Miscellaneous Earnings Call Notes 2.11.16

Ingersoll-Rand Plc (IR) Michael W. Lamach on Q4 2015 Results

It was a year of volatility

“2015, it was a year that I can characterize best by one word and that word is volatility; volatility in energy markets, in foreign exchange rates, in industrial markets, in emerging markets and, of course, in the stock market.”

North American HVAC positive while global industrial markets weak

“North American Commercial HVAC and Residential HVAC as well as transport and Commercial HVAC markets in Europe are generally positive while global industrial markets remain weak. Transport markets in the Americas will be flat to down as lower trailer volumes will be largely offset by higher auxiliary power units, small truck refrigeration and other products.’

Douglas Emmett’s (DEI) CEO Jordan Kaplan on Q4 2015 Results

We are not seeing what’s going on in the stock market affect the underlying fundamentals of our operating properties

“That’s a great question and believe me, we are watching for it. But the answer is no. I mean, it’s funny if you turned off, if you didn’t turned off the stock market; and you go these are great days around here. I mean, other than watching what’s gone off the stock market in all areas tenant demand, tenant attitude deal flow, we have movement in the economics of leases, rental rates etcetera up, up and up all good. So you kind of see what’s going off the stock market and you wonder whether the stock market is vibrating to some different type of thing that’s going on out there, it’s just hard to know, but no we are not. What we are seeing in the stock market, we are not seeing in any of our underlying fundamentals of operating our properties.”

Our office space is leveraged to media not energy or banks or technology

“we’ve got a very, very diversified tenant base. And so, when you look at sectors that might be potentially backing up in the economy be it energy or banks or technology there is no overweight to anyone of those particular sectors within our market and thus far the media companies which is the tech has been fuelling our media companies the Hulu’s and Netflix etcetera that our production companies are very, very busy providing content and that flows through to the caterers and the accountants and the other people within our portfolio.”

Cisco Systems (CSCO) Charles H. Robbins on Q2 2016 Results

Starting in the third week of January, we saw people pause a bit

“what I will tell you is that after week 10 through those three weeks, we saw customers as they were trying to just digest what was going on, they just paused a bit. And you see customers say I want to just wait and see what’s going on. Let me take a look at this, we want to understand this a little better.

General Cable (BGC) Michael T. McDonnell on Q4 2015

Utility seems to be bouncing back

“The last three months we saw some pullback related, I think to end-of-year. I think a lot of fourth quarter was related to end-of-year tightening of the supply chain, reduction of inventories, and so forth but we’re pretty encouraged by what we’re seeing right now in utility sort of bouncing back a bit and getting back into line with where it had been in the last year maybe even a bit more in North America. ‘

General Cable 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

Divesting Asian and African assets

“We’re developing a divestiture plan for Asia Pacific and African assets. We will have more to say about that plan and our progress in upcoming calls, where our plan is to exit these operations as expeditiously and orderly as possible, while protecting the substantial underlying value.”

CEO transition

“We announced yesterday that we’ll be moving forward to implement our planned leadership transition. Our board has formed a search committee to identify my successor as CEO. Once a successor is identified, the board has asked me to remain on the board and become Chairman, and I’ve agreed to do so on an open-ended basis as the needs of the company dictate. ”

800m in liquidity offsetting 1.4B in debt

“Collectively, we have approximately $800 million of liquidity in the system to fund operations and support the quarterly dividend, the restructuring program and the anticipated retirement of the $125 million senior floating rate notes due in April 2015. Net debt was $1,359 million at the end of the third quarter of 2014”

Construction and infrastructure spend drive the business

“as construction and infrastructure spend go, so goes General Cable for the most part.”

Flat to up environment in NA

“distributors are — about 40% of our business that’s through distributors are channel partner. As you well know, and I’m seeing some mix as slightly positive. We saw the Anixter results, I think Rexel just announced. It’s sort of a mixed story. But I think consistent with what we’re seeing some positive movement in North America, particularly the U.S. The other big piece of our business, about 35% of global is utilities, and we watch energy demand and their rate cases. And it’s again way off from where we were say, 10 years ago, but we do see transmission is generally stronger, and of course, we have wind, which has been — wasn’t there 10 years ago. So I’m watching a lot of the industrial infrastructure companies like Ford or Foster Wheeler, or others watching the utilities what they’re saying and then finally the distributors, but I think it’s — what we’re seeing is fairly consistent with what you’re reading on a macro.’

General Cable 2Q14 Earnings Call Notes

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

Tough economy for wire and cable industry

“The wire and cable industry have been waiting through an uneven and lengthy global economic recovery over the past several years including 2014, where growth momentum continues to be inconsistent. We continue to face uneven spending for utility and construction products in North America and Latin America, as well as persistent challenges in Spain and Thailand.’

Better construction season failed to materialize

“While the momentum we anticipated going into the construction season failed to materialize, we are still planning on a solid second half of the year as the burden of selling higher average cost inventory subsides and the initial benefits of our restructuring program are realized.”

Strong pressure from a competitor who wants market share

” We are seeing strong pressure on the aluminum building wire business. A competitor entered the business and seems intent in growing that business. We’re going to defend our position strongly. It’s where we have a wonderful brand name, STABILOY and NUAL in Canada, and that’s an unfortunate element of people taking strategies and that’s their strategy. So we’ve seen a lot of value add be erased, as well as volume from that business. And we will defend our position vigorously, and I would say that cost us volume and price over the first half of the year, and we expect that pressure will be there, but we will meet it.”

Copper prices are neither headwind nor tailwind

“Right now, copper is around $3.23. So it’s broadly neither a headwind nor a tailwind. Again, the issue has been the industry is not running at capacity, so there is — it’s pretty far from capacity other than in a few segments. So the ability to recover up or down is more limited, but it would be a push broadly if it stays where it is today.”

Got to drive the costs lower in a commodity business

“So all in all, in Europe, we’ve got to keep driving our cost and driving our cost and driving our cost, and then work the niches, which really are communications and a lot of the utility cables, as well as the turnkey business.”

General Cable 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.

“our estimated results for the third quarter fell short of our expectations, principally due to certain of our businesses in North America. Seasonal demand as it relates to grid reinforcement and maintenance activities were lower than anticipated. Delivery schedules for aerial transmission products shipments shifted from Q3 into Q4 in early 2014, and construction activity, while stable, fell short of expectations.”

“as noted in the press release, we determined that an indicator of potential asset impairment is present in our Mexican business due to a history of losses and the continuing difficult local market environment.”

“Overall, our second half volume is expected to be weaker than we anticipated. Utility, mining and construction-driven spending has been generally below expectation.”

“Over the last 10 years, we have transformed the company through more than 20 acquisitions from a U.S. and Canadian-centric player, primarily dependent on copper telephone cable. The wait for renewed infrastructure spending has been a long one.”

“We were talking macro and prudent planning would say that we see the early part of next year sort of as a macro standpoint similar to the, what we’re seeing in the second half year.”

General Cable 2Q13 Earnings Call Notes

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

“Our overall business feels a bit more sluggish than previously anticipated. In addition, metal prices are falling materially over the last couple of months, perhaps causing some customers, particularly distributors, to work that inventory.”

“This anticipated increase principally reflects improvements in aerial transmission and specialty product shipments in Brazil, a growing construction products business in North America and increased project activity in Thailand.”

“I would say, generally, the residential world is just waking up and it impacts, as you know, our utility business as well. So we’re seeing some of that occurring, some better demand in Florida and Arizona. But I would say, generally, we haven’t really felt the full impact of housing starts, single family, beginning to return to the kind of equilibrium level that we’ve seen over the last 15 or 20 years. The non-resi, as you know, has been lackluster with some puts and takes, with mining a bit down and government down and then some up in some other sectors”

“as we look forward to the second half, I would say utility spending is okay, but a bit weaker than we thought. We are seeing the wind orders come back and we are likely to have a one of the best years in transmission”

“Latin America is okay, it’s going to be stronger in the second half than the first half. And Asia Pacific is still paced primarily by our performance in China, Thailand and the Philippines.”

“I will say the non-resi feels sloppy, OEM production feels sloppy. The residential is beginning to have some impact, but it’s — you’ve got to create the house, wire it, et cetera, you see people building out existing developments that were sort of stopped.”

General Cable 2013 Analyst Day 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.

$BGC General Cable Corp Analyst Day Notes

“Today, we’re around 14,000 people, 57 plants, 26 countries, selling into probably 100-plus countries. So again, a heavy product that is somewhat freight-sensitive. There are regional specifications. So the serving area, generally, is 1,000 or 2,000 miles around that plant, depending on where it is.”

“we’re more of a late cyclical. And as we see, the construction cycle begin to kick back in again, led by North America. That’s a good thing for us”

“knowing we’re in a fast-moving local business, but knowing there are certain things that can separate us over time from our competitors, we developed a view — I’m sure others have done it, but what we really said is “Let’s not get a big corporate center, but let’s make sure if we have a breakthrough in the Philippines today, that it’s known in Zambia in 10 minutes.”

“we’ve really seen almost no construction recovery unlike the typical peak to trough and maybe 7 years, if you look back over economic history”

“demand from the electric utilities by approximately half or more from where it was in the last decade”

“We see a lot of capacity that was built in the 5, 6, 7, 8, 9 years ago, coming out of the business or not working. A lot of companies are for sale in the industry because again, it’s been 5.5 years of fairly tough times. So we need the utilization to come up. In some markets, we’re in the 80s, in the 60% percent range. There is no independent figures for utilization. But that will help drive. As utilization comes up, we both get a net contribution margin against our fix. We have plenty of open capacity, generally, as well as occasionally, you get some pricing power.”

“It’s a $175 billion industry, which few people have thought about in terms of that size and scale.”

“We do have a culture of we’re going to be better tomorrow than today, which is continuous improvement.”

“I think we really — we came out of that crisis [’02,’03], which is a very difficult time for the company and said, we’re going to be really good in a very tough business.”

“lean was one of the big legs that help carry us through that ’02, ’03 timeframe and a very important piece of everything we’re doing today”

“We’re not going to run away from businesses that are thought as commoditized. We’ve got some great positions in key markets where what you would think of is commoditized products has been some of our most successful products.”

“in this business, if you can see into what’s being sold, you can reduce your capital employed. So what we love is we have a distributor that says, will you look into our distribution center and as we sell something, will you go ahead and hit an automatic replenishment? We also will do that backward with our suppliers. So as we really grow with these customers, we try to get into the business where we look at each other’s mistakes or weak points, eliminate them so we can make a seamless integration between the companies. So we’ll sell through distribution, which is a bit more than half the business. so we have a channel partner that may call on this hotel who’s about ready to rewire the hotel. We’ll try to specify our gen speed data cable and other things, sell a package through a Graybar at WESCO, Sonepar, Rexel. It depends on the project. We’ll also sell directly to OEMs. We’ll also sell to utilities. And then there’s all kinds of subspecialist like industrial distributors, electronic distributors, communications distributors; some of them are hybrids. But again, it reaches the market in lots of different ways. We’re measuring within those channels the inventory velocity, the cycle time, breakage or below the line cost. So you have your sell price minus — and then your gross profit and then you have all the places where money can leak out from transportation to rebates allowances and so on. So we’re constantly looking at channel profitability and pricing”

“So again, the long-standing relationships, we’re tough on each other because we’ve got to be successful in a tough business. So this is nothing taken for granted. But we really know these folks well. We meet at the highest levels, at my level to be sure we’re pointing the right direction together. If we have issues, we need to get them out on the table, as well as integrate right through it operationally. And this isn’t just about lowest price. This is about can you run the material? What’s the quality of the material, or how is the supply chain running?”

“One of the things that I think is our key advantage over our competitors is the fact that we really offer everything they need in just about every situation. So when I walk into a customer or I walk into a building, or even you just look in this room, you can see that this room doesn’t just sell data cable, yet you have a lot of our competitors that, that’s really all they do. But when I look up and look around in this room, you can see that there’s portable power, you can see there’s LED lighting, you can see there are lighting signs, you can see there’s outlets on the wall. And we sell all those things, and customers buy those things at the same time. And we worked very, very hard in the last 5 to 6 years to try to leverage that purchase into one package, and we really gained some good traction”

“We actually have an organization with salespeople that are responsible for all of our products. And I’ve worked for several wire and cable companies, and I can tell you that’s not the case in many of the wire and cable companies that are out there. And having the ability for a salesperson to represent electronics, to represent our broadcast, to represent our data, is a very powerful tool. And we’re also finding with our distributors that they have the same desire to try to collapse this decision process into a single process that leverages all of these types of cables.”

“In many organizations, problems might be subdued, they might be hidden; they might be covered. In our organization, the philosophy is we want those problems to surface, because those are opportunities and those become the next way for optimizing that value proposition to customers.”

“I don’t get too concerned about telling our story and about our journey of Lean. And part of the reason that I don’t fear that we’re giving away any secrets or competitive advantage here is because this is not easy to imitate. Lean is not a plug-and-play model.”

“Now having said that, we prefer practitioners over academics. What I mean by that is we want people who are willing to go out and try something as opposed to think about what the perfect ideal solution may be.”

“we always talked about net contribution margin. So you can run one more of the average product [indiscernible] product, $0.12 to $0.20 falls to the bottom line in terms of operating income. If you can do that. And then there’s pricing power if we ever get into the high 80s, low 90s, where you begin to see a scarcity build around that product. Which you saw in ’06, ’07 with some products.”

“We can see projects being quoted. We are probably a short backlog business, other than some projects that have a forward look, most of our stuff is sort of a 14-day backlog. But, yes, no, I feel the U.S. is gathering after a softening second half of last year and a soft-ish first quarter. We see a little bit of pace to it. But I would say it’s more the resi side taking up; the non-resi, looks like more of the same. But we don’t know much more than the newspapers other than we are with channel partners quoting on projects, industrially, non-resi, et cetera, so we do get that view.”

“I think the Chinese are getting serious about standards and quality, and doing business the right way.”

“The greenfields are hard. We’ll get them to work. But I prefer to acquire than build. The reason we did the greenfields was the expectations were so high among the sellers because of this road of the sky [ph] around ROW that we felt, let’s go ahead — around the developing countries facilities, we’ll go ahead and build these facilities. I those expectations have come down. It has been a sobering 5.5 years. So, broadly, what we’re seeing today, even in the developing world, is a lot of companies for sale. And we’ll just be careful about what we do in terms of both management time and talent, as well as the upside in this business.”

” if you took the metal out, with your margin on the work that you do in the cable, they’re actually double-digit margins generally…So I have the tendency to think that the margin we make on the value-added, which is generally the double digits and if copper were down, you’d still need to make $400 million on operating income or $300 million otherwise you don’t have a business”

“Wire and cable is about 65% of the overall demand for copper”