Apple 1Q16 Earnings Call Notes

Tim Cook

Seeing extreme conditions unlike anything we’ve experienced before

“Our results are particularly impressive, given the challenging global macroeconomic environment. We’re seeing extreme conditions unlike anything we’ve experienced before just about everywhere we look. Major markets, including Brazil, Russia, Japan, Canada, Southeast Asia, Australia, Turkey and the eurozone, have been impacted by slowing economic growth, falling commodity prices and weakening currencies.”

Foreign currency fluctuations have a meaningful impact

“66% of Apple’s revenue is now generated outside the United States, so foreign currency fluctuations have a very meaningful impact on our results. ”

Began to see economic softness in China

“Notwithstanding these record results, we began to see some signs of economic softness in Greater China earlier this month, most notably in Hong Kong. ”

The mother of all balance sheets

“We had the mother of all balance sheets, with almost $216 billion in cash, which translates to nearly $39 per diluted share of Apple stock.”

Customer loyalty still high

“recent consumer surveys by 451 Research, formerly known as ChangeWave, measured an incredible 99% customer satisfaction rate for iPhone 6S and 6S Plus and an equally impressive 97% rate for the iPad Air 2. They also indicate that our iPhone loyalty rate is almost twice as strong as the next highest brand.”

Install base has crossed 1B devices

“our install base has been growing very fast and has recently reached a major milestone, crossing 1 billion active devices for the first time. ‘

The level of Android switchers we had was the highest ever by far

“I would say we were blown away by the level of Android switchers that we had last quarter. It was the highest ever by far. And so we see that as a huge opportunity.”

I don’t think VR is a niche

“Yeah. In terms of virtual reality, no, I don’t think it’s a niche. I think it can be — it’s really cool and has some interesting applications.”

Next quarter should be our toughest compare

“we do think that iPhone units will decline in the quarter. We don’t think that they will decline to the levels that you’re talking about. We aren’t projecting beyond the quarter, as Luca mentioned earlier. But at this point in time, we see that Q2 is the toughest compare.”

I don’t think smartphone penetration is saturated yet

“as I look at sort of your — maybe your broader umbrella point about a question on saturation, the metrics I see would strongly suggest otherwise. For example, almost half of the iPhones that we sold in China last quarter were to people who were buying their first iPhone. And certainly if you go outside of China into the other emerging markets, our share is much lower and the LTE penetration is so low, I mean in some cases, it’s zero, that it indicates to me that there’s still a lot of people, a tremendous number of people in the world, that will buy smartphones and we ought to be able to win over our fair share of those.”

Our expansion plans have not changed even in markets where it looks fairly bleak

“our expansion plans in China have not changed. We are maintaining our investment profile and plans there. We are also continuing to invest in markets where we believe they are great places for Apple for the long-term, like India, as an example of that one. And finally, even in the markets where today, grandly, it looks fairly bleak, from Russia and Brazil and some of the other economies that are very much tied to our oil-based economies. We do believe that this, too, shall pass and that these countries will be great places and we want to serve customers in there and so we’re not retrenching. ”

Luca Maestri

79% of corporate buyers planning to purchase smartphones plan to purchase iPhones

“Among corporate buyers planning to purchase smartphones in the March quarter, 451 Research found that 79% planned to purchase iPhones. That is the highest iPhone purchase intent in the eight-year history of the survey.”

The macroeconomic environment is weakening

“The macroeconomic environment is weakening. When you think about all the — particularly all the commodity-driven economies, Brazil and Russia and emerging markets, but also Canada, Australia in developed markets, clearly the economy is significantly weaker than a year ago. We talked about the unfavorable FX, which again is 400 basis points.”

Data centers are a growing expense as installed base keeps growing

“data centers is a growing expenditure for us, because, as we mentioned in our prepared remarks, our installed base of customers and devices is growing, and is growing very significantly. And the data center capacity that we put in place is to provide the services that are tied to the installed base.”

Freeport McMoran 4Q15 Earnings Call Notes

Freeport-McMoRan (FCX) Richard C. Adkerson on Q4 2015 Results

We face serious challenges with our balance sheet

“This is going to be a different call than we have – have been done in the past for obvious reasons. We face serious challenges because of what’s going on in the marketplace and because of the situation with our balance sheet, and we want to convey that we’re addressing this seriously and with a degree of urgency and we’re very focused on it.”

This is the worst of the scenarios that we were looking at

“as we talked about it at the end of the third quarter, we were looking at various scenarios that ranged from a further decline in prices at that time to other more positive scenarios. We’re experiencing the worst of those scenarios right now, with copper dropping to $2 and oil dropping to $30.”

What are we doing about it? We’re aggressively managing cost and capital raising transactions

“So the issue is what are we doing? What’s Freeport going to do about this right now? And I want to convey to you what we are doing…We are aggressively managing cost, CapEx, production, cash flow and working for capital raising transactions to address our balance sheet.”

Issued $2B in equity and are talking to parties about asset sales

“We’ve taken steps to protect our balance sheet by suspending our dividend. We raised equity proceeds through two ATM initiatives that have generated $2 billion of equity for us. Now we’re going to talk about further steps. As we look at restoring our balance sheet to reflect current market conditions, we’re going to focus and manage our cost and capital and continue to generate cash flow in a safe way. We’re going to take immediate steps to reduce debt to enhance shareholder value. We are in active discussions with a number of parties on alternatives for asset sales.”

The copper market is very different than other commodity markets

“So much talk about copper market commentary that I’m just going to make a couple of comments about it. Unquestionably, the uncertainty about the global economy is negatively impacting financial market sentiment. China’s demand growth is slowing. Our Western demand is not as good as we and others had hoped it would be, but it’s still expanding gradually. I’m not going to debate anyone about the market. The market is what the market is. But the facts are that in the copper business differs from other commodities in that there is not an enormous excess supply in inventories”

The story is not as negative as financial markets are reacting

“The story is fundamentally, in today’s world, the business we’re seeing is not as negative as the financial markets are reacting to it. We have no particular insight as to what’s going to happen in China in the future. We have to prepare ourselves for what the market is and the market is we’ve got $2 copper and we’ve got to react to it.”

We have adequate liquidity

” We have total debt at the end of December of just over $20 billion. We have adequate liquidity, as we go forward. We have very limited amounts, $200 million of debt maturing in 2016. We have no funds drawn under our $4 billion bank credit facility. I’m sure you all have followed the rating actions taken on our company and have also followed the rating agency’s public comment about their broadly based reviews of credits in the metals and mining and energy sector. We have worked with agencies over the year to demonstrate our commitment to protecting our balance sheet, and we’ll continue to do so.”

The situation has developed very quickly and aggressively

“I know everyone would like to be more specific now. I would like to be more specific now. The situation has developed in a negative way very quickly and aggressively, and we’re responding to it. And we will report to you at a time when we can be more specific. But today, we can’t.”

Going to look at the opportunities that we have in the oil and gas business

“Well, as I said, our strategic focus is around our mining business, so that’s going to be the focus. We are looking to see what market opportunities we have available to us with our oil and gas asset to generate value, and we’re going to assess how to do that either near term or over time. I mean, we are not going to make irrational decisions based on just current market conditions. But we have a number of interested parties who are anxious to talk with us about how we might go forward with it.”

Going to use proceeds from asset sales to reduce debt

“We recently restructured our bank credit facility so that we’ve agreed that half of any asset sales we have will be used to reduce debt. Practicality of it is we’re going to use proceeds from asset sales to reduce debt. I mean, that’s just what – that’s why we’re doing it. So there’s not any real restriction now”

Potlatch 4Q15 Earnings Call Notes

Potlatch Corporation’s (PCH) CEO Mike Covey on Q4 2015 Results

Lumber prices hurt by strengthening dollar

“Lumber prices were hurt principally by our strengthening U.S. dollar which has gained 43% against the learning [ph] since January of 2013. To a lesser degree, weaker from China and a modest growth in the U.S. housing market also put pressure on lumber prices. As a result, our average lumber price realization dropped $56 per 1,000 board feet and EBITDA for the Wood Product segment dropped $56 million year-over-year.”

Trying to arbitrage the high private market values of land vs the deep discount that our stock trades

“we are actively pursuing opportunities to take advantage of the arbitraged between high private market timberland values and this deep discount in which are stock currently trades in the public equity market. Hence we have shifted from being a buyer of timberland to a seller with intend of using sale proceeds before successful to repurchase our share and reduce debt. ”

We think our stock is at a 40% discount to NAV

“Our stock is currently about 40% lower than analyst’s estimates of NAV are roughly $900 per acre. The resent market volatility and the further decline in our stock prices only increased our conviction at ours that this is an attractive strategy.”

Their assumed value per acre

“our arbitrage opportunity really comes from the fact that I think the stock is trading at around $900 an acre for the company and we think Southern timberland is worth as I said $1,700 to $2,000 an acre and our Northern Idaho timberland we think it worth $2,000 an acre. So there is the arbitrage opportunity.”

Jerry Richards

There are lots of reasons to be optimistic on lumber prices this year

” if you look at the demand factors that are out there, I mean we are talking about higher housing starts, we are talking about improved repair remodel markets, we’re talking about non-residential construction doing well. The only think that’s really holding back the industry is weakness in China which ultimately is causing the Canadians to push lumber away from China towards the U.S. That’s the only real negative factor. But if you collectively take all those things into consideration, there is reasons to be optimistic. And we’re talking about 5% improvement in pricing year-over-year and that’s right in line with where the fund it’s forecasting as well.”

Eric Cremers

A little early to say whether we’ve seen prices turn yet

Yeah, so I would say we’ve seen pickup in pricing yet, it’s still too early in the year George. I wouldn’t expect to see it frankly until we get out into maybe mid-February. It’s now like you can pinpoint one day and say okay, this is the day that the prices turns. So far no, we’ve not seen prices turn.

Parker Hannifin FY 2Q16 Earnings Call Notes

Thomas L. Williams – Chairman & Chief Executive Officer

Continues to be a very tough environment

“It continues to be a very tough environment in many of our end markets and regions. We have responded decisively to adjust to these conditions and delivered impressive margin return on sales. We have tightened control of discretionary spending, reduced employment levels across all regions in our company and implemented reduced work schedules where necessary.”

Continued to experience general industrial weakening

“We continued to experience general industrial activity weakening due to the knock-on effect from natural resource markets. These challenging markets outweighed positive growth in other markets such as power generation, air conditioning, lawn and turf, rail, and heavy-duty truck.”

Expect environment to continue through the rest of our fiscal year

“We expect the difficult environment to continue through the rest of our fiscal year.”

Valuations are still high. Sellers expectations have not met the new reality of growth rates

“On the balance sheet, the acquisitions – the pipeline is active, but valuations are still high and I think what you’re seeing is a delay in the reality from seller’s expectations to buyers like us as far as setting a new revenue target as far as what they think for the business. That’s the key valuation difference. I think everybody knows we’re disciplined buyers and we buy things that are in our space, so we understand what the growth rates are. And I think the time is on our side with that. I think as time goes on and people see the new reality that they – it’s maybe not going to grow what they thought it was the previous decade, but those valuations will come in more line and I think our pipeline will become more actionable at that point. So, it’s lumpy, it’s hard for us to predict output, but we’re still working on it.”

An example of the IoT in the field

“if you take an air-conditioning contractor today, they have a lot of mechanical tools they have to utilize to measure pressure, humidity, temperatures and so this is a patented sensor that we have. It allows you to diagnose and troubleshoot the conditions of that air-conditioning unit much more rapid, so the value for the contractors as many more calls happens during the call, they can get a print out right on their smartphone or visual on their smartphones and print it out if they want it for the customer, so they can see what’s going on with their unit. So, we launched that. We’ve been very pleased with the initial sales. And that’s a really good example of taking a traditional market and using Internet of Things to make it even better.”

Jon P. Marten – Executive Vice President-Finance & Adminstration and Chief Financial Officer

January has been consistent with what we saw in FY Q2

“This is Jon. I think, James, the pattern is consistent with what we saw during Q2. I think what we’re seeing in January is consistent with what we’re seeing in guidance. January is, of course – the first two weeks of January are a little bit – very difficult to judge, but I think from what we can tell so far that we’re consistent with the guidance that we’ve got together for Q3.”

Lee C. Banks – President and Chief Operating Officer

natural resource markets have remained challenging

“I think one common thread that hasn’t changed is the whole natural resource driven markets, ag, mining, construction equipment, oil and gas, they really by and large continue to be challenging everywhere around the world.”

Residential air conditioning has been strong as housing markets have been strong

“Looking at, really, air conditioning, refrigeration markets in North America, we’ve seen good North America residential air conditioning growth. This is a result, obviously, of the continued strengthening in the housing market.”

Continued topline declines in ag

“Turning to agriculture, we continue to see topline declines, which is consistent I think in contraction and production schedules at our major customers. So, very weak on the agricultural equipment side.”

Heavy duty truck has been strong

“On heavy-duty truck, Class 8 truck, this market has been very good and growing for us. And it was excellent, but consistent with industry forecasts, we are lowering our forecast by at least 20% from the 2015 levels going forward.”

China renewables and rail strong

“On energy, in the region, really I’m speaking to China mostly, renewable, wind, solar and hydro is growing rapidly, but traditional thermal powers, coal, gas, nuclear is still taking a major share. On rail, and this really speaks to China, we continue to be very bullish on the rail market; the Chinese government is making significant investments in this area. ”

Brazil continues to be in dire condition

“talking to Latin America, it’s really about Brazil. I won’t go into the details. I think everybody knows, but Brazil continues to be just in very dire condition and we’ve seen softness in all our end markets, mining, PowerGen, oil and gas, heavy-duty truck, et cetera.”

INventory stocking has stayed about the same, but it’s tough to get a read on that

“Andy, it’s Lee. I would say it just stayed about the same. I mean at the end of the day it’s really hard for us to get a gauge on that. But it certainly didn’t get worse.’

Sprint 3Q15 Earnings Call Notes

Sprint’s (S) CEO Marcelo Claure on Q3 2015 Results

500k postpaid additions

“Sprint continues to build momentum in subscriber growth as you can see reflected in our third quarter results, we have 491,000 total net additions in the quarter, which bring us to over 2 million total net additions year-to-date, as continued progress in postpaid has offset the pressures of the prepaid business. Postpaid net additions of 501,000 were the highest in four years comparing net additions of only 30,000 in the prior year quarter, which makes five consecutive quarters of postpaid growth.”

Focused on network densification and optimization

“A couple of things to our network, first and foremost, we are focused on a densification and optimization strategy. We’ve been very clear that we’re going to do that without jeopardizing the customer experience. And the way we’re expanding network is we’re utilizing something that we call the lowest cost structure.”

Fundamental value prop is to keep things simple

“So our fundamental value proposition is we like to keep things simple. It’s a great product at a great price. And we are achieving that. As you have seen, our network is performing better than ever. And therefore, I think the best way to validate that is our churn.”

We made it clear that we’re going to be a price leader

“As it relates to prices, we made it very clear that we’re going to be a price leader. We are pretty bold in terms of offering 50% of our competitor rate plans and after they have been with us for 24 months, they are going to go back to a standard rate plan. We can do that, because we see our network getting better every time.”

We have the best churn in our history

“Our existing customers are finding out that they already have the best price and customers had been with us for a while, they are very satisfied with the quality of the network and all the improvements that they are experiencing. I think the best way to measure that is churn. If you look at what we have done in churn, it had been three consecutive quarters in which we have had the best churn in the Sprint’s 20-year wireless history.”

ARPU is an outdated figure

“I think ARPU is an outdated figure. It’s really hard to measure, because as we’re transitioning customers from a traditional subsidy model to a model where they are paying or they are leasing their device, it’s really hard to measure ARPU”

JS Earnings Call Notes – RLI, PG

RLI Chief Coperating Officer Craig Kliethermes thinks their competitors are selling insurance policies at prices that they will regret in the future

The construction industry continues its slow rebound with increasing competition in the space. Local knowledge and policy terms are a big differentiator when writing contractors and we’ve seen some lack of discipline and lack of knowledge from competitors. This will likely come back to bite them over time.”

Alternative capital continues to flood the reinsurance market, reducing prices across the industry

Primary pricing on cat continues to be challenging even after factoring the relatively cheap capital provided by reinsurers and alternative capital. Rates on cat are down about 15% year-to-date, the second straight year of double-digit decreases. When we see larger players writing accounts at a 100% of expected model loss providing three months of extra coverage for no charge and readily deploying $100 million policy limits, we have to wonder if discipline will return anytime soon.  Memories are short, the paybacks are long in this business. We continue to offer responsible terms and conditions and pick our spots.”

And that they’ve been able to hire away talent from competitors going through mergers

“We’ve invested both in additional people and product across our casualty portfolio as we have seen some fallout of people from the M&A activity between quality companies. As you know, we believe the quality underwriters and claim staff who buy into our model are the bedrock of RLI.”

They are having difficulty writing new insurance policies which adequately compensate them for the risk they are taking on

Overall, casualty rates have remained slightly positive, large accounts are consistently under pressure; new business is challenging to find at the right price as everyone is very defensive of their best accounts.  We continue to see stiff competition and a general lack of discipline with what appears to be cash flow underwriting mentality in the space.”







Proctor & Gamble (PG) CFO Jon Moeller reduced the company’s growth expectations

“We continue to operate, though, in a very challenging and volatile macro environment. Market growth rates on both a volume and value basis have decelerated due mainly to slower growth in developing markets. We entered the year expecting the market to grow close to 3% to 4% globally. We now expect 2% to 3%.”

And currency continues to remain a headwind

“Currencies are weakening across the board, more than three-quarters of a billion dollars since the start of the fiscal and over a $1 billion after-tax versus year ago. This is on top of a $1.5 billion impact last fiscal year and nearly a $1 billion impact the year before. Across three years, FX has been a $3.5 billion impact over 30% of fiscal year 2013 core net earnings after-tax. Since the start of December, the current year FX headwind has increased by $300 million after-tax with a 40% devaluation in Argentina and additional 15% devaluation in Russia and nearly a 10% devaluation in Mexico.”

They expect these trends to continue for the forseeable future

“We expect these dynamics: slowing market growth, geopolitical hot spots, and a stronger dollar will continue to be part of our reality going forward.  Against this backdrop, we’re staying focused on big opportunities in our control, executing what is the largest transformation in our company’s history, without changing productivity, transforming our portfolio and strengthening category business models and innovation plans.”

And they’ve amended their marketing strategy in a substantial way

“Continued digitization has been and will be a big enabler of our overhead and manufacturing enrollment efficiencies. We’re reducing non-working marketing expenditures – costs that do not impact reach, do not impact frequency. Last year we reduced the number of agencies we worked with by nearly 40% and cut agency and production spending by about $370 million. We’re aiming for an additional $200 million of agency-related savings this year. These are non-working savings that enable us to invest in advertising and in trial of consumer-preferred products. We’re strengthening our working marketing programs — greater reach, higher frequency, greater effectiveness, at less overall marketing costs.”

They’re also investing marketing dollars around their key brands

“Last fiscal year in the US we increased total marketing and merchandising support behind Pantene by 440 basis points, increased Tide brand spending by 220 basis points and invested an additional 150 basis points in Fusion behind the new FlexBall innovation. This year we’ve made similar increases to advertising programs in the US on Shave Care, Fabric Care; in Brazil on Baby Care and Fabric Care; in China on Fabric Care and Oral Care. In North America alone, we’ve added nearly 100 basis points to advertising and in-store merchanting budgets since we started the fiscal year.”

The US Laundry detergent segment was an area of strength 

The US laundry detergent category is continuing to grow, up more than 4 points on a value basis across all outlets over the last 3 to 6 month periods. Within this, our share is growing. P&G’s US laundry detergent value share was up a point last fiscal year and was up a half a point in the December quarter.”

And they are finally gaining traction in their online Gilette shaving offering

“We’re also innovating online. With more men purchasing their blades and razors through e-commerce, we’re establishing Gillette as the online leader. While we were admittedly late to build out our online offering, Gillette Shave Club launched in June and is off to a very good start. We’ve increased our e-commerce share of blades and razors more than six points and nearly double the online consumption since launching Gillette Shave Club.”

Proctor & Gamble (PG) CFO Jon Moeller did say he saw a slowdown in China

Our second largest market both sales and profits is China. Here Q2 organic sales were again down high single digits in line with the Q1 trend. We’ve gotten behind in premium innovation which has been a contributor to our soft top line trends over the last several quarters.”

Proctor & Gamble (PG) CFO Jon Moeller highlighted the firm’s thinking on of currency hedging

There are three reasons we typically don’t end up choosing to hedge. Up to two-thirds of our foreign-exchange losses and a significant amount of our forward exposure is in currencies that are either non-deliverable or are very difficult to hedge. The Argentinian peso, Venezuela bolivar and the Ukrainian hryvnia are three examples.  Second, hedging is neither free nor cheap. Currency volatility in itself increases in significant ways this cost. So when you want it most, it becomes difficult to afford.  The last shortfall of hedging as the answer is that it solves nothing longer term. It also does nothing to help restore the margin structure of the business. A hedge simply defers volatility. When the instrument expires, you have the same hit with the same margin impact you would have had, had you not hedged. While it takes time and there is a lag between the hurt and the help, we typically look to pricing, sizing, mix enhancement, sourcing choices and cost reduction to manage FX impacts. We’ve historically recovered about two-thirds of FX impacts with pricing over time.”

Proctor & Gamble (PG) CFO Jon Moeller explained how he thinks about the trade off between market share and profitability

In terms of market share, our objective is balanced growth and value creation with the growth objective being over time at to slightly ahead of markets. So market share does matter but particularly in a time when we need to restore structural economics and in response to currency moves we can get ourselves in big trouble, as that becomes the driving metric. And so as we’ve said we’re prepared to lose some share in two situations.”

Johnson & Johnson 4Q15 Earnings Call Notes

Johnson & Johnson (JNJ) Alex Gorsky on Q4 2015 Results

Medical devices and prescription drugs represent 18% of total healthcare costs

“Here in the United States, prescription drugs represent approximately 12% of total healthcare costs and medical devices represent around 6%.”

Last year M&A was premium priced. Today we see a number of opportunities

“As we reflect back on 2015 we realize that the market was premium priced. We remained very active in a number of different areas. And while we didn’t necessarily close on a larger deal, I would not assume that we were not engaged and involved. But at the same time, we think it’s really important for you, our shareholders, as you think about long-term returns, that we stay at the appropriate level of discipline and decisiveness as we go through that process. As we look at the environment today, we see a number of opportunities across the Consumer, the Medical Devices, and the Pharmaceutical groups. We’re going to remain very active.’

Overall we see a positive trend in med tech markets

“Look, I think what we would say overall is we continue to see let’s say a slightly increasing positive trend. So we saw hospital admissions I believe up around 2%. We saw surgical procedures up a little over 1% in the U.S. That’s the most recent data that we have.”

Dominic J. Caruso – Vice President, Finance and Chief Financial Officer

Did see a slowdown in China, but we’re optimistic

And on China, just a couple comments. That China, we did see a slowdown in China primarily in the Consumer business, because both Medical Devices and Pharma businesses still had high single digit growth in China. And we’re optimistic about China going into 2016. Our plans are for improved growth in China in 2016.

Danaher 4Q15 Earnings Call Notes

Danaher (DHR) Thomas Patrick Joyce on Q4 2015 Results

Slowing in December clearly impacted our industrial businesses more than others

“what we’re assuming is that what we saw with some of the slowing in December is essentially the environment that we’re going to see in the near term here. It’s clearly impacting our more industrial businesses more than our other businesses”

Fortunately the Euro has stabilized

“Fortunately, the euro has stabilized so the overall currency impact is not what it was in 2015, but there’s a little bit of a negative right now.’

Having trouble getting a sense of channel inventoriesThe environment is favorable for us in terms of M&A. THere are more people on the sidelines than in previous days

“I think the environment is generally a favorable one for businesses like ours with a balance sheet that’s ready to deploy into small and midsized situations. And I think to your question, there are some folks who are perhaps a bit more on the sidelines right now than in previous days.”

We actually saw Middle East numbers hang in through the middle part of the year

“We’re trying to be increasingly conservative as we see how government funding is being influenced. I think it was interesting watching the course of the year. Oil continued to drop, as you know, throughout the course of the year and yet we actually saw our Middle East numbers hang in there reasonably well throughout the middle part of the year and it wasn’t until the latter part of the year that we saw a more acute shift in the Middle East. And so there was a little bit of a lag there and it’s taken a bit of time for the team to fully recalibrate.”

Daniel L. Comas – Chief Financial Officer & Executive Vice President

Markets have opened up M&A opportunities

“Clearly what’s going on in the high yield market has made it very difficult for the private equity parties, let alone industrial companies that have a lower credit rating. So, some of the anxiety out here is definitely helping some of the conversations. So, on the margin, we’re a little bit more encouraged than we were 60, 90 days ago on the M&A front.”

DR Horton FY 1Q16 Earnings Call Notes

D.R. Horton (DHI) David Auld on Q1 2016 Results

Positive tone because seeing positive things in the market

“Well, we’ve a positive tone, because we’re seeing positive things happen out in the market. And with the absorptions improvement on the relatively flat community count, less pressure on margins, it was a good first quarter, and what we’re seeing going into January gives us a lot of confidence.”

We feel very good about the market right now

“The resale market is still relatively strong with continuing positive signs, so I mean, our inventory turns are improving, our absorption per flag are improving with stable and in some cases improving margins. So we feel very good about the market right now, and are not seeing other than obviously Houston slow, but the balance of our markets are doing very, very well.”

Texas is as good a market as I’ve seen

“I spent a week drive in Dallas and a week drive in Forth Worth in January. And when I got back I told Horton I had to get out of the field, because if I stayed in Dallas and Forth Worth, I would become way too aggressive buying land. It is as good a market as I’ve seen. ”

Bill W. Wheat

feeling good about what they’re seeing in January

“And Nishu just to share — just a little bit more about January, we’re seeing week-by-week accelerating sales pace as we’d expect to see in January and certainly consistent with typical seasonality and certainly in line with our expectations and our budget. So we’re feeling good about what we’re seeing so far”

Michael J. Murray

Entry level is probably the strongest right now

To the competitive landscape certainly the entry level the lower end of the market is certainly the strongest right now and any time we see that in the market we expect further competition.

Kimberly Clark 4Q15 Earnings Call Notes

Kimberly-Clark’s (KMB) CEO Tom Falk on Q4 2015 Results

Remain very optimistic about growth prospects in 2016

“Even though volatility has increased and economies are slowing in some parts of the world we remain very optimistic about our growth prospects. For 2016 we are targeting organic sales growth of at least high single digits for our business in the developing and emerging markets.”

Facing continued currency headwinds in foreign markets

“Like other multinational companies, we’re facing continued currency headwinds. We’re planning that currency translation will reduce sales and earnings by 5% to 6% this year. The all-in drag on earnings including currency transaction is expected to approach 15%. These projections are based on forward exchange rates as of a couple of weeks ago which are pretty consistent with recent spot rates in most cases. To reduce the impact of currency headwinds we plan to raise selling prices in some of our international markets.”

Lots of competition around but I wouldn’t say it’s getting worse

“In China, we saw a bit more competitive pricing being spent in the market by some of the competitors which we matched up to at some extent, but we saw some of that in the third quarter as you may recall, but had a very strong volume quarter again and again have lots of innovation coming. So still tons of competition around, but I wouldn’t say it is getting worse, but it is continuing.”

China probably a bit of a slowdown, but still growing overall

“In other markets China kind of a mixed bag with a little weaker quarter for us and yes some of that was execution on our front that we need to improve and there is plenty of competition there, probably a bit of the economic slowdown, but again that market is still growing overall, it’s just not at the same pace that it once was.”

Birth rates are ticking up

“If you look at a market like China, we’d still say high single digit growth. It is going to be the year of the monkey in China which is a good year and so you typically have a little bit of an uptick in the birth rate, restarts with the forecasters were calling for, the birth rate in the U.S. is actually ticking up. ”

Local competitors have exposure to dollar priced commodities

“If you look at a market like China, we’d still say high single digit growth. It is going to be the year of the monkey in China which is a good year and so you typically have a little bit of an uptick in the birth rate, restarts with the forecasters were calling for, the birth rate in the U.S. is actually ticking up. ”

We’re pretty bullish on China

“We’re doing a ton in e-commerce and that channel is growing pretty dramatically in China and so it’s probably a third of our diaper sales were in e-commerce which is over wait the rest of the categories. We’re still seeing good mid-tier super premium segment growth where we tend to do better. So again, I’d say China we are pretty bullish, lots of competition but good growth in innovation coming and some geography expansion as well.”