AGCO 3Q16 Earnings Call Notes

AGCO (AGCO) Q3 2016 Results

Martin Richenhagen

Sabilization in Brazil and more supportive gov policies in Arg

“Market conditions in South America have been difficult during the first nine months of 2016. More recently demand is starting to stabilize in Brazil where solid farm fundamentals are beginning to overcome previous weakness caused by political and economic challenges. More supportive government policies in Argentina have also contributed to higher sales in that market.”

Andrew H. Beck

Farm income will be down again in 2016

“In the United States, the USDA estimates that farm income will be down again in 2016, and as a result, our North American industry forecast calls for a decline of 10% to 15% from 2015 levels, with a more significant decline in higher horsepower equipment.”

Need to raise prices to offset steel price increases

“Well, we’re still working those price increases and probably not ready to give any numbers at this point, but for sure we’ve talked with our marketing teams about monitoring the steel price increases, and understanding that we need to make sure our pricing offsets that completely next year. So that’ll be our intent, but we don’t have firm numbers to give you yet, Jerry.”

Have seen a pullback in demand for storage and conditioning equipment

“Well, I think what we’re seeing in that market right now is certainly a pullback in demand in the grain storage equipment. That usually everyone is focusing just on the silos, but a lot of that business is also in the conditioning, drying equipment, also the conveyance equipment as well. So there are multiple aspects to that. What we’re seeing is a pullback – a significant pullback in the conditioning equipment because the harvest have been quite easy and the grain has been relatively dry. So the hours on the equipment don’t require any replacement this year. We’re also seeing a pullback in commercial activity as some of the big processors are pulling back on CapEx right now.”

AGCO 2Q16 Earnings Call Notes

AGCO (AGCO) Martin H. Richenhagen on Q2 2016 Results

Chided the IR guy for mispronouncing his name

“Thank you, Greg, and I hope that one day you learn how to pronounce my last name properly. It’s not Riken-hagen, it’s Rishen-hagen.”

Continued decline in industry sales

“The outlook of healthy global crop production, especially in commodity prices, and estimates call for 2016 farm income to be at or below 2015 levels. In North America, relatively young machinery fleet and dealers’ efforts to reduce inventory levels have contributed to a continued decline in our industry sales through the first half of the year. Weaker demand from the row crop sector resulted in significantly lower industry retail sales of high horsepower tractors, combine harvesters and sprayers.”

More supportive policies have finally contributed to higher sales in that market

“Regional industry demand declined most significantly in South America during the first half of 2016. In Brazil, political and economic uncertainty is curtailing investment in farm equipment. More supportive government policies in Argentina have contributed to higher sales in that market finally.”

Record harvest and low corn prices have different dynamic effects

” I think it’s a mixed picture, so that means there are certainly farmers who will be in a record harvest. And so, even with lower corn or crop prices, they still will be very, very profitable. And then on the other hand, there are farmers who benefit from it. Everybody who has then (29:57) chicken, pigs and so on, of course enjoys lower commodity prices. So therefore, it’s a very, very difficult picture, and very interesting to understand. But overall, what we know is that farm income is very important. I think that farmers in America still have money and still want to invest, but maybe not on the record level we saw maybe between 2010 and 2013.”

British will likely try to replace European subsidies with British subsidies

“And then I think that, in the UK, in order to avoid any major problems with Brexit, the government wants to – I met the Secretary of Agriculture of England, who is actually – no, I shouldn’t make that comment in public – but I think they will try to basically replace European subsidies by British subsidies. That’s at least the plan. So I don’t think that we will see a huge upswing next year in Europe, but I also don’t see a big downswing either.”

Miscellaneous Earnings Call Notes 4.28.16

General Electric (GE) Jeffrey R. Immelt on Q1 2016 Results

Saw improvements in our business in China

” We’re in the midst of a challenging Oil & Gas market. However, we are things sustained strength in Aviation and Power markets. Healthcare is rebounding. I was in China last week and saw improvements in our business. Most of the portfolios are strong and we’re delivering. There’s plenty of business out there to achieve our goals.”


McDonald’s (MCD) Stephen J. Easterbrook on Q1 2016

All Day Breakfast came out hard and then settled but is still exceeding expectations even at the settled stage

“we clearly came out of the tracks hard with All Day Breakfast. It exceeded our expectations through the launch phase, and then hit a more settled rate. Frankly, it’s still exceeding our expectations through the settled stage as well. So we’re incredibly encouraged.”


Honeywell International (HON) David M. Cote on Q1 2016 Results

I’m hopeful for a rebound but we’re not going to count on it. Europe did better than expected

“I’m hopeful that there is a global economic rebound, but we’re certainly not going to count on it. If there was any region that surprised me in this past quarter, it was Europe did a lot better than I expected. I don’t know if this is just a one-time bounce or something that’s going to stay consistent, but I was quite encouraged by seeing that. It was a nice surprise. I mean, we’ll see how much that turns into something. But right now, we’re going to stay with this whole idea that this is a slow growth global environment and it’s just the smart way to plan. And you see that reflected in how we are forecasting the second quarter and how we’re forecasting the total year. I just don’t think there’s any percentage right now on being bullish about it. If it happens, great. I think there’s a greater chance it happens than there is that it doesn’t. But that being said, I don’t see any percentage in being bullish about it.”

Flight hours is the most important driver of the aerospace cycle

“I’d say it comes back to flight hours again. They fly a lot. And that’s really – I’ve said many times the biggest Aerospace driver we have is flight hours. And it’s not tied to OEM schedules or airline profitability or any of that generally. The long-term trend is going to be driven by flight hours. If they’re flying, everything ends up working out. Whatever short-term disruptions or benefits, whatever you’re seeing, over time flight hours ends up being the driver. Flight hours continue to climb, and that’s a good phenomenon for us.”


LyondellBasell Industries’ (LYB) CEO Bob Patel on Q1 2016 Results

Olefin and polyolefin markets are tight

“Looking forward, we see olefins and polyolefins markets remaining tight during the near-term. There are heavy turnaround schedules in both the US and Asia. The recent rise in crude oil prices provides tailwinds for both pricing and demand, as customers no longer feel incentives to delay purchases, in hopes of future declines in product prices.”


Procter & Gamble’s (PG) Q3 2016 Results

Jon Moeller

It’s not enough just to gain market share

“The reason that we’ve talked a little bit about not following share out the window, we can be gaining shares in categories that are declining, and that’s not going to grow our top line. What we need to be doing as innovation leaders in our categories is getting the market growing through that innovation and gaining a share of that growth.”


Twitter’s (TWTR) CEO Jack Dorsey on Q1 2016 Results

Acquisitions have been critical in creating value for the internet sector for two decades

“The first point I would make is that acquisitions have been critical in creating value for the Internet sector, consumer Internet sector over the last two decades. Many of our competitive peers have bought assets at very early stages that have resulted in billions of dollars of value and Twitter has been the same”

Goal is to be one stop shop for advertising

” At end of the day, our goal is to be a one-stop shop for advertising. And having both owned and operated inventory, third party inventory and ad text stock that can serve both of those constituencies is really critical.”


United States Steel’s (X) CEO Mario Longhi on Q1 2016 Results

Favorable trade case results are boosting the domestic steel industry

“Last year, we successfully advocated for the passage of the Level Playing Field Act in the trade adjustment assistance bill. This represents the first time in decade that U.S. trade laws were revised and clarified to align with the original congressional intent. The interpretation and enforcement of these new laws has already been reflected in preliminary determinations in the three major trade cases we elected to pursue with other steel companies in 2015. Yesterday, we announced another step in our efforts to have the rule of law enforced. We filed a complaint with the U.S. international trade commission to initiate an investigation under section (337) of Tariff act of 1930 against the largest Chinese steel producers and their distributors. The 337 complaint alleges illegal unfair methods of competition and seeks the exclusion of all unfairly traded Chinese steel products from the U.S. market. I would like to emphasize that the remedy under section (337) is not a tariff, it is an exclusion of products from the U.S. market. Our complaint alleges three clauses of action, the illegal conspiracy to fix prices, the theft of trade secrets and the circumvention of trade duties by false labeling.”


Third Point 2Q16 Investor Letter Dan Loeb

One of the most catastrophic periods of hedge fund performance since this fund’s inception

“Unfortunately, many managers lost sight of the fact that low net does not mean low risk and so, when positioning reversed, market neutral became a hedge fund killing field. Finally, the Valeant debacle in mid-March decimated some hedge fund portfolios and the termination of the Pfizer-Allergan deal in early April dealt a further blow to many other investors. The result of all of this was one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund”

Volatility is bringing excellent opportunities

“As most investors have been caught offsides at some or multiple points over the past eight months, the impulse to do little is understandable. We are of a contrary view that volatility is bringing excellent opportunities, some of which we discuss below. We believe that the past few months of increasing complexity are here to stay and now is a more important time than ever to employ active portfolio management to take advantage of this volatility. There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies. ”

Texas Instruments’ (TXN) Management on Q1 2016 Results

Kevin March

Inventories were up because we expect higher shipments

“We expect that material is going to ship over the balance of the year. And between the increased shipments in 2Q and the shipments of that personal electronics material, we’ll see the days of inventory drift back down comfortably inside our model, very similar to what we saw last year. If you go back and take a look last year, we were also a little bit higher in the first quarter, anticipation of second quarter growth, and then days drifted down as we came through the year.”

Dave Pahl

Weakness came in as expected but broad based strength in other areas

” that portion of demand where we saw weakness came in about as we expected. The strength was more broad-based, and we continue to, obviously, to see strength in automotive and then the improvement in industrial and comms equipment. So, very, very broad-based strength that we saw. So the second part of your question was sequentially. What we saw from the trends there, no surprise that automotive remained very strong, and it was driven by infotainment as well as the hybrid electric and powertrain systems. Industrial, again we had growth across almost every sector inside of industrial. Personal electronics down, with most sectors declining”


Group 1 Automotive’s (GPI) CEO Earl Hesterberg on Q1 2016 Results

Vehicle inventory stood at 85 days vs 69 days in 1Q15

“The U.S. new vehicle inventories stood at 31,400 units which equates to an 85 day supply compared to a 69 day supply for the first quarter of 2015. Luxury brand inventories drove much of the year-over-year increase. We have adjusted orders and expect to bring inventory closer to our target level of 60 days by the end of the second quarter. ”

Oil companies still have a long way to go in restructuring their balance sheets for what’s happened to oil prices

“our new vehicle sales in Houston, we held a 1% decrease for the quarter, so we’re fighting it pretty well, but I attend a lot of meetings and I’m various Boards with these oil company executives and they still have quite a way to go in restructuring their balance sheet and that’s what happening now.”

Hasn’t been a big consumer confidence problem outside of energy impacted markets

“No, I don’t really see weakness outside of the energy belt. David I’d say people are reacting to the fact just not growing as significantly as it had been in recent years. So when it’s flat without it only grow 1% or 2% or 3%, I think it feels for a lot of people like it’s just very slow. But I wouldn’t say I have seen any big consumer confidence crisis anywhere outside of the energy impacted market.’


AGCO (AGCO) Martin H. Richenhagen on Q1 2016 Results

2016 farm income expected to remain below 2015 levels

“estimates call for 2016 farm income to remain below 2015 levels. In North America, relatively young machinery fleet and dealer efforts to reduce inventory levels have contributed to continued decline in industry sales through the first quarter. Weaker demand from the row crop sector resulted in significantly lower industry retail sales of high-horsepower tractors, combines and sprayers.”


AGCO 4Q15 Earnings Call Notes

AGCO (AGCO) Martin H. Richenhagen on Q4 2015 Results

Most projecting another decline projected for farm income in 2016

“Excellent harvests across all major regions put pressure on commodity prices and the USDA estimates, that U.S. farm income will be down significantly in 2015, with most experts projecting another decline in 2016. This softer farm economics have reduced demand for agricultural machinery, especially for larger models.”

More work remains to reduce inventory levels

“The industry made progress in reducing inventory levels, but more work remains especially with large horsepower tractors and combines. Forecasts are pointing to reduced farm income in 2016, and we are expecting lower demand.”

You could call it catastrophe in Brazil

“sales in South America were extremely weak, resulting from political uncertainty, or you could call it catastrophe and a depressed general economy in Brazil”

There are some manufacturers who have a major inventory problem

“Well, it depends very much on the manufacturer, so there are some who really have a major problem. I don’t want to mention name here, we talk about AGCO. When it comes to smaller tractors, I think this might also be an issue for the guys who basically didn’t plan properly, mainly companies from Asia.”

The government in Brazil is in really bad shape

“We try to lobby, politicians right now don’t listen, so the government in Brazil is in very bad shape. They don’t know what they are doing, they don’t have a strategy, they are corrupt, and this damaging not only our business but business in general.”

We’re hopeful that the new President in Argentina comes in with a more pro business strategy

“one is the election in Argentina where we are very hopeful that the new President with whom we will meet soon comes in with a much more business oriented strategy for farmers. That means that we lobbied many years with Kirchner on basically reducing the export duties. And I think we have chances that this will be done, which would of course help Argentinean farmers a lot.”

Venezuela is close to complete bankruptcy

“there is one other bad exception with this Venezuela, I think Venezuela is close to complete bankruptcy, the political system doesn’t work at all, you can’t travel there without being killed. So that’s really, really a very, very difficult market.”

Europe seems to have bottomed out

“I would like to make a general observation. To me, it looks like as if Europe somewhat is close to have bottomed out. And Europe seems to be, in general, a little bit more stable than the other markets.”

Miscellaneous Earnings Call Notes 10.29.15

E*TRADE Financial (ETFC) Paul Thomas Idzik on Q3 2015 Results

There’s a big penalty for a bank when it crosses $50B in assets in the form of greater regulatory spending

“as I said many times in previous calls when this topic comes up, none of our owners are going to reward us by tiptoeing over $50 billion and incurring all the costs and distraction. If we go over $50 billion, it will be when Mr. Pizzi and I and the rest of the team are confident that it’s going to make sense for our owners.”


Volvo’s (VOLVY) CEO Martin Lundstedt on Q3 2015 Results

We see a strong year for trucks in North America

“Trucks North America, we can say that North America – when we start with the macroeconomic view on North America, I think we see the same thing as many other people see. It is a solid growth also for next year, so we don’t see any kind of other things in North America compared to what most, I would say, macroeconomic people see.”

Brazil is probably not coming back for two years

“I think that also one should recognize that Brazil is most probably not going to come back into some kind of high growth or anything like that for – I would say don’t anticipate that for the next coming two years at least because Brazil has to go through quite a lot of things. We don’t see the boom in terms of raw material prices. And not only prices, also the demand is actually coming down and that was very much what fueled the economy in Brazil.”


Whirlpool’s (WHR) CEO Jeff Fettig on Q3 2015 Results

Currencies have experienced a global reset

“Given the significant economic shocks this year, we believe that currencies have experienced a global reset, and we are prepared to operate this changed environment going forward.”

Europe is a split market

“On Europe, again it’s a split market, if you want to say. But Eastern European market demand continues to be very slow and very much down, which is driven by Russia and Ukraine…The western side, on the other side, I would say its stronger than anticipated. The most markets are in a very healthy and robust phase.”

China -4% right now

“China has been slower in terms of market events than we expected, kind of coming into the year. Its at around minus 4% right now, and for that market, it’s a big decline, although in general terms its not and we don’t think that it should have a significant impact on our business”


State Street (STT) Joseph L. Hooley on Q3 2015 Results

It’s certainly a positive that markets have rebounded month to date

” it’s certainly a positive that markets have rebounded month-to-date here in October. I would point out just for completeness that emerging markets now are pretty close on a month-to-date basis back to the third quarter average. They had really dipped in late September, and what’s particularly important to us is the average over the whole quarter. So I would – I’d hesitate to try to claim any kind of victory based on the first three weeks of October, and obviously we’ve got another couple months to go. But I would agree with you that it’s certainly been helpful to see the equity market positive news on the first three weeks of the month.”


Royal Caribbean Cruises’ (RCL) CEO Richard Fain on Q3 2015 Results

Bookings are strong even in China

“The Caribbean and China which makes up approximately two thirds of capacity are significantly more booked than last year at higher rates. The strength of these two products is more than offsetting continued pressure in Latin America.”

Our feelings are good about China

” our feelings are good about how we see China. We think the opportunity is still very, very strong. So that’s kind of our perspective on China.”


Bank of Hawaii’s (BOH) CEO Peter Ho on Q3 2015 Results

CRE has been the headliner for loan growth but we are pretty mature in the cycle, and our core relationships will probably begin to pull back

“all of our lending categories are performing very well right now. So CRE has been the headliner for a good amount of time. It continues to be through the third quarter and we think we still have some space left in this cycle for continued growth. Having said that, we are pretty mature in both the commercial and in particular the commercial real estate cycle and really what you are likely to see is as our core relationships begin to pull back in light of pricing in the marketplace, you will likely see us doing the same.”

Consumer lending strong

“on the other consumer side, home-equity and indirect and installment and credit card, those portfolios are growing very nicely for us. And really, I think a reflection of what’s happening with the economy here in town.”


Comcast’s (CMCSA) CEO Brian Roberts on Q3 2015 Results

Comcast venturing into wireless service

“we believe that wireless obviously is an important area for consumers and how they are in the future. And today, we have incredible success with our Wi-Fi network, which is the largest in-home Wi-Fi network, as well as a terrific out of home Wi-Fi, we’re seeing a majority of bits travel over the Wi-Fi network. But it takes about six months to activate the MVNO. We’ve had told everybody that before, we were going to trial some things and test some things after we activate and we’ll update people as that progresses.”


Ford Motor’s (F) CEO Mark Fields on Q3 2015 Results

We are seeing stabilization in China

“just a couple comments on the China industry, we are seeing stabilization and as Bob mentioned we do expect to lift from the stimulus package. And as he mentioned we are seeing showroom traffic improve, we are seeing closing ratios improve and unquestionably we see this as a really good opportunity, because 70% of our sales have the engines that are eligible for the stimulus.”

Expect stronger for longer in the US

“We would characterize the U.S. industry as healthy and borrowing any type of shock whether it would be economic or policy related. We do see industry sales staying well supported at the current levels through the next few years or in other words we expected to be stronger for longer.”

The industry is going to have to do a lot of work to increase fuel efficiency by the end of the decade

“if you look 2019 and 2020 I mean I think there’s a lot of work the whole industry is got to do at that point in time in response to your compliance particularly around the machines and fuel economy, but I think we feel good about where we are up until 2019, but then there is a sort of a step level increase and we are all going to have to continue to work on particularly with more electrification that’s going to be required in that timeframe.”


Coach (COH) Victor Luis on Q1 2016 Results

We’re bucking the trend of a weak environment in China

“In terms of China, as you mentioned, we’re really pleased to be bucking the trends that many of our traditional competitors are reporting…our team is managing our brand incredibly well in what is of course a very turbulent environment, not only with the exchange rate fluctuations and the impact on traffic into Hong Kong and Macau, but also the domestic stock market gyrations which are now very well-publicized.”


PACCAR’s (PCAR) CEO Ron Armstrong on Q3 2015 Results

European outlook continues to improve

“The European economic and truck market outlook continues to improve. GDP growth expectations for this year are 2.6% in the UK, which is PACCAR’s strongest market in the region, GDP growth is also accelerating on the continent…We expect the strong market conditions to extend into next year.”


Simon Property Group’s (SPG) CEO David Simon on Q3 2015 Results

Bankruptcies in 2015 but better comps than expected

“We are obviously had a lot more bankruptcies in ’15 than we did in ’14 and the other impact we’ve had on the negative side is that we’ve lost certain amount of percentage rent from the outlet business because of the fact that the strong dollar has also heard tourism shopping and we’ve seen that impacted more in the outlet business, the outlet tourists centers then we had in the mall business. The mall comp sales have been a better than our expectations and our leading portfolio in terms of that.”


Applied Industrial Technologies (AIT) Neil A. Schrimsher on Q1 2016 Results

October declined from September

“I mean we had a weakness in July, some expected. That continued through August. And off of that lower base, September probably came in modestly positive. As we look month-to-date through October, I’d say sequentially, it’s around 2% decline that we would see off that period”


CBRE Group’s (CBG) CEO Bob Sulentic on Q3 2015 Results

Our strongest growth is in Europe

“we are not seeing a lot of pressure. I would tell you where we are seen the strongest growth is in Europe. You saw the results this quarter, we expect that continue, but we saw good growth in places where people did not necessarily expected. In Greater China, we had nice growth. In Australia, we did, so we have not felt a lot of meaningful pressure at this point and the backlogs of business we have suggest that year should finish out nicely for us.”

Not seeing any deals die because of lack of capital

“From what we have seen, there is sufficient capital from other sources to step in. As I mentioned earlier, we have been anticipating that the rate of growth in sales will come down to a more sustainable level and we still believe that that is likely to be the case, but we are not seeing deals die basically because of a lack of capital”


Mondelez International (MDLZ) Irene B. Rosenfeld on Q3 2015 Results

13 percentage point currency headwind

” Based on current spot rates, we estimate currency to have a negative 13 percentage point impact for the year, a little more than our previous estimate of a 12-point impact”

The European retail environment is challenging

“the European retail environment is challenging. And I think we have been able to hold our own quite well. They’re interested in some of the very same things that our retailers around the world are interested in: what’s happening in health and wellness, what’s happening on the innovation front. And as long as we continue to drive traffic to their stores, we’re an important partner.”


AGCO (AGCO) Martin H. Richenhagen on Q3 2015 Results

Another robust harvest putting pressure on farm economics

“Another year of robust global harvest is putting pressure on commodity prices, and more challenging farm economics has reduced demand for agricultural machinery, especially for larger models.”

Argentina has increased import allowances

“the biggest export market outside of Brazil, or the market that we ship the equipment from Brazil to, is Argentina. And as you’re aware, the last few years they’ve had import restrictions that has really reduced sales in that market. This year, though, there has been some increase to those import and import allowances.”


Walgreens Boots Alliance (WBA) Stefano Pessina on Q4 2015 Results

Global healthcare markets are ready for change through scale

“The global healthcare markets, and perhaps the U.S. market more than any, are ready for change, and open to new ideas and new approaches that throughout provide scale. As the leading global healthcare company, we have the potential to play a defining role in this evolution.”

We’re not doing the RAD deal to increase our negotiating power with the payer and PBM

“Well, we have not done this to increase our negotiating power with payer and PBM. We have done this because we believe that we can extract a lot of synergies, rationalizing the combined company for, I would say, from internal sources and the harmonization of prices”

This deal will not reduce competition because we’re in an environment with lots of competition

“at the end of the day we are in an environment where the margins are decreasing. So it was decreasing. We are in an environment where there is a lot of competition. And the fact that we put together two companies will not reduce the competition – not just the competition among pharmacies.”


Macerich’s (MAC) Management on Q3 2015 Results

Apparel sales are struggling with lack of a distinct fashion trend

“On the negative side, apparel sales are only showing modest sales per square foot gains, if they struggle with a lack of a distinct fashion trend increasing competition from large format retailers and sluggish consumer settlement”

We anticipate bankruptcies will likely be comparable or higher than in previous years

“Looking towards the end of the year, we are anticipating that bankruptcies are likely to be comparable or higher than in previous years. Many of these retailers are public companies and based on their current stock prices the markets are pricing in a significant risk of bankruptcy. Contrary to the previous year, we are expecting less store closing as part of the bankruptcies as many of the retailers are prime candidates for restructuring with a smaller store base. Again, we believe the lower quality centers will be disproportionately impacted.”

Chains will use bankruptcy to their advantage to reduce store count

‘these chains will use bankruptcy potentially to reduce their store count.Outside of bankruptcy it’s more difficult, because the landlords will typically require some buyout or compensation and many of the companies have not – there’s been very few examples where companies have been successful doing that.”


Manitowoc (MTW) Kenneth W. Krueger on Q3 2015 Results

Deteriorating demand for tower cranes

“our third quarter results were disappointing, as deteriorating demand for tower cranes in the Middle East and Asia coupled with lower than anticipated all-terrain and crawler crane shipments, all contributed to the shortfall in revenues. The current global economic environment affecting customer demand is unlike any cycle we’ve seen in the recent past. Uncertainty among our customers is mounting due to emerging market peers, ongoing question over Chinese growth outlook, persistent depressed oil prices and slowing domestic growth. ”

The third quarter was one of the most difficult operating environments in recent memory

“The third quarter proved to be one of the most volatile and difficult operating environments in recent memory. Manitowoc has weathered many economic cycles and our team has proven its ability to manage the business without compromising our competitive position in the marketplace. This cycle should be no different.”


Delphi Automotive Plc (DLPH) Q3 2015 Results

China was significantly weaker than expected, but we are now starting to see a pickup in orders

“we’re real optimistic. We’re still optimistic about China. For the third quarter, it was significantly weaker than what we originally estimated. If you recall, our outlook was China up about 3.5% or 4% in the third quarter; ended up actually being down 9%. So it was very fluid. For the fourth quarter, our original outlook was China volume up roughly 5%. Current outlook is basically down a point. However, when we look at sequentially third to fourth quarter, we are starting to see a pickup in orders, a strengthening in the market, sequential growth in vehicle production”


The New York Times (NYT) Mark J. T. Thompson on Q3 2015

NYT exploring ways to deal with ad blockers

“Now ad blockers have been much in the news perhaps this is a good moment to give our perspective on that topic. As you know the Times’ digital subscription revenue stream means that we are significantly less expose the most publishers to the impact of ad blockers. Nonetheless, let me make it clear that we oppose ad blocking. The creation of quality news content is expensive and digital advertising is an important way in which we and other high-quality news providers fund news gathering operations. We are exploring a number of options including but not limited to technical solutions to mitigate the impact of ad blockers should the threat increase.”

Strength in luxury, technology advertising

“We’ve seen in Q3, and I think this will continue in Q4 real briskness in the luxury business. We saw real briskness in Q3 in the technology business. I think that will continue. And then there are other categories like retail where we just have less visibility and where there tends to be more volatility.”

We are a journalism play

“we are a journalism play. We are a news and features and opinion provider with multiple platforms, and we’re very interested in the synergies between the platforms. ”


BorgWarner’s (BWA) CEO James Verrier on Q3 2015 Results

Lowering sales guidance thanks to weakness in China and global commercial vehicle markets

“Our reported sales growth is now expected to be between minus 6% at the low end and minus 5% at the high end. This is compared with minus 5.5% to minus 2.5% previously. The change in our sales growth guidance is primarily related to two things. The impact of weaker than expected market conditions in China on our business and weak commercial vehicle markets around the world.”


AGCO 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

Softer industry

“I’ll begin my remarks on Slide 3, where you can see that in the fourth quarter of 2014, AGCO sales were down approximately 13%. While our products are performing well in the market, our results reflect the impacts from softer industry wide, our resulting production cuts and the negative impact of currency translation.”

Near ideal growing conditions were bad for farmers

“Nearly ideal growing conditions produced record crop production across the global ag markets in 2014. The record harvest contributed to an increase in year-end grain inventories.

The resulting reduction in commodity prices has negatively impacted the economy for row crop farmers but favorably reduced the input cost for dairy and livestock producers.”

Lower horsepower equipment to dairy and livestock farmers

“industry sales increased in the lower-horsepower category, which are typically sold to dairy and livestock sectors, while sales of higher-margin, high-horsepower tractors and combines declined significantly in the full year of 2014”

15-17% sales decline for 2015

“Our 2015 forecast assumes softer industry demand across all regions and a sales decline ranging from 15% to 17%.”

Reducing expenses by 150m

“In total we will be reducing expenses by about $150 million or about 10% of the cost in these areas compared to 2014 levels. We are forecasting operating margins ranging from 5.5% to 6% in 2015 and we are targeting an effective tax rate of 36% to 37% for 2015.”

Customers are very loyal to brands and dealers

“for the most part we still believe customers are very loyal to brands and very loyal to their dealers and those are the areas that we continue to work on, our investment in new products and our investment in our distribution network are the real keys to success in our business and we are trying to continue to effort those even in the weaker market conditions we have.”

Farm income probably wasn’t so bad because yields were up even though prices down

“I also think that we should have in mind as mentioned doing – and this presentation the harvest conditions in 2014 were excellent. So while commodity prices went down the volume of course went up and the yields went up. So therefore I think farm income was most probably not as bad and I think everybody has the funds and the money to invest. The question, the big question is will they do so?’

AGCO 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

Softer industry demand

“While our products are performing well in the market, our results reflect the impacts from both softer industry product demand and our resulting production cost cuts.”

Reducing inventory controlling costs

“In response to weaker industry conditions, we are executing our plan to reduce inventory and aggressively control costs. Our team is analyzing all aspects of the business to identify cost savings and to better align our operations with the current market environment.”

Strong harvests are still necessary

“Despite the downturn in the commodity markets, we remain confident that long-term agricultural fundamentals remain positive. Strong harvests are still required to meet the growing demand for food and biofuel requirements.’

Reengineered the business to cope with what’s to come in 2015

“we basically tried to reengineer our business in a way that we can cope with the markets in 2015. We want to take quick and very radical and aggressive steps in order to reduce our cost.”

Trying to take inventories down quickly

“we’re still targeting that we can get our inventories down to level or below last year, at the end of December. So we’ve got a lot of work to do here in the balance of the year. We have significantly reduced our production levels here in the third quarter and the fourth quarter to try to achieve that. Ultimately, it will depend on us meeting our sales targets at the end of the year”

Our business is built to do well in some areas when other areas not doing well, but everything went down at once this year

“Our footprint, in a way, basically, normally would allow us to compensate, let’s say, a downturn in one market by opportunities in another market. So that’s what we saw in the past. Brazil going down, North America going up — or North America going down, Europe going up, things like that. And what we were — what we saw so far this year is that all markets globally went down ”

We’re making radical cuts early to try to get ahead of the events

“I think I would agree to your point that we decided to make severe radical cuts very early, and therefore, we might — I hope that we are a little bit ahead of the events.”

Big strategic Indian shareholder

“I invited Mallika to join the board, which gives us a very good diversification. She’s not only a woman, she has been businesswoman of India for several years, and she is very, very well connected and knows our industry very, very well. And on top of that, she is a woman which also was attractive to us. And then there’s mandatory stock ownership for directors, and Mallika wanted to signalize how much she believes in our business and how much she believes in our strategic alliance and wanted to buy more. In order to make sure that we don’t get into complication here long term, we decided to agree on a standstill agreement, which is 12.5% on the basis of the share count December 31, 2013, and this is pretty much what she is holding out through programs, and she is pretty close.’

Agco 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 North America, farmers’ strong financial positions and the expectation of near-record farm income in 2013 are expected to support healthy retail demand, especially in the professional farming sector, through the end of the year. Strong farm fundamentals are expected to continue in Brazil in 2013 and the attractive terms for the government financing programs are in place through the end of the year are expected to stimulate growth in excess of 15% compared to the same levels in — compared to the levels in 2012. We are expecting softer demand in Western Europe, with weakness in the U.K. and Central and Eastern Europe. Solid demand across France and Germany is expected to mitigate some of the weakness in other areas. We are continuing to expect 2013 demand in Western Europe market to be down between 0% and 5% compared to 2012.”

“I don’t think anything has really changed too much over the course of a quarter. Obviously, the commodity prices are down, but also you have to keep in mind that farm income levels are projected to be very strong in North America and South America. And in many cases, in Europe, we’re seeing good harvest and farm income should be very good there as well. So we’re expecting the activity levels in our dealerships and retail demand to be strong for the balance of the year, and that’s what we’re for focused on right now.”

” in November, we will have the biggest farm show in the world with — it’s in Hanover, Germany, called Agritechnica. It’s a very global, very international show. All dealers go, all importers go, a lot of customers go. And so it, therefore, typically, before Agritechnica, orders slow down a little bit. And the real picture we will have when we come towards this in December. So it’s actually too early to talk about what’s really going on and to talk about 2014″

“we have seen a pickup in the midsize tractors for some of those dairy and livestock guys and also with that, we would expect to see heavier orders or continued heavy orders for the hay products. So that’s balers, windrowers, those kinds of things. So there is some offset then as you see maybe a slowdown if you do on the row crop guys, the dairy and livestock and the protein producers typically see their margins go up and that’s when we would expect to see stronger sales of those products that we just talked about.”

“especially in the U.S. with some expiring tax benefits and the farmers have had a very good year, a good harvest in most cases and commodity prices have been okay, so farm income is going to be good.”