Delphi 2Q17 Earnings Call Notes

Kevin Clark

China is forecast to lead the world in powertrain electrification

” China’s forecasted to lead the global trend in Powertrain electrification, representing over 50% of unit production in 2025, reflecting a 40 fold increase over today’s levels. We remain optimistic about the China market as a result of the underlying macro trends which include increased government focus on emissions regulations, which are increasing demand for China’s new energy vehicles, increased consumer demand for active safety and infotainment in user experience technologies, and accelerated penetration of higher contented SUVs and luxury vehicles.”

The data opportunity in this industry is huge

“Well, listen. As we’ve talked about before, the data opportunity in this industry is huge. And, as an industry, we’ve just scratched the surface. We think mobility on demand and specifically the business opportunities we have with fleet management firms or what I’d call the mobility on demand providers, put us in a position where there’s both opportunity within the vehicle from a data standpoint, but there’s also real opportunity outside the vehicle. And those are what we are evaluating now. Those are the reasons why we’re doing these smart sitting pilots with a select group of partners. And you’ll hear us talk more about our plans as we firm them up.”

Delphi 4Q16 Earnings Call Notes

Kevin P. Clark

Autonomous driving capabilities continue to garner strong customer interest

“As I mentioned, our autonomous driving capabilities continue to garner strong customer interest. When you combine Mobileye’s Vision and Road Experience Management systems with Delphi’s best-in-class sensor suite, automated driving software from Ottomatika, and our multi-domain controller, no other entity comes close to matching the quality or the capability of our CSLP automated driving platform. We believe no other system will be faster to market. And as we’ve heard from our customers, no other company is in as strong a position as Delphi.”

Some of the more automated stuff in Mexico could potentially come back

“The whole discussion around border tax, it’s actually broader than Mexico at this point, right? When they talk about import value, they’re talking effectively globally. So it’s clearly Mexico is a big piece of it, but it is hard to speak to specifics. As it relates to businesses or types of operations down there, there are certainly more automated-type manufacturing processes down there, which you could conceivably see coming back to the – or coming to the U.S. Some of these were never in the U.S. We’ve grown them in Mexico or started them in Mexico. And we’ll look at that depending on where the rules go. But it would have to be much more of the – sort of the automated-type manufacturing operations, just given the difference – the labor differential there.”

Joseph Massaro

Guidance

“In total, 2017 revenue guidance is $16.5 billion to $16.9 billion, including approximately $400 million of net FX and commodity headwinds, including the euro at $1.05 versus an average of $1.11 in 2016. While operating income is expected to be between $2.2 billion and $2.3 billion with margins between 13.3% and 13.5%. Earnings are expected to be in the range of $6.40 to $6.70, up 7% to 11% over 2016, including the benefit from $600 million of share repurchases in 2017, which we are using for planning purposes. Our guidance assumes a 16% effective tax rate for the year. And we expect to generate over $2 billion of operating cash flow.”

Strength in China

“Yeah. About half the revenue upside – about half of it, Itay, came from China. Particularly late in the quarter we saw very strong demand in China. I think China totals up about 19% in the quarter. The rest was spread sort of evenly between Europe and North America. And again, we saw it flow strongly from an OI perspective, from a performance perspective. So it sort of mirrored that volume flow.”

Delphi Automotive 3Q16 Earnings Call Notes

Delphi Automotive Plc (DLPH) Q3 2016 Results
Kevin Clark

Megatrends are safe green and connected

“Turning to slide six, the automotive industry’s transformation has been the theme at each of this year’s major auto shows with the highway seeing the megatrends of Safe, Green and Connected, which are at the heart of our strategy. The theme of the recent commercial vehicle show in Hannover was around new mobility. I met with a number of customers who are looking to Delphi to help solve some of their toughest challenges resulting from these megatrends”

25% – 30% of vehicles will be electrified by 2020

“at the Paris Auto Show, vehicle electrification was front and center, as customers look to close regulatory gaps on CO2 emissions and improve fuel economy. Industry experts and even some of our customers are now forecasting 25% to 30% of vehicles to be electrified by 2025”

At level 3 autonomous you get 80% of the benefit for 20% of the cost

” We look at automated driving as on the spectrum of active safety. And the reality is if you get to level 3 automated driving, you get 80% of the safety benefit at 20% of the cost, right?…Yeah, couple thousand dollars. So, listen, a lot of benefit can be really derived there. As you look at going from level 3 to level 4 or level 5, level 5 especially, we see the initial demand being primarily driven by the mobility providers, the folks that you are familiar with, who have another economic incentive to have a driver out of a car and for it to be fully autonomous. Now, there are additional OEs who are working on fully automated vehicles as well for a number of other reasons. But I think that’s a great question and our view is yeah, at level 3 you get 80% of the benefit at 20% of the cost.”

There could be Level IV and level V autonomous systems on vehicles before 2021

” I think given the dialogues we’re having with select customers, they could have them in their vehicles close to 2019 or before 2021, put it that way, given some of the dialogues we’re working. So in terms of pulling it forward, obviously, what’s critical is that our partnership begins working with OE sooner rather than later to integrate that. ”

Joseph Massaro

Expecting flat vehicle growth next year

“we believe global vehicle production for next year will be flat to 2016 levels. However, with our strong portfolio of relevant technologies, we would expect Delphi to grow mid-single digit organic, driven by our faster growing product lines, active safety, infotainment, GDi and vehicle electrification, all of which are expected to grow strong double digits again in 2017.”

Delphi 2Q16 Earnings Call Notes

Delphi Automotive Plc (DLPH) Q2 2016 Results

Kevin P. Clark – President, CEO, Chief Operating Officer & Director

Customers increasingly seeing need for electrification

” As we’ve discussed previously, our customers are increasingly seeing the need for further electrification of the powertrain to close regulatory gaps on CO2 emissions and fuel economy. 48-volt mild hybrids deliver roughly a 70% reduction in CO2 emissions compared to full hybrids at about 30% of the cost. Given our strength in Electrical Architecture and power electronics, Delphi has competitive advantage in the intelligent electrification of the vehicle.”

Large increases in demand for active safety technologies

” with almost 80% of the safety benefits of Level 4 automation coming for just 20% of the cost at Level 2 automation, we see the near-term demand for active safety technologies only growing. As a result, we expect our active safety revenues to increase roughly 50% annually over the next few years.”

Singapore is farthest along in launching robo-taxis

“Yeah, Singapore’s the most advanced from a plan to get to, use your term, robot taxis, and we’ve been working with them or planning with them for about the past year. There are several other cities that are talking about it at this point in time, that we’re talking with, providing the same sort of service and solution. But when you look at Singapore in terms of actually executing, we’re in a situation now where we’ve launched a program. We’ll have piloted vehicles for two years through the end of 2018 and actually pilotless vehicles beginning in 2019. And their plan is to have pilotless vehicles, a fleet of pilotless vehicles in the areas that we’re currently testing beyond 2020 servicing consumers. So they, by far and away, are the further along. But when you look at other U.S. cities, there certainly are examples. London’s talking about it, Amsterdam’s talking about it. They’re looking at it where we’re located outside of Shanghai in Anting, so there’s a lot of dialogue, but Singapore’s first.”

Better margins where it’s tougher to integrate

“We’re now at a point, we’ve talked previously, we talked specifically to active safety, about an investing mode. We’re in profit mode now. It’s not where E&S margins are, but we’re clearly making money. I think with respect to price pressure with specifically as it relates to active safety, it really somewhat depends on what sort of active safety solution you’re talking about, right? If it’s Level 1 where it’s just a camera or just a radar right? As you know, we’re in an industry that commoditizes itself very, very quickly. And to Joe’s point, we’re really good at getting cost out when we get volume and leveraging the manufacturing plant as well as getting material savings. As you get into integrated solution where you’re fusing sensors, that’s a much different scenario, and there are only a few players that can actually do that, we being one of them. And I think in those sorts of scenarios, and that’s where this space is headed. In those sort of scenarios, the pricing pressure is actually very reasonable. It’s there. It’s always there but it’s much more reasonable.

Joseph R. Massaro – Chief Financial Officer & Senior Vice President

We’re watching north America closely but at this point have not seen any softening

Yeah, David, we’re obviously watching it very closely. There was obviously an announcement last week with Ford and such. At this point, what we see is in the forecast. We haven’t had any updates or we have not seen any softening at this point beyond the volume estimates that we have provided.

Delphi Automotive 1Q16 Earnings Call Notes

Delphi Automotive Plc (DLPH) Q1 2016 Results

Steady growth in vehicle production in CHina, NA and EU

” Regulatory trends and consumer demands continue to influence fuel economy, emissions, and vehicle safety standards, driving content per vehicle growth. And we continue to expect steady growth in global vehicle production, driven by continued growth in China, North America, and Western Europe.”

Declines in SA and Eastern EU though

” We’ve seen further declines in vehicle production in both South America and Eastern Europe and increased weakness in the global commercial vehicle market, now expected to be down low-single digits driven by double-digit declines in the North American off-highway market.”

Customer interest in electrification is gaining momentum

“As we highlighted at our Investor Day and was reinforced in Beijing last week, customer interest in electrification is gaining momentum. Our customers increasingly see the need for electrification of the power train to close the regulatory gaps on CO2 emissions and fuel economy. ”

Automakers are exploring moving to a 48-volt system

“If you look at HIS, and based on conversations with customers, that mix of EV and hybrids out in 2025 has actually increased over the last 6 months. And listen, I’d say there’s maybe an opportunity that it accelerates further. Clearly there’s more dialogue and more interest from our customers, as they focus on solutions to reducing CO2 emissions and increasing fuel economy. And things like 48-volt, where you can get a significant benefit at a fraction of the cost, it’s a great value proposition. It’s a terrific value proposition.”

Cost and regulation are the current hurdles to autonomous driving

“Yeah. We can certainly offer a turn-key solution from a technology standpoint. And we are having dialogues with various parties with respect to that. I think the challenge for both customers as well as folks like ourselves are kind of two-fold. Near term it’s cost…And it’s how you sell commercially effective solution. And then second, it’s the regulatory/legal environment. And how you cross those various bridges. I mean as we said in the past the biggest challenge to get to fully automated is not going to be the technology or the cost. It’s really going to be regulation and legal liability.”

Autonomous is an extension of active safety

“I think the important thing from our perspective as we said, we look at automated driving as quite frankly the far end of the spectrum on active safety. And what excites us most is getting to level two automated driving, which is fully commercialize-able today. You can get to 80% of the active safety benefits, so really at a fraction of the cost. And that is really why we’re seeing the tremendous demand for active safety solutions.”

Engineering growth is in software and systems, it can be done in foreign countries though

“When you think about it from the most rapid growth from an engineering standpoint, it’s clearly on software and systems. They’re 25% of our – those engineers are 25% of our engineering work force to date. And I think we expected – Jeff [Owens] talked about it in our Investor Day – close to doubling that number over the next 5 years. And that doesn’t mean you need to do it in Silicon Valley. You can do it in places like Bangalore, where we’re located, in places like Shanghai. We’re looking at other locations to actually recruit and put those people. And quite frankly where it makes sense, we partner with outside service providers and leverage their capabilities.”

Delphi Automotive 4Q15 Earnings Call Notes

Delphi Automotive Plc (DLPH) Q4 2015 Results
Kevin P. Clark – President, CEO, Chief Operating Officer & Director

Chinese volumes whipsawed

“However, operating margins lagged the prior year, primarily the result of the sequential whipsaw in China volumes. You probably recall that in response to the third quarter slowdown in China, we actually reduced head count by about 4,000 employees. And then had to add back over 6,000 employees to meet the 40% sequential increase in volumes that we experienced in the fourth quarter.”

Continue to expect solid growth in global vehicle production

“We continue to expect solid growth in global vehicle production, primarily driven by strong growth in China, North America, and Western Europe.”

The pool of opportunities is higher in 2016

“the pool of opportunities is actually higher. So the amount of activity that remains out there is actually higher than what it was in 2015, which is certainly a positive sign. So we would expect from a booking standpoint to come in roughly in line with what we booked in 2015 from a total new business bookings standpoint.”

Opportunities are in active safety, electrification

“The big opportunities tend to be around, as you can guess, active safety. We’re seeing a big ramp-up in demand – off of a small number obviously – on vehicle electrification, including things like 48-volt, as well as a fair amount of activity on our traditional powertrain products like GDi, Gas Direct Injection. So very good. Great deal of opportunity out there.”

4-5x content on a 48 volt hybrid than on a traditional car

“We’re starting to see more demand, more of a ramp-up in vehicle electrification, including things like 48-volt. Those are very good for us. So 48-volt hybrid content is four times to five times the content that we have on a traditional car. Full EV is seven times the content. 48-volt is an area that – quite frankly a product that we’ll be talking more with folks like yourself about at our investor conference in April.”

We see no change in production schedules from OEMs

“listen we’ve – again we understand the concern that people in the investment community have with respect to where we are in the cycle and what production schedules look like. We see none. I mean we’ve seen absolutely no change in production schedules from when we gave guidance originally a month ago, as well as what our outlook was in the fourth quarter of last year as it relates to 2016. So we’ve seen no change.”

Watching non-traditional competitors closely

“Yeah. No, it’s – listen, it’s something that we always think about. To date it’s not as direct a competition in terms of space or places that we compete. So it hasn’t had an effect. And it’s something we watch closely. I mean the Chevy Volt is a great example. I mean that’s a car where we have close to $400 of content. So we have a pretty good position from a vehicle standpoint. But it’s something we monitor very closely.”

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.”


Delphi 1Q15 Earnings Call Notes

North America, Europe and China solid, weakness in Latin America

” Western European vehicle production appears to be gaining momentum, and vehicle production in North America and China remained solid, in line with our prior outlook.

The positive outlook for these regions is largely offsetting increased weakness in South America. Other macro factors are helping to counter a portion of the negative translation effect of the weaker euros.”

We bring technology and technology capabilities to the car

“We think at the end of the day what we bring to bear is technology and technology capabilities. And the more control, the more involvement in technology, the more value we add. The more integration of systems that we can do, the more value we add. So, our view is net-net that sort of trend would be a positive for suppliers like Delphi.”

Not too afraid of new entrants like goog or aapl

“Listen, you know, at the end of the day we think those of us who have been in the industry for a long time that have the capabilities, that understand the automobiles, that know how to integrate it, and do it at a quality level that the OEs need and require is very differentiated, and that is something the industry is going to continue to need.”

Chinese auto manufacturers are putting more content in their cars

No, listen, we came away from China as a management team very, very optimistic. And it’s really for two reasons. You know as a back drop to give you some background as you know we supplied both the global OEs there as well as the locals. A disproportionate amount of growth in that region has historically been with the global OEs on heavily content vehicles.

You’re absolutely right, the local OEs are starting to increase the quality and increase the content in their vehicle. And as a result appear to be strengthening. The positive for us is we have two things going on. On a relative basis you have strong vehicle production growth in the region. We have the benefit of serving both customer bases. The local OEs we actually do more systems work.

So dollar revenue and profitability tends to be greater when we serve those customers, which is beneficial. But what we are seeing is a significant ramp up in content per vehicle, and that’s what really explains the strong growth that we had in the first quarter, we were more than 10 points over market.”

There’s a fair amount of over capacity with OEMs

“I think everyone is familiar with this industry is aware that there is a fair amount of overcapacity among the OEs. Right, that is the reality. I think that’s something that the OEs need to ferret out, and figure out how they deal with it. ‘

Delphi 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

EPS up 18% on 3% rev growth

“Revenue was up 3%, OI up 10%, margins expanded 120 basis points. And EPS, up 18%. And for the year, Delphi’s revenues were $17 billion, up 4%. And our earnings per share increased 16%”

New CEO is old COO

“I’m honored to succeed Rod as Delphi’s next CEO.”

We are never satisfied with who we are

“I’ll leave this with you and this team is focused on it, is that we are never satisfied with where we are. And we’ve been quite clear from the day that we set sale of the IPO or what our margin expansion would be. We are ahead of schedule or slightly ahead of schedule, to say the least. ”

Industry continues to evolve from hardware to software

“I mean, the industry continues to evolve to — in terms of sophistication of the automobile, particularly in the space that we staked out, which is safe, we’re going to connect. And so, I guess, in my mind and the way we’ve outlined to you guys our journey and our story and our value prop, there’s nothing new here. And so the — in all 3 spaces, the whole focus is to get the vehicle cleaner in terms of environmental impact, get the vehicle safed up. And then, in doing that, that’s the visioning and sensing systems that we’ve always said”

Notes From the Merrill Lynch Auto Summit

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.

$BWA Borg Warner

“as we look ahead, fuel economy and emissions improvements will remain the key objectives for automakers around the world”

“Throughout our history, our technology has competed against alternatives”

“Chinese domestic companies are going to get stronger and better and better, and I think they’re going to get a lot of support for that”

“I think the way to think about what the next technologies look like for us, first of all, each of the products that we have in the portfolio today are all enabling fuel economy and emissions performance across-the-board, every one of those products. And we see area for opportunity and advancements in all of those products, actually. So if I think of turbochargers to pick on an example, we see optimization in the turbo to help the automakers overcome such things as transient response, or turbo lag as some folks may know it. So we’ve got a bunch of examples going on there where we’re looking to use lighter materials, different types of materials. So there’s a whole stream of work around next generation of the products that we have today, and I could list those examples for — across every one of the products that we have. And that’s a big, big part of the work that we do. But the other part of the work that we do, and that’s kind of part of the BorgWarner DNA, is what’s the next thing that’s not in our portfolio, and we approach that both organically as well as through M&A. So we’re looking at what the powertrain may look like 10 years, 12 years, 15 years. We have a Chief Technology Officer, a team of people that are dedicated to — that’s what they do. And that may come externally where we may see a technology that isn’t in play today but will be in a decade”

“The way we interact with the customer is almost always as a system-type approach. But what leads us to the solution with the automaker is our system know-how. Absolutely, our engine system know-how or our clutching and control systems know-how. And integral to that know-how is a tremendous amount of sophistication that we have inside the company about understanding engine and transmissions as a complete system.”

$TRW TRW Automotive

“we’re big, we’re global. We have over 65,000 employees around the world. There is usually not a platform or a car that you can name where we don’t have some kind of content on”

“there’s no one platform, no one product, no one customer that is hugely material to the company, and that speaks to the defensive nature of our business.”

“We do feel that there’s pent-up demand building in Europe. We do think that the normalized level is something more in the 20.5 million to 21 million zone.”

“over many years, it’s gone from a component base to a systems base to an integration.”

“We go through ups and downs, be it the downturn of ’08, ’09, the investment phase that we’re going through now, commodity spikes. But at the end of it, we always generate cash…Two worst years in the history of the auto industry, ’08, ’09, we generated $545 million in those 2 years. And this is something that we highly focus on in the company”

“Yes. We are making money in Europe at these levels. I think at 18.4 million vehicles being produced this year, that’s well above our breakeven. You’d have to get down into the 17 million, sub-17 millions before there’s any concern or worry.”

$DLPH Delphi

“The pace of change in the automotive industry, well, it’s accelerating…global platforms have become a reality. By 2020, they will represent over 1/2 of the global vehicle build.”

“China isn’t the only area that we’re seeing massive change, stricter fuel economy. And emission standards are taking hold worldwide. And consumers are demanding to be connected from the car.”

“we do have the industry’s leanest cost structure.”

“Delphi is a very large and a very complex company that earns the trust of our customers through outstanding, flawless execution…we purchase 0.25 billion parts every day from 6,400 supplier locations. Our 110,000 people in our 141 global facilities deliver 60 million parts every day at quality levels of less than 2 rejected parts per million and with on-time delivery of 99.5%”

“We believe the role of the Tier 1 supplier is becoming increasingly more important. OEMs rely on system integrators like ourselves. And there are only a few Tier 1 suppliers like us that are focused on innovation and even fewer that can execute globally like we do”

“there’s a long list of consumer electronic companies that’s at the top of the game and the connectivity technology. But being able to make that technology, automotive grade and make it work in a car, then that’s a different story, and that’s where we come in at Delphi. Those companies don’t know cars like we do, so we work very closely with companies like Microsoft, NVIDIA and Google”

“we’re a very high-tech company with very special products, and there’s an extra amount of percent of vehicles on the planet that will not utilize ours, particularly, a lot of the entry-level emerging market types of vehicles. They’re not heavily contented in our space, and we do not try to engineer down into that. So there’s probably 35% to 40% on the vehicles that we don’t want to be on because they won’t generate the kind of value that we want to generate, and we don’t plan on taking our technologies and trying to cheapen them, and brand them down to meet into that space. In addition to that, we don’t — we only have about 5% of our business with the Japanese OEs.”

“[on how to achieve fuel efficiency] much improved conventional Powertrain through technology improvement, it will lead the way, it will be the majority of what you see in d vehicle fleet followed by the hybrid and the plug-in and then the EV…when we look at our content for vehicle, it’s actually higher on the electrified vehicle than it is on the conventional vehicle.”

$GPI Group 1 Automotive

“we’re the fourth largest dealership group in the U.S. Last year, we retailed a little bit over 128,000 new vehicles, about 85,000 used vehicles”

“We’re currently up to 142 dealerships, representing over 180 franchises, we have 36 collision centers…we added 18 dealerships in Brazil.”

“brand mix has always been very dominant with Toyota and Lexus, it’s still about 30% of our company. And then you can see Nissan and Honda and BMW and MINI, all around 11%; and Ford, a significant part of our business at a little less than 10%. You can also see that Texas, California and Massachusetts are our primary geographies, and the U.K. showing up there at about 6%, but I expect will continue to grow.”

“While Only 12% of our revenue, our Parts & Service business generates 42% of our profit. Finance and Insurance business also is disproportionate in its contribution to our profit level, 4% of revenues generate 23% of our gross profit. So although a vast majority of our revenues, 57%, come from selling new vehicles, only a little more than 1/5 of our profit comes from that.”

“We continue to see great potential for growth in the U.S. market in the next few years as well. However, still a lot of pent-up demand, the age of the car park is as old as it’s ever been, near 11 years. The number of licensed vehicle drivers is on the rise. Financing is widely available in the market. And used vehicle prices, although they’ve softened recently, are still very strong, which helps consumers trade their vehicles.”

“And as new vehicles trailed off during the recession, our best source of inventory, if you will, is the trade when somebody comes to buy a new vehicle and that fell off as the new vehicle sales fell. We got down to a low of about 50% of our used vehicles being sourced via trade-in, where kind of prior to the recession, we were running about 70%. That puts some downward pressure on our margins…we have to go to auction to source cars. We’re paying $500 to $1,000 more kind of for a similar vehicle. You got auction fees, you got transportation cost, and you’re ultimately bidding against other dealers. So it’s a more expensive place to pick up inventory, so we think there’s opportunities going forward there.”

“the productivity of salespeople over the last decade, or maybe it was even longer than a decade, hadn’t really improved much while you’re selling 8 to 10 cars per month per salesperson. And we’ve got to find a way to change that.”

$HTZ Hertz

“$9 billion of revenue. You can see that a little over 84% of that is in the rental car space…equipment rental business is a $1.4 billion business”

“we’ve really focused over the last couple of years in becoming experts in the used car market. if we can sell a car directly to a dealer, we can make $500 more per car by eliminating that wholesale channel. That’s really the fees that you pay to the wholesaler. And if we can sell directly to the retail channel, there we can make $1,100 more per car”