Grainger 3Q17

D. G. Macpherson – Chairman and Chief Executive Officer

Modest tailwinds

So, we’ve experienced modest tailwinds that continued to increase throughout the year, I’d say. So it’s little better it seems at the quarter. In terms of the large customers, both the spot buy and large non-contract customers, which effectively are all spot buy, showed some growth for the first time in a long time, and that helps. And our contract customers continue to grow similarly to what we’ve seen, continue to improve slightly. So that’s no real change there in terms of the path that we’ve been on.

Hurricane volume to midsize customers

So the way that works is we have a hurricane. Our branches we typically load the branches with hurricane type products and they skew more to midsize customers. So we see more midsize customer hurricane volume than we would see with large customers. We see a lot of it everywhere of course.

Seeing inflation but not in COGS

So, our COGS inflation this year is going to be very slightly negative. And so we are seeing inflation. Now, we are starting to see inflationary pressures a little bit more than we’ve seen in the last few years of course. But so far, we have that is not shown up in our COGS line.

Programs keeping a lid on inflation

Yes, we do. We think we’ll keep a lid on inflation. I think if we didn’t have that program, we would be seeing some inflation for sure. But that program helps us to offset that inflation.

Miscellaneous Earnings Call Notes

Yahoo’s (YHOO) CEO Marissa Mayer on Q2 2016 Results

Marissa Mayer is proud of the last four years

“As we work to conclude the strategic alternatives process, this groundwork will serve as a solid foundation for Yahoo!’s next chapter. I am proud of what this company has achieved of these past four years. I remain committed to our team and our company and I continue to be optimistic and passionate about the future of Yahoo!”


W.W. Grainger (GWW) Q2 2016 Results

Laura D. Brown – Senior Vice President-Communications & Investor Relations

June selling volume down 3%

“There were 22 selling days in June of 2016, the same as 2015. Company sales were flat in June versus the prior year. The sales performance included 4 percentage points from acquisitions, offset by a 3 percentage point decline from volume and a 1 percentage point decline from price. In the United States, June daily sales decreased 3%, driven by a 4 percentage point decline from volume and a 1 percentage point decline from price, partially offset by 2 percentage points from intercompany sales, primarily to Zoro. June customer end market performance in the United States was as follows: retail was flat; light manufacturing, government and commercial were down in the low single-digits; heavy manufacturing was down in the mid-single digits; contractor was down in the high single-digits; reseller was down in the mid-teens, and natural resources was down in the high-teens.”


Mattel’s (MAT) CEO Chris Sinclair on Q2 2016 Results

Kevin Farr

Brexit will have minimal impact on current results

“Brexit will only have a modest impact on our full year results. Based upon current trends, we believe the negative impact from foreign exchange will be roughly $0.02 to $0.05 of EPS for the year related to Brexit.”


QUALCOMM’s (QCOM) CEO Steve Mollenkopf on Q3 2016 Results

Favorabale demand for chipsets, especially in China

“In QCT, the favorable demand trends for our new chipsets across the mid and high-end smartphone tier, especially with the top 10 vendors in China are helping to deliver improved financial performance. We are also seeing incremental demand for our lower tier chipsets in China versus our prior expectations driven in part by our differentiated all mode and modem leadership.”

5G deployment may have been pulled forward to 2018/2019

” In general, we are obviously trying to drive 5G as quickly as we can. It’s an area which we think to be a strong player in 5G, you have to be a strong player in 4G, 3G and WiFi and consequentially we think that we will maintain a very strong IP position moving forward. The standards bodies are working on that right now. So, I think we have a lot of visibility into the strength of our submissions as well as to how the industry is unfolding. I think in general, if you’d have asked me that question, a year ago, I would have said that it would have happened closer to 2020. Certainly over the last year and accelerating here over the last quarter there has been a real pull to push that in or to pull that in closer to 2018/2019 timeframe depending on what the deployment is.”


Cohen & Steers’ (CNS) CEO Bob Steers on Q2 2016 Results

Joe Harvey

Markets sending seemingly inconsistent signals

” Markets expressed seemingly inconsistent expectations as the quarter progressed. The 10-year treasury yield declined to 1.5%, suggesting slow growth, disinflation and a flight to safety amidst Brexit concerns. Yet, oil and commodity prices continued to rally. These conflicting signals are hard to reconcile, especially in light of our view that inflation should accelerate towards 4% into 2017, driven by rising energy, rent and food prices. While part of the inflation bump should be temporary, rising wages, prospects for additional central bank and fiscal stimulus and a likelihood that commodities have entered a new bull market, suggest to us that the positive market performance in real assets will continue, while the fixed income bull market has less and less room to run”

Brexit will long term be good for the UK

” I think that Brexit over the long-term will be good for the UK. It will result in some short-term pain, probably a brush with recession. But long term, I think it’s good that they can control their own destiny apart from being tied to Europe. And in terms of commercial real estate in the UK, we are expecting prices to decline anywhere from 5% to 15% or 20% depending on the property type and the biggest declines are being expected in the office market. ”


D.R. Horton (DHI) David V. Auld on Q3 2016 Results

David V. Auld – President & Chief Executive Officer

Optimistic about CA but also Texas

“Bob, the growth we’re looking at there is at a new price point that hasn’t existed out there. And we feel very optimistic based upon the land that we’ve been able to put in front of that program. So do we feel more optimistic about California than the balance of the country? Absolutely not. I think Texas continues to be strong and our Southeast area just continues to outperform”

Miscellaneous Earnings Call Notes

McDonald’s (MCD) CEO Steve Easterbrook on Q4 2015 Results

Our turnaround is starting to take hold

“I am confident in the actions we are taking and attraction is beginning to take hold. Most importantly, customers are noticing a difference. Our customer feedback systems are showing improvements in many important aspects of the customer visit, including food quality, order accuracy, speed and friendliness.”


Zions Bancorporation’s (ZION) CEO Harris Simmons on Q4 2015 Results

Paul Burdiss

Don’t expect credit deterioration in anything besides energy

Well I mean, I guess the short answer is until we see the non-energy economies start to really fray, but we’re not seeing that we — and I don’t think we’re going to venture a guess as to when the cycle really starts to et cetera, we’ll actually do that but I think suffice to say that at the moment we continue to see improvement and even in markets like, in a market like Texas the non-energy portfolio remains very healthy. We are looking at a lot of indicators in each of those portfolios to kind of watching for problems and so far it is not really showing up.”

Michael Morris

All domains continue to perform well and metrics are all solid

No, I can’t add anything to that, all domains consumer, retail, mortgage, small business, large commercial they all continue to perform well and metrics are all solid.


W.W. Grainger (GWW) Q3 2015 Results

Macroeconomic conditions are well understood

“The macroeconomic conditions faced by our industry in 2015 are well documented and largely understood.”


DuPont’s (DD) CEO Ed Breen on Q4 2015 Results

There is always cost saving

“Look, there is always cost savings. I mean I am a believer that they occur every year in a few percent range, as you keep streamlining your company, I would say. So, you are never done with it.”

Dow is already on IT systems that we were implementing

“we’re on a very fragmented IT system. One of the benefits it looks like we obviously get here with the Dow merger is Dow is on the IT platform that we were going through the global — actually latest revision of the SAP platform”

Fourth quarter was actually our best organic quarter of the year

“It’s interesting to note though that — and I don’t want to say there is a trend here, but our fourth quarter organic revenue was actually our best of the year. We had been running kind of minus 3% through the first nine months of the year and we are minus 1% in the fourth quarter. And if you kind of look at it around the geographies, it was kind of flat in Latin America, flat in North America, pretty flat in Asia and our one down market was Europe which was down about 2%. So, we’ll see how the trend goes here in the first half of the year but that was little bit encouraging that we saw that lift.”


Brown & Brown (BRO) Powell Brown on Q4 2015 Results

Small businesses still trying to understand ACA

“We define small employee benefits as employers with less than 100 employees. For this segment we are continue to see companies be very focused on managing their costs and trying to understand the implementation complexities of ACA, specifically how they manage costs via exchanges and/or private plan.”

Do expect rates to remain under pressure. A lot of activity in M&A but prices remain high

“We do expect rates in ’16 to remain under pressure and are watching the economy very closely for signs of further expansion or contraction. From an M&A perspective there’s a lot of activity out there. We’ve seen a number of announcements in 2015, maybe the most active year of acquisitions ever. We can tell you that prices remain high, some at levels that don’t make sense to us. However, we continue to look for partners that fit culturally and make sense financially”


AK Steel Holding’s (AKS) CEO Roger Newport on Q4 2015 Results

“the steel industry continues to face significant challenges as we enter 2016. These challenges include continued pressures in the global steel industry as the result of the massive oversupply steel primarily from China, that direct and indirectly impact others oversupply in all regions of the world and otherwise AK Steel is not a major player in the oil country tubular goods business, the significant downturn in that market is contributing to the excess capacity in those markets in which we do compete and to the overall steel market. As we have been stating for several quarters now, the steel market in the United States has been flooded with what we believe are unfairly traded imports. While the import levels have indeed began to decline for many of those countries where preliminary duties are being levied, we still face significant ongoing import pressures.”


Tupperware Brands (TUP) CEO Rick Goings on Q4 2015 Results

Turkey very weak

“Turkey, very disappointed. It was down 25% and much like France it’s been heavily impacted by externals, particularly the terrorist attacks, military activity, there is political instability which has just been almost bipolar from the President almost being voted out of office in June to getting a majority back again just over the last two months. So that’s we’ve seen weakened concurrency and there is a lot of change in consumer behavior in spending.”

I might be concerned if I were selling cars in China, but I think we’re ok

“Also I would say in China for all the news you really hear about that, I think if I was selling cars I might be concerned, but at the lower, we’re again a multi-local business, I think we’re in good shape there.”

It isn’t business as usual out there

“we don’t look at it as a crisis but isn’t business as usual out there”


Qualcomm’s (QCOM) CEO Steve Mollenkopf on Q1 2016 Results

Qualcomm talking about strong volumes

“QCT chipset shipments were near the high end of expectations, with low tier strength across OEMs particularly in China, offsetting some weakness in thin modem sales at a key customer. QTL revenues were higher than expectations on strong 3G/4G device volumes and ASPs and we continue to make progress in signing up Chinese licensees, although there is still more work to be done on that front.”

Lots of industries are looking to leverage mobile technology into their products

“At the Consumer Electronics Show earlier this month, it was clear that many industries are looking to leverage mobile technology into their products and businesses are looking to the leaders in communications and computer systems, such as Qualcomm, to make the world more connected and smarter. Our many announcements at the show reflect our progress extending Qualcomm technology into adjacent and new areas, including automotive, IoT and networking.”


PulteGroup’s (PHM) CEO Richard Dugas on Q4 2015 Results

The volatility does change the way management teams think about their businesses at the margin

“All that being said we are well aware of the volatility in the world today. From concerns of our global economic conditions to the swoon in oil prices, to gyrations in the stock market, the day-to-day swings can be violent. The reality is however that we can’t control any of these factors, what we can do is focus on running our business, consistent with the goals we have established and disciplines we’ve demonstrated. This means acquiring well-located communities that we believe can deliver high returns on investment. It also means hedging our bets by using more land options, where possible and focusing in on smaller, shorter duration projects, where we can get our capital back quickly. It also means, not over leveraging the balance sheet and keeping one hand on the lever to slow investment if housing demand begins to change. And finally, it means having the discipline to systematically give excess funds back to shareholders, rather than trying to force investments in the system. ”


Ford Motor’s (F) CEO Mark Fields on Q4 2015 Results

We are a mobility company

“Well to answer your question Joe when you look at where we’re heading we said we were transforming into an auto and a mobility company because it’s really important that we don’t lose sight of our core business as I mentioned on our remarks upfront.”

China is going from an industry led economy to one that’s consumer led

“In China obviously as we mentioned, when you look at the stock market volatility, that’s endemic of the country that’s moving from an investment and industry led economy to one that’s consumer led. And actually when you look at the components of GDP growth there, the services in the consumer portions of that are actually growing while some of the industry ones are coming down and we view that as a good sign.”

Marion Harris

Not seeing any uptick in delinquencies in the US

“Colin, this is Marion. No, we’re really not. I know there is a lot of discussion about this, but with the exception of the trend in longer term financing we’re not seeing any weakness in the consumer alone. In fact delinquencies which are a leading indicator were at an all time record low for us.”


Las Vegas Sands’ (LVS) CEO Sheldon Adelson on Q4 2015 Results

Adelson thinks we’ve seen stabilization in Macau

“We do see stabilization in gaming revenue trends. In the mass gaming segment, our non-rolling drop was down just 1% over the prior quarter, despite new competition that has predominately focused on the mass market. Our VIP rolling volumes were actually up 5% over the prior quarter outperforming the 2% sequential increase in the Macau market.”…”I thought we had either hit bottom in the mass market or we are bottoming out. Ever since I said I’ve been reading the issues, I’m been reading from analyst reports and from other Sands China reports that I get daily, other clippings that people are starting to believe that and some of the numbers put out and experienced through December and January indicate to me that that’s the case.”


Steel Dynamics (STLD) Mark D. Millett on Q4 2015 Results

I think there’s positive momentum

“Well, I think there’s positive momentum, generally. I’m sure Dick can speak to some of it, but the inventory overhang, there’s continued destocking there and it’s becoming balanced. It’s still relatively high, particularly in hot band. But in coated products, in coated sheet, I think it’s getting into a good position. And you speak to a seasonal uptick. I think we’re seeing that as well.”

Theres tightness forming in cold roll sheet

“On cold roll sheet and coated, I sense a tightness forming in that arena. I think it’s a combination of – the automotive arena is strong. So, the integrated mills got a relatively good order book. Construction continues to come back. There’s some destocking going on. And we have some relief from the trade cases and erosion of import levels.”


United States Steel’s (X) CEO Mario Longhi on Q4 2015 Results

Automotive continues to be a good market, appliance and construction markets should also grow

“Now I would like to give a brief summary of what we are seeing in our markets and our guidance for 2016. The automotive market continues to be a very good market for us and we expect it to remain strong throughout the year. We also expect growth in demand in the appliance and construction markets compared with last year. Industrial equipment market is mixed with a slight improvement in demand for construction equipment, steady demand in the railcar markets and weakness in mining equipment. In the energy markets, low oil prices and rig counts remain a significant headwind. At this time, we do not see any catalysts other than increase in oil prices that would drive significant improvement in tubular demand and pricing with impacts to both our tubular and flat-rolled segments. We continue to expect slight growth in the automotive, appliance and construction markets in Europe as compared to last year but tin mill products may be facing increasing challenges from imports.”