped to absorb those changes and leverage them as a competitive advantage than most other lenders in the market”

“quite frankly, I’m not seeing a lot of available alternatives that work for our secured customer, secured loan customers out there. So I’m not aware of any new bank products that would compete with our secured loan products. And clearly, I guess, there is some movement in the subprime auto space. But basically, our demographic profile in our surveys with customers, I don’t really believe that’s having an impact on this consumer. ”

“we believe that the consumer just very cautious right now.”

“the customers that we talk to, they were out in the field, in our shops and surveys just indicate there, they’re very cautious about getting extended right now, they’re very cautious about letting go of any collateral, letting go of money to purchase items as well.”

“I hear more from our store managers than I’ve ever heard about, when we talk about loan balances and some of the challenges that they have, how customers are not taking the full collateral value of the merchandise. So obviously, when someone comes in and we’ve got the update loan amount. Say $150 on a piece of jewelry, they’ll — in many instances, they won’t take it. They’re going to take something less than that. And we obviously let them know that their collateral can cover more than that, than the amount that they ask for, in the extent that they are going to come for it, but I’m hearing that more and more that it’s all the customer really wants, they’re being cautious about how much their borrowing against our collateral. Again, I think that’s also reflected in our redemption rates. The jewelry the people have left, they want to hold on to it. And they’re not borrowing quite as heavily on it, and are not forfeiting it at the same rates that historically we’ve seen over last 4 or 5 years.”

“in some regions of the country, we’ve seen some of those independent gold buying stores begin to close. I think it was the new reality of where we are in the gold business today. It’s going to be very, very difficult, I think, for those people to continue to be in business. So that’s my personal view. And again, I think the key aspects, that I think many people miss in this analysis, is it’s not so much what happens with price of gold, quite frankly, my belief is that there has been a significant amount of gold volume that has been scrapped over the last 5 or 6 years and people don’t have excess stuff to bring in. So even if gold went $2,000 an ounce, I would expect a margin of profitability will be aided by that. I don’t expect to see significant jump in overall gross profit associated with the big jump in the price of gold, just because I don’t believe in volume of gold people would be willing to dispose of is anywhere near the level than it was in 2006 and ’07 when this process began.”

Microsoft 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.

“In Licensing, we expect revenue to be $5.2 billion to $5.4 billion. This range reflects similar dynamics to what we saw in the first quarter. As I noted earlier, we expect the business PC market to be stable, however, the consumer PC market is subject to more volatility”

“In Hardware, we expect revenue to grow 35% to 45% to $3.8 billion to $4.1 billion, reflecting the expanded Surface line up and the much anticipated Xbox One launch.”

“In Devices and Consumer Other, we expect revenue to be $1.7 billion to $1.8 billion. Search revenue should continue to grow reflecting improved revenue per search and query volume. As a reminder, in Q2 of the prior year, we launched Halo 4, which contributed $380 million of revenue to this segment.”

“moving onto Commercial. We expect revenue to grow 9% to 11%, in line with the first quarter.”

“In Commercial Licensing, we expect revenue to be $10.7 billion to $10.9 billion, with similar dynamics to what we saw in the first quarter. This includes healthy renewals and strong annuity revenue growth from volume licensing with Software Assurance.

In Commercial Other, we expect revenue to be $1.7 billion to $1.9 billion, reflecting ongoing momentum in our commercial cloud business and enterprise services. As CIOs increasingly look to capitalize on the opportunities of cloud computing, we are confident they will continue to look to Microsoft for their IT solutions.”

“The strength of the commitments the customers are making, is really forward-looking. It’s a three-year commitment to the Microsoft platform both, to our cloud and on-prem solutions, the breadth and strength of that roadmap and our offerings, and in many ways that’s what gives us the confidence that we are outperforming our peers.”

“especially for this last quarter, Surface, we saw two things I will mention which is popularity of the Surface 32 gigabyte RT device. That one was more successful this last quarter. And we actually saw demand increase in both commercial and in the education customer segment as well. So we did see some improvement across both of those segment”

“the importance of our hybrid cloud. Within especially our server business, our ability to power the cloud whether you want to run it, you want a service provider to run it or you want to use ours, is really an incredibly powerful story and I think in some ways whether or not cannibalizing becomes somewhat difficult.”

“Secondly with Azure, I think we have seen both, but the thing I would say is what has been really helpful is that as we make it easier to attach Azure services to our normal rhythm in the field for enterprise agreements and through licensing. It provides a really helpful way and a really easy selling motion to provide customers flexibility. We added in the normal rhythm of the sales motion. We allow people to try, use and buy. And that has served us well in terms of being able to expose Azure to more and more customers in a normal selling cycle. So I think that’s probably one of the better ways. It’s the same actual selling rhythm we have used with Office 365 so successfully.”

Colgate Palmolive 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.

“Innovation is key to driving share and category growth, and we referenced a number of successful new product launches across the region in the press release.”

” in the current more benign commodity environment that we have certainly seen this year and so far moving into next year, we’re going to continue to expect and see progress on the gross margin line”

“The market share for global toothpaste was 45%. It was modestly down because of market share declines in a couple of key geographies. One was Mexico, although it’s still over 80%”

“when we think about brand engagement with our consumers, frankly, we think about it holistically. And as I’ve said before, even though it may not be popular because there’s still this feeling that if it goes to trade spending, it’s bad advertising. And if it comes below the line as we were all brought up, it is somehow good advertising. The fact of the matter is with the techniques available to you today, you can foster some incredible engagement that is brand building and trial generating with our consumers at the retail level. So first of all, we do think about it holistically. And yes, our advertising has increased, but so has our total commercial investment.”

“in terms of that commodity environment, we have literally just begun our planning process. As we have said many times, our belief is that you build categories by building brands, which is a combination of building your base business and adding relevant innovation. We do not believe that the short-term pricing activity accomplishes that nor do we believe it is rational or sustainable. ”

Raytheon 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.

“As you know, the U.S. government was shut down for 16 days this month, and we’re operating under a sequestration and yet another CR. To call this a very challenging environment would be an understatement.

Clearly, this is not the way we’d prefer the budget process to operate. No one wants to have to manage their strategic business plans under such circumstances. But by working closely with our customers and focusing on performance, we continue to deliver the solutions our customers need.”

“Financially, the shutdown impact was minimal and has been captured in our updated financial guidance. But personally, the situation was hard on the individuals and the government and the industry who devoted their entire careers to supporting our nation. And while a larger company such as Raytheon have the ability to mitigate the impact to our workforces, our industry supply base does not. These companies are often small and minority owned, don’t have the same resources or flexibility to weather these ongoing budget storms.”

“we’re raising our guidance for sales, EPS and cash flow for the year. This kind of performance doesn’t just happen, rather, it’s a function of a dedicated team working every day to find new ways to improve, to lower our cost and to respond more quickly to our customers’ needs.”

“The growth we are experiencing in our international business partially offsets the decline we’re seeing in our domestic business as a result of sequestration and CRs.”

“we do expect strong bookings for the year, particularly international, and there’s several significant awards that we anticipate in the quarter. As I mentioned, every one of them has got a milestone plan that’s associated with them. They’re reviewed daily or weekly, depending on the business or the program.”

“we’re planning for sequestration to continue. I mean, that’s the environment we’re in. I’d like to think that this budget process is not working. I’ve grown up in an industry where we have appropriations bill. There was a sequence to what we’re doing. You could see it, you could plan on it. Today, we operate under CRs. We have another one that goes to January 15.”

“From what I understand, our customers are planning 2 budgets. Which one gets submitted, I can’t tell you. That’s a product of somebody else making that decision. I just know that American industry really likes to have some finality in what we do. And if you give us a number, we know how to put our strategies and plans in place to make that happen.”

” In my experience, in price, when you buy that way, you don’t get all the capabilities you want, and so they’re going to have to deal with that.”

“clearly, I’m an engineer by training and a technologist, I’d like to think of myself that way. And people, when they look at U.S. systems, they are still state-of-the-art. What people don’t realize is that life cycle costs really run into these decisions. And if you don’t take that into account, you’re going to be really sorry with some stuff you bought. And we know of systems around the world produced by other countries that aren’t working and can’t be [ph] manned. And you have to almost learn that lesson the hard way. So we’ll see what happens here.”

“our customers stay with us because they recognize that we consistently deliver value and equipment to them to be able to handle the threat environment that they’re in.”

“The Army is under the most pressure. They have the largest headcount of any of the services, and the hard choices are strategically, how do you handle the future, do you do it with a smaller service? Do you do it that’s more mobile, more light, and how do you think through that? And when you come from very high numbers to a smaller number, it really makes it hard for them to do that, plus planning, do they have sequester, don’t they have sequester? That’s really tough on them. We’re really trying to work with them in any way we can. But Dave and I would both tell you that, from our standpoint, planning for sequester, we know exactly in our minds what the Army will be doing and that’s in our forecast as we look at things. And we’re not centric around any one service. And from that standpoint, we could weather the storm and why our portfolio is probably in better shape than others.”

“if you look at missile defense, it’s one of the key areas going forward. The other part of missile defense is it never stands still from my standpoint, have been doing this a long time. When you realize you need missile defense, you put it in, then you go through the training to get your troops up to speed. But the threat keeps evolving and changing. ”

“the supply base, and especially minority or small-owned businesses, they are the heartbeat of this country. And for some of them, they’re really key to what we do. So we work with them and try and help them in any way. We send Six Sigma teams in to some of our suppliers to help them be more competitive, that’s good for us and it’s good for them. We’ve sent people in to help on technical issues. And financially, if they’re in trouble, we’ll sit down and work with them to figure out what we can do to be able to get through this. I mean, the shutdown was really hard. I mean, we spent time every day trying to figure out how to make sure that people were getting paid. How did we move, work around? I mean, one of the beauties in our company is with our common systems and processes. We were able to do things, and it identifies areas for us real quick. But it is an area that, as a person that’s been in this industry my whole career, I worry what we’re doing to that, into the business, as a country.”

Ford 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.

“Our One Ford plan shown here is the foundation for everything we do. Across the Ford enterprise, we continue to aggressively restructure the business to operate profitably at the current demand and the changing model mix to accelerate development of new products our customers want and value, finance our plan and improve our balance sheet, and work together effectively as one team leveraging our global assets.”

“we were upgraded to investment grade by S&P. With this upgrade, the four major rating agencies that rate us now report Ford and Ford Credit as investment grade with a stable outlook.”

“North America continued to perform very well, achieving a pretax profit of $2 billion or more and an operating margin of 10% or more for the sixth time out of the last seven quarters.

In the third quarter, this was driven by a strong industry and a robust full-size pickup segment, our strong product lineup, U.S. market share growth, continued discipline in matching production to real demand, and a lean cost structure, even as we invest more in product and capacity for future growth.”

“The volume improvement mainly reflects higher U.S. industry sales, increasing from SAR of 14.8 million to 16.1 million units”

“We continue to have success with what we call the super segment vehicles. This is small vehicles and small to midsized cars, particularly on the coasts.”

“Europe’s market share improved 0.2 of a percentage point, from 7.8% to 8%.”

“Third quarter market share in the region was 3.7%, 0.6 of a percentage point higher than a year ago, and a quarter record. The improvement was driven by China, which isn’t shown, where our market share improved 0.8 of a percentage point to equal last quarter’s record of 4.3%”

“We now expect full year industry volume of about 15.9 million units in the U.S., about 13.6 million units in Europe, and about 21.7 million units in China.”

“Our total company third quarter production volume, shown in Appendix 5, was about 1.5 million units, 187,000 units higher than a year ago, reflecting higher volumes in all regions. We expect total company fourth quarter production volume to be about 1.6 million unit”

“There’s nothing that has changed about our plan that we announced last November, and I’m clearly excited and honored to continue to serve Ford.”

“as we start to satisfy that pent up demand over this next couple of years, it will come down to more of a normal growth rate based on demographics and discretionary income, and we think that it’s going to be in the 16 million to 17 million range.

I think the peaks that we’ve seen in the past that were fueled by a lot of factors as you know, we don’t expect to see. And I think that nice, steady rate that reflects those fundamentals would be welcome by all. And I think that’s the way we’re looking at that right now.”

“The top line performance in China was really remarkable. Through the first nine months, wholesales were up 51%. The share was growing. Revenue strong, inventory’s in great shape. So the China story is an incredibly positive story.”

“It’s a great question. Overall, as you mentioned, the full-size pickup segment is doing well this year, particularly versus last year. It’s up over a point, and obviously as you mentioned that’s driven a lot by the housing market.”

“Commodities, whether on a year over year basis or quarter to quarter, are pretty benign. So no, I don’t think commodities are anything to look at.”

“in Asia Pacific we’re going to be increasing our manufacturing capacity there to 2.9 million units, up from about 1.5 million in 2011, really accelerate the growth that we’re seeing in Europe.”

ABB 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.

“It’s a pleasure for me to present the results for the first time as ABB’s CEO. It’s an exciting time to take on this challenge, and I’m looking forward to talking to all of you in the coming months and quarters about how we see the business developing, as well as hearing your views on the company.”=

“We are really encouraged to see orders up strongly in some key markets, for example, in China and in Germany, both at double digits, and steady order intake at high levels in the U.S.”

“Europe looks like it has reached the bottom, but a meaningful upturn is not yet reasonable at this point. Southern Europe is still weak despite a relatively easier comparison this last year. Asia looks more positive, led by China, but India will probably remain challenged until the next year’s election that are coming.”

“it’s a pretty broad pickup and we have to stick with that. We see some hesitancy in some of the process industries, doing more than the typical replacement in maintenance fees, which is not surprising given the large order and the overall demand on there”

“if you look longer term ahead, the subsea area is really an area where you have an opportunity or high opportunity to technologically differentiate yourself from others. To really come out with unique solutions, that technology really matters. There’s a big difference. So I believe putting money into this kind of market makes a lot of sense for us”

Logitech 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.

” With two quarters behind us, we are on track in our turnaround. We significantly increased operating profitability and the signs generally look good inside our growth businesses. Total sales declined by 3% in Q2 and by 1% on a year-to-date basis, better in both cases and expectations at the start of the year.”

“I am very pleased with the improvements we have made to accelerate our time to market in the tablet accessories category, and the benefits from those improvements will soon become visible.”

“Our outlook is based on the prudent assumption that the sales performance of our PC peripherals will not be sustainable in the phase of a double-digit PC market decline.”

“Our IQ has gone up exponentially since we started into this about a year and a little over year and half ago. First, Apple shares no information directly with us, they are as secretive you hear and we respect that and I think it creates a very fair and level playing for all the competitors in the market that create tablet accessories. But we are working very hard to understand and predict what Apple will try to do with their next generation of products based on what they have done with the last one. And I would say our IQ is proven to be better and better and better. This is probably the best yet. We feel like we really understood where this is going, but honestly they can always come in with a surprise.

So there are no guarantees in this world, we are just going to keep trying to raise all the intelligence we have about what Apple and as well as other tablet accessory makers or tablet makers are doing. And I think we will continue to improve there and therefore become faster and faster to market.”

“Our expectation is that this PC platform decline is deep enough and we don’t see anything underlying that that’s changing right now. So we think it’s prudent to assume if that that’s going to continue and we don’t think it’s prudent to assume that we are going to be outperforming that to the level that we have in the past.”

S&P 500 Stocks with Single Digit PEs

Even though the market is up a huge amount in 2013, below is a simple reminder that there is still some merchandise left in the bargain bin.  Here is a list of the 35 stocks in the S&P 500 which have forward earnings multiples below 10x.

If you’re the type of person who likes to buy clothes off the sale rack, then this is the list for you.  However, just like with any other bargain bin, be aware that it’s likely that most of the good merchandise has been picked over at this point.  The chances are that most of what you find here won’t be worth owning, but there’s always the possibility that you could find something that works for you, especially if you don’t mind wearing something that’s a little out of style.

Of the 35 companies on the list, most of the names are either in the Tech, Financial or Energy sector.  Consumer Discretionary has three names and they’re all in the auto industry.  In comparison to past periods, 35 is a relatively low number.  There were 98 companies that traded for less than 10x at the beginning of 2013, 46 in October of 2007 and 56 on January 1, 2000.

Single Digit PEs

 

Source: Compustat Data

Wellpoint 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.

“In the fully insured marketplace, the rollout of public insurance exchanges began October 1, and there has been a lot of activity around this area. We remain optimistic about the long-term membership growth opportunity through exchanges.

But given that we are just 3 weeks into the open enrollment period, it is really too early to draw any definitive conclusions. Based on what we know to date in our continuing review of the competitive landscape, we remain generally pleased with our positioning across the exchange markets. That said, it will likely be sometime before we can get an accurate picture of what our initial volume on exchanges could be in 2014, and what the resulting risk profile might look like. We note that open enrollment runs through March 31.”

“We can say that initial interest in exchange products appears robust. As a point of reference, during the first week of open enrollment, we received over 35,000 calls into our service centers, which is more than double our historical weekly volume for individual business. In the second week, this increased to nearly 45,000 inbound calls as consumer awareness began to ramp up across the regions.”

“Moving now to Medicare. Performance was stronger than we expected in the quarter, driven primarily by improvements in our Medicare Advantage business. We are making progress with our Medicare Advantage turnaround efforts consistent with our multi-year improvement and product repositioning strategy. Based on our review of the 2014 competitive landscape, we continue to expect some modest membership attrition next year as we have worked to offset most of the pressures stemming from CMS reimbursement cuts through a variety of levers.”

“Medical enrollment totaled 35.5 million medical members as of September 30”

“we’ve been working on this for a couple of years now. We knew that there would be some choppiness going in. We’ve hired bubble staff, we have a number of folks ready to assist our customers, working through the issues, and we’re not at all surprised by the initial activity.”

“We’re still comfortable with our margin range of 3% to 5% based on the pricing we’ve put forward and what we have out there. I”

“For the on-exchange, we’re generally very pleased with our positioning across most states with the strategies we’ve built out and the segments we’re looking at. I would say it’s — we have good data going in, so we feel we’re pretty well positioned when we make pricing assumptions. And there are some — there’s a wider variance on the on-exchange. There are certain markets that have a wider variance than you would expect. I would stake Colorado as a good example amongst our markets. The pricing on a metal level between the highest and the lowest competitor is pretty varied in Colorado.”

“Relative to where I think the industry thought the duals would be a year ago, things are moving at a slightly slower pace, but nonetheless, the opportunity remains significant and we think we’re very well positioned. ”

“we feel that brand will carry our membership and the early results are too difficult to tell, but we do seem to be pulling in the membership on a brand basis. There’s a deep affiliation to the Blue brand.”

Caterpillar 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.

“The sales decline was mostly in our Resource Industries segment, which is principally mining, where sales were up 42% versus the third quarter of 2012. Sales in our Power Systems and Construction Industries segments were each down about 7% in the quarter and driven mostly by dealer inventory changes and in the case of construction currency impacts.”

“We’re still seeing strong mine production. In fact, some of the big mining companies are setting production records. But despite that, we’re still not receiving nearly as many orders as we expected and our outlook today is lowered as a result.

With the outlook now is $55 billion, we expect the full year to be down almost $11 billion from 2012, and about $8 billion of that is Resource Industries. In terms of profit, we’ve reduced our outlook for 2013 by $1 a share. The most significant for the reason for the lower profit is sales volume.”

“In general, we think 2014 could be a better year for global growth. However, we are concerned. We’ve been in a similar position over the past two years. When economic indicators began to look more positive, we forecast better global growth, that drove the expectations around key industries that are important to our business and we set our outlook. As it turned out, world economic growth was weaker than we expected.”

“Dealers have reduced mining inventory substantially in 2013. That means what we’ve sold to dealers this year is much less than what end customers have been buying from them. For 2014, we’re not expecting nearly the scale of dealer inventory reduction that we’ve seen this year, and that should help offset some of the decline in end-user demand.”

“We do think that mining customers are delaying some maintenance and repair. They’re working hard to improve for this year their results and we certainly understand that. We’re taking a lot of cost action that’s pretty short-term focus as well. But that kind of behavior can’t go on forever. So it’s probably increasing the likelihood that the further out you go, the needs for rebuild and repair are going to go up. So it has been a little bit of a negative this year. We’re thinking now it is probably flat for next year.”

“I mean, this is an industry that goes up quickly, it goes down quickly. What you need to be able to do is flex your costs, and that we’ve worked pretty hard to do. ”

“We’ve not seen any seismic shifts there. Our dealers are highly engaged with the service and support activity, as a customers they’re very good at it. They have significant rebuild program. So I think to some degree, it’s around mining companies working really hard right now to improve their operating results and a lot like we’re doing.”

“I have had several personal meetings with our mining customer CEOs the last few weeks, month or so on this very question. And it strikes me that two things are going on, the bullishness in which they answer that question on existing mines.

If you look at a couple of big announcements, even in last week of increased iron ore production or increased coal production, and in my discussions with these guys, it’s been pretty bullish in terms of what they see for existing mines in the scope of a very bearish situation for any expansion.

Any expansion in the near-term is dead. It’s over. It’s not going to happen. But they are really focused on increasing productivity, getting a lot more mine production out with less resource. That’s one of the reasons I think we’ve seen fewer replacement sales and aftermarket sales frankly in the last few months.

But they are all fairly optimistic on existing mine production”

“China will not implode. It will continue to attract iron ore and some coal and they feel that they want to get that out of existing resources. At some point that plays right to our hand, just not right now.”