Moodys 2Q17 Earnings Call Notes

Raymond W. McDaniel, Jr.

Certainly has been some pull forward financing

We certainly think that there has been pull-forward into the first half, including the second quarter. How much opportunistic financing is still going to occur in the second half pulling forward from 2018, we’ll just have to see, but borrowing conditions do remain good, rates are low, spreads are narrow. So, that’s all positive.

Robert Fauber

Broad base of issuers

“we saw very strong issuance from issuers who are typically infrequent issuers rather than issuers on relationship based arrangements with us. As Ray mentioned, U.S. bank loans, we saw a very healthy activity there. And we benefitted from issuance that was a bit more broad-based than last year where we had several kind of super-jumbo transactions included in the volume. So, this broader issuance generally leads to better revenue yield. We had very strong growth in first time mandates also contributing to that favorable mix. And as Ray mentioned, some pockets of very strong issuance growth, particularly outside the United States, EMEA bank loans, Asian corporate finance, Canada, to spotlight three.”

Moody’s 1Q17 Earnings Call Notes

Mark E. Almeida – Moody’s Corp

There is going to be anxiety around elections throughout the year

“there is going to be a level of anxiety around each of these elections throughout the year and they are spaced out throughout the year So, I imagine, we’re going to be having periods of relative optimism and then periods where market participants pull back, awaiting the outcome of these various elections.”

Raymond W. McDaniel, Jr. – Moody’s Corp.

These are good conditions for debt issuance

I think it’s each of the items you identified and right now, rates and spreads are very attractive. So, it is a good opportunity for issuers to be in the market, whether it’s refinancing or new money or upping their outstanding debt. These are attractive conditions and looking ahead to potential interest rate increases going forward. And again some of the uncertainty that comes with the geopolitical situation and the elections in Europe. Yeah, we do think issuers are taking advantage and we’re certainly not anticipating a weak second half of the year, as I said earlier, but the kind of growth we’ve seen early in this year, we just don’t think is going to be sustained.

CLO spreads are at multi year lows

“In CLOs, similarly to the strength in the leveraged loan market, spreads there continue to tighten, again at multi-year lows. We’ve seen very heavy refinancing activity. That continued all the way into April. I would think that will slow down a bit, probably pick back up again sometime in the third quarter and we are seeing some new CLO issuance in the pipeline. So, it’s not just going to be weighted towards all of that refi activity.”

Moody’s 3Q16 Earnings Call Notes

Moody’s (MCO) CEO Ray McDaniel on Q3 2016 Results

Ray McDaniel

Moody’s received a letter from the DOJ about the financial crisis

Okay. Thanks Linda. As we disclosed in today’s earnings release, on September 29 we received a letter from the Department of Justice indicating that it is preparing a civil complaint against Moody’s alleging violations of the Financial Institutions Reform, Recovery and Enforcement Act in connection with ratings MIS assigned to RMBS and CDOs leading up to the 2008 financial crisis.

Some of the strong issuance in 3Q may have been pull forward from 4Q

“Yes. Peter, it’s Ray. And I will let Rob comment on this in more detail, but I think the punch line is, we do think that some of the strength in the third quarter was pulled forward from the fourth quarter, We had a very strong close in late September and some of that issuance appears to have been opportunistically pulled into a very attractive issuance environment.”

Expecting an attractive issuance environment in 2017

“Looking out into 2017, we think that issuing conditions are probably going to be attractive and that may encourage pull forward from 2018 and beyond. Part of the reason why we are optimistic about the current outlook for issuance conditions is driven by the fact that we think the default rate in the speculative grade arena is probably peaking right about now over the next month or so and it’s going to moderate and come down, which should help spread. So even if official rates are moving up somewhat, we think there is an opportunity for spread tightening and an attractive issuance environment.”

Expecting stable growth, gradual normalization of monetary policy in the US

“Yes. I mean at a macro level, just looking at GDP, the GDP growth is, I think we are anticipating it’s going to stabilize, albeit at fairly low levels in the developed markets. So somewhere around 2% in the U.S. Less than that in Europe. And then for the G20 emerging markets, more in the 5% range. So, it’s good in that there is growth in the key markets that we operate in, but it is not going to be fast-paced growth in our estimation. We would also expect to see a gradual normalization of monetary policy in the U.S., but I think that will be gradual. And we are going to continue to see accommodative monetary policy outside the U.S. So I think that’s going to feature in continuation of low rates in a number of markets.”

Rob Fauber

Continued good market access in the US

That’s right. And I think I would characterize, there is continued good market access here in the U.S. and we expect that will continue through the election and even potentially beyond. Selective access, I would say, in Europe and healthy issuance in Asia. And we have a healthy new mandate pipeline as well. But as Ray said, we have incorporated some potential volatility and fewer, what we call, [indiscernible] days in the fourth quarter into our thinking.

Investment grade space benefiting from foreign investors looking for yield

” in the investment grade space, we have seen continued interest from foreign investors who were looking for yield. And it’s interesting, when you look at the funds flow both in high yield while last week we saw a small outflow, the prior two weeks were almost $4 billion in inflows and over $11 billion in inflows year-to-date. Similarly on the bank loan side, that asset class has seen its 11th straight week of inflows and that’s the longest streak since 2014 and almost $3 billion over the last 11 weeks. “

Corporate Annual Reports And CEO Interviews 3.24.16

Source: John Deere Annual Report

John Deere (DE) CEO Sam Allen said the farm equipment recession of the last few years has been the worst in nearly a century

“In relation to the farm economy’s robust years earlier in the decade, the current downturn has been quite dramatic. Since peaking in 2013, industry sales of large agricultural equipment in the United States have fallen more than 60 percent. Deere’s total equipment sales have declined more than 25 percent from their high. Last year’s sales decline was the company’s largest in percentage terms since the 1930’s.”


Source: Richemont (owner of luxury jewelry brands such as Cartier, Van Cleef & Arpels) CEO Youtube Interview= https://www.youtube.com/watch?v=-MvyTHPueKI

Richemont CEO Johann Rupert said the true price of capital is obscured in today’s economic environment

“We have a lot more competition, especially from ridiculously mispriced capital. When people misprice something, it is abused. In England, water is free, it rains all the time yet there is a drought. Now, if you misprice capital, people will abuse it and will regret it, unfortunately in our business as well.”


Richemont CEO Johann Rupert stated you should always be improving your business whether we are in an economic expansion or economic recession

“Never waste a good recession. Never waste an opportunity to fine tune your business.


Source: Schlumberger Annual Report

Schlumberger (SLB) CEO Paal Kibsgaard remains constructive on both the supply and demand of the oil markets ultimately coming into equilibrium in the medium term

“We remain constructive in our view of the market outlook in the medium term and continue to believe that the underlying balance of supply and demand will tighten. This will be driven by growth in demand, weakening supply as the massive E&P investment cuts take effect, and the size of the annual supply replacement challenge. In continuing to accelerate the benefits of our transformation program across both our Technologies and GeoMarket regions in 2016, we believe that we will emerge as a stronger company once the price of oil and the market conditions in our industry improve.”


Source: Autozone Annual Report

Autozone (AZO) CEO William Rhodes said the company is prioritizing their E-commerce auto parts websites in order to get their products to consumers quicker

“We are expanding our fast-growing internet offerings. Utilizing our autozone.com, autozonepro.com and autoanything.com websites, we believe we are well positioned to serve our customers however they elect to interact with us. In 2016, we will continue our focus on both expanding our online product offerings and improving the shopping experience. While this business is growing at a faster pace than our “brick and mortar” business, it remains small in absolute terms. However, over time, as mobile shopping intensifies, it will only expand. We have to stay out in front in this sector of our industry. Our customers expect us to offer this shopping convenience and additional avenues for trustworthy advice to maintain, enhance or repair their vehicle.”


Source: Leucadia Annual Report

Leucadia (LUK) CEO Richard Handler said his company is undervalued and prepared to weather the stormy economic environment

“As we write, there is continuing volatility in the fixed income and equity trading markets, as well as in energy prices. Scratches and dents seem inevitable and we won’t dare make predictions for the rest of the year, but based on the actions we have taken to date, our businesses are prepared to weather the storm, and several are doing quite well. We are both aligned long-term investors in Leucadia stock and will continue to work our hardest to deliver good results in the coming years. There remains significant long-term upside in the value of Leucadia, which exists in the intrinsic value of our businesses and is not fully reflected in our current dismal stock price. We will discuss all of our businesses later in this letter.”


Source: Bank of New York Mellon Annual Report

Bank of New York Mellon (BK) CEO Gerald Hassell reiterated the company’s new mission statement

“We play an important role in the financial marketplace and describe ourselves as the Investments Company for the World. Our mission is to help people realize their full potential by leveraging our distinctive expertise to power investment success. In doing so, we seek to improve the lives of countless people globally – a goal that motivates us to be the very best at what we do.”

Bank of New York Mellon (BK) CEO Gerald Hassell said the company remains the dominant vendor for central banks and pension funds

“Our clients include three-quarters of the Fortune 500, central banks that hold approximately 90 percent of all capital and more than two-thirds of the top 1,000 pension funds.”


Source: Moody’s Annual Reports

Moody’s (MCO) CEO Ray McDaniel said the company is benefiting from several tailwinds in the financial markets

“We manage through cyclical conditions, while focusing on and investing around the deeper pull of structural market evolution: phenomena such as the disintermediation of credit, the demand for enhanced risk management techniques, the need to curate increasingly vast quantities of financial information and data and the development of emerging economies. These are powerful dynamics and they reveal an open road beyond the rubbernecking that often surrounds day-to-day market sentiment.”

Moody’s (MCO) CEO Ray McDaniel noted a choppy economic environment is creating uncertain buying patterns across their customer base
“Financial markets continue to be buffeted by volatility stemming from, among other things, uncertain global economic conditions, diverging monetary policies and geopolitical events. These dynamics (and their inter-relationship) create cross-currents and choppiness that unsettle market participants. This in turn impacts both the short- and long-term outlook for Moody’s.”

He elaborated that markets getting harder to interpret

“Markets are becoming more complex, not less, and are moving more quickly and featuring more choices. The need for products and services that illuminate and enhance the understanding of risk is essential to market confidence, and that confidence is essential to the sound management and efficient movement of global capital. Moody’s focus and opportunity involves filling the gaps that complexity, volume and information inefficiencies create.”


Source: Potash Annual Report

Potash (POT) CEO Jochen Tilk said increased global demand for protein will benefit his agricultural nutrient focused company

“By 2050, the world’s population is expected to grow by another 2.3 billion, reaching 9.7 billion. At the same time, diets are improving in many regions. These facts add up to greater demand for food, which will require increased crop production even as the amount of arable land per person is declining. With the world counting on increased yields from farmers, fertilizers will continue to be essential in keeping soils healthy. The role of fertilizers cannot be overestimated: they are responsible for half of all crop yields and without them, we believe the world would be incapable of feeding itself. ”


Source: Wells Fargo Annual Report


Wells Fargo (WFC) CEO John Stumpf said the company is still a relationship oriented business

“The most powerful expression of our heritage isn’t in documents or artifacts or even our stagecoach. It is in any of the millions of relationships we have formed over generations with customers, team members, communities, and shareholders. Relationships define Wells Fargo. Earning lifelong relationships, one customer at a time, is fundamental to achieving our vision.”


Source: Mark Fields Business Insider Interview http://www.businessinsider.com/ford-ceo-mark-fields-interview-2016-3

Ford (F) CEO Mark Fields said cars on the road today are lasting longer than ever, suppressing demand for their products

“We have worked very hard at quality over the last number of years, and our quality is in the top echelons of the industry. So part of it is vehicles are lasting longer. When I was growing up, when you saw a 20-year-old car it was like, Oh my gosh — that thing’s on its last legs. Now you see a 20-year-old vehicle and in many cases it looks pretty good. So part of it is that, but the other part is when we went through the downturn, clearly there were a lot of deferrals of people replacing vehicles.”

Ford (F) CEO Mark Fields noted that economic volatility and currency wars are making the automobile manufacturing business a more competitive landscape

“For us the main policy is making sure that currency is not used as a weapon, if you will, to manipulate the cost of products, whether they’re imported or exported. We can compete with anybody around the world. We can’t compete with central banks.”

Moodys 4Q15 Earnings Call Notes

Raymond McDaniel

There’s nothing in particular that we’d characterize as a red flag

“I wouldn’t say we’ve seen anything that we characterize as a bubble. There obviously are some parts of the market that have more leverage than others and obviously there is stress in the energy, metals and mining sectors. But looking at the market more broadly, there’s nothing that I would say we’ve identified as being a particular red flag.”

There’s a refinancing building coming from 2017-2019

“I’ve thought for a while that the second-half of the year offers more potential probably than the first-half of the year and in part, because we do have the refinancing build from 2017 through 2019 coming closer on the horizon. And also just because we’ve been through a recent period of really strong volatility in the markets, and I think markets looking for more stability in energy and seeing where spreads settle that’s going to encourage. The stability itself will encourage issuance in addition to the refinancing walls that will be coming closer.”

Long term rates have a greater impact on issuance

“I think it’s – first of all, some stability, so that companies feel that they have visibility in what their issuance would look like. Obviously, rates and spreads are relevant. I don’t think that movement on the short-term rates is going to be particularly impactful. It’s really looking more the long-term rates for the bond issuance. And it also has to do with economic momentum in the economy and refinancing needs. So if we have relatively wide spreads or volatility in the market, and we don’t see a lot of economic momentum to encourage capital expenditure and business expansion and we don’t have refinancing needs, then issuance is going to be more subdued.”

Linda Huber

January was the fourth highest volume month for investment grade issuance ever

“investment grade, for January we saw about $125 billion of issuance. And it was the fourth highest volume month ever. However, $46 million of that issuance came from one deal, the Amba’s [ph] deal. We are encouraged by approximately $200 billion in the visible M&A pipeline, but volatility is impacting the pace of that issuance. So the pipeline is healthy, but we do seem to have some backup in the issuance pipeline.”

High yield issuance has been soft

“Moving on to the speculative grade categories, high-yield bonds, January about $7 billion of issuance. The leverage market was soft in December. That tone has continued into January and that makes us cautious. $35 billion is in the forward pipeline, and again we see two classes of issuers, those with higher quality speculative grade names have access and those with lower ratings don’t; continuing headwinds coming from the commodities’ volatility issues and default rate concerns.”

Expect strength in structured finance driven by CMBS

“We are really looking at strength in multiple areas of structured finance in 2016, within offset coming from the CLO sector, which we think is going to be softer. And really, I think the most important driver in structured side is the refinancing that has to occur for commercial real estate.”

Michel Madelain

a number of metrics point to relatively high leverage in the system today

“Yes, maybe, I think you are right in pointing to the fact that a number of metrics point to relatively high leverage in the system today for this entity. I think the – what’s we’re more focused on obviously are the sort of indicators of credit stress. We’re looking at liquidity, covenant protections and default – prediction of defaults. And then, what we see is a slight uptick, I mean, we’ve seen a lot of things getting movement [ph] in energy and mining space. And we have a slight uptick in the other sectors, but they remain – compared to historical standards well controlled.”

Miscellaneous Earnings Call Notes 12.11.15

Universal Health Services (UHS) Presents at Bank of America Merrill Lynch 2015 Leveraged Finance Brokers Conference

Steve Filton

Behavioral health business is more recession resistant

“if you’re seeking — and you’re seeking acute care treatment, you need a hip implant or you need some sort of ENT surgery et cetera, you may think about the economics of that; you may choose to postpone that because you don’t want to come out of pocket for a co-pay or deductable or because you don’t want to be out of work frankly during a tough economic climate. But if you try to commit suicide or you overdose on drugs and alcohol, you are not going to be in a position to decide whether you should or shouldn’t be admitted to the hospital. That decision is really being made generally by somebody else who is effectively economically insensitive to what your economics of the situation or concerns might be. So, I think that’s another reason why the behavioral business has generally proved to be more, I’ll call it, recession resistant.”

Optimum occupancy in behavioral care is in the low to mid 70s

“occupancy rates and our behavioral facility peaks in the mid 80s, right around 84% in about 2005-2006. What we started to do at that point because we have a view probably the ideal occupancy rate in this business is somewhere in the low to mid 70s. And so, when we were at 85% in about 10 years ago, we’re turning away a lot of patients at that point because obviously if we’re averaging 85%, it means that there’s a lot of days when we’re at 90 and 95 and even a 100% occupancy. It also means that because of some of the constraints that we have, we have put male and female patients; we don’t put adults and children together, we don’t certain diagnoses together. So, as a consequence, it’s difficult for facilities to really run at something close to full occupancy.”


Silicon Laboratories Presents at Credit Suisse Technology, Media & Telecom Conference

Tyson Tuttle

Low power for IoT requires innovation

“if you look at the energy efficiency that’s required. If you’re handset only has 10% battery life left, and I know that when mind says 10% battery life, I’m like looking for a charger. But if you imagine that amount of power needs to power an IoT device for five years. So that’s essentially the amount of energy that’s in the little coin cell and they want that device to sense the environment. Let’s say every few minutes it needs to communicate that when something happens. This type of energy consumption requires a lot of innovation. And if so this is what we are focused on doing.”

From a macro perspective, wireless markets suffering but infrastructure business doing well

“I think a lot of people that we are selling into wireless were suffering, especially in China, we were not exposed to that at least on our infrastructure business, we had a little bit of exposure on the microcontroller side and some of the optical modules that did hold back our growth in IoT in the second half. But on infrastructure we see that it’s pretty solid globally. And this is more of a reflection of core network in data center roll outs.”


Barnes & Noble’s (BKS) CEO Ronald Boire on Q2 2016 Results

Have seen increased traffic so far in Q3

“the challenges were greater than anticipated and reduced traffic as well as conversion. During the second quarter, we implemented a significant number of website fixes to increase traffic, improve the overall user experience and stabilize the site. So far during Q3, we have seen increased traffic and have stabilized the site for the holiday season. We plan to implement additional improvements after the holiday season to further upgrade the overall user experience.”


The Cooper Companies’ (COO) CEO Bob Weiss on Q4 2015 Results

Had a bumpy ride from mid September through the end of November

“August was a good month and things dropped off in October a lot, particularly in the U.S. and some of the problems we ran into in Europe exacerbated the most. We thought we’re in pretty good shape in early September, found out we weren’t in as good shape as we thought by mid-September and had a bumpy ride with our integration if you will in Europe, from mid September until pretty much the end of November. Having said that, we had what we call a very respectable November”


Toronto-Dominion Bank’s (TD) CEO Bharat Masrani On Q4 2015 Results

Mark Chauvin

Are starting to see stress in consumer credit portfolios in energy-impacted provinces, but within expectations

“Next, with respect to our oil and gas exposure, we were not surprised by the level of impaired loan formations this quarter. Ongoing analysis indicates that the oil and gas nonretail credit portfolio continues to perform within expectations, given the current level in near-term outlook for commodity prices in this sector. We are beginning to see signs of deterioration in the oil impacted provinces consumer credit portfolios, which again are well within our earlier expectations. Based on ongoing stress tests conducted against the credit portfolios, I remain comfortable that the potential impact of low energy prices on the bank’s credit losses remains well within the range of a 5% to 10% increase over 2015 levels.”

Seeing a gradual increase in delinquency rates over last 4-5 months in oil impacted provinces

“we have been watching it very closely, especially the impacted provinces, which would be Alberta, Saskatchewan and Newfoundland. And what we are seeing in two categories, being the indirect auto but the non-prime segment primarily and then in the card segment, we have seen a gradual increase in delinquency rates over the last four or five months.”

Customers affected are early indicator, the type of customer that would be more challenged than the typical customer

“So in many respects we look at that as an early indicator because that would be the customer that maybe would be more challenged than the typical customer. Now, I would stress that these two categories are less than 1% of our total book and that we expected to see losses of this level.”


Sprint’s (S) Management Presents at Bank of America Merrill Lynch Leveraged Finance Brokers Conference

Tarek Robbiati — CFO

Wireless data is much cheaper in some other markets than the US

” I think the – look at the U.S. wireless market, it’s the biggest one in the world by value. And the reason why it is the biggest one in the world by value is because we have 300 million people and you have a very, very high ARPU…when you really look at some of their – the size of their bills, it’s quite extraordinary. I mean you compare this with Hong Kong which is a market that I am very familiar with. In Hong Kong you can get very, very decent data packages on 4G networks for less than $5 postpaid, which is quite extraordinary.”


Comcast’s (CMCSA) Management Presents at UBS Global Media and Communications Conference

Mike Cavanagh–CFO

No new comments on wireless plans. We believe the cheapest way to transmit data is to get it to the hardwire as soon as possible

“we have no news on this topic today. What we have decided is that it’s certainly worth at this point triggering the MVNOs that we can work on exploring what kind of offering we could bring and go deeper to learn and experiment. That’s the state of play on the MVNO. And that sits in the context of having been big believers in WiFi. So, you have seen us invest in and continue to invest in the WiFi as an extension of the value of the broadband pipe, which is still the kind of best and cheapest way to transmit data we believe is to get it to the hardwire as soon as possible. So, with the progress we have made on our WiFi product and broadband, we think it makes complete sense to be exploring on – what possibilities the MVNO offering has to add value to our customer relationships. That’s as much as we know. There is no – it will take time to draw any conclusions from what we are now going through.”


Vail Resorts’ (MTN) CEO Robert Katz on Q1 2016 Results

Our labor markets are tight

“think ensuring that we have enough, ensuring that we are providing the right employee experience, attracting enough of the right labor, retaining labor and then a part of that is obviously being able to have housing for everyone that works here, I think it is probably our number one concern right now in terms of ensuring that we can continue to drive success. And so, I mean that’s led us over the last couple of years to continue to invest to make sure that we can do that. I’d say where we feel right now is that our markets are tight. We think it is a challenge.’

Upper income US remained strong

“Colorado in particular is the strong market, continues to be a strong market given the economy here, Utah, the Bay Area and California so that obviously is the big help right there but then I would say we are seeing pretty broad based strength from all of our major destinations across the United States, I would say even places like Los Angeles, like Seattle which are not typically our strongest markets in terms of size, we’re seeing real strength there too”…

“I would say right now I think the domestic, the U.S. economy on the domestic side is very strong, the upper income portion of that remained strong ‘


AutoZone’s (AZO) CEO Bill Rhodes on Q1 2016 Results

DIY auto spending has benefitted from lower gas prices

“I think clearly we are seeing some industry strength currently. I think a part of that has to do with what’s going on with gas prices. And while gas prices initially went down, you didn’t see the initial correlation with miles driven increasing. But in more recent months, starting really strong in this summer, and continuing through September, the latest date that we have available, it’s showing nice strength. Over long periods of time we’ve seen that has a nice correlation with our DIY industry growth.”


Cisco Systems (CSCO) Presents at Barclays Global Technology Brokers Conference

Hilton Romanski

Customers are looking for a hybrid cloud

“what we’re hearing from customers fundamentally is that they want to see the benefits and the economics of public cloud in their private cloud environment. So that would suggest to us that ultimately there is a hybrid cloud solution out there for enterprises where some of those benefits across multiple types of workloads across their own environments that are private as well as those that are being hosted in a public cloud is going to co-exist.”


Dave & Buster’s (PLAY) CEO Steve King on Q3 2015 Results

Couldn’t be happier with how 2015 is shaping up

“we couldn’t be happier in terms of how 2015 is shaping up, while we’ve achieved so far as we look forward to a strong finish in the fourth quarter.”


Halliburton’s (HAL) Management Presents at Wells Fargo 2015 Energy Symposium Brokers Conference

Christian Garcia — Interim CFO

North America looks like it could be marginally better than expected, but international looks marginally worse

“North America does look like it’s going to be marginally better than what we said in the third quarter call and international looks like it’s marginally worse and in total, we’re in line with our expectations as we left the third quarter.”

2016 is clearly going to be another down year but we don’t know the magnitude yet

“2016 is still opaque. E&P the E&Ps have not announced their budgets, but clearly it’s going to be another down year. The question is the magnitude of the decline.”

Argentina had elections that could lead to positive economic reforms

“Argentina just had elections and we think that new president elect will usher in a new era of economic reforms achieved among that would be probably a potential depreciation of their over valid currency which will in the short term provide some little need to some dislocations but I think in the long term would be actually help that economy boot that economy and would invite for investors.'”


HCA’s Management Presents at Opperheimer 26th Annual Healthcare Broker Conference

Bill Rutherford, Chief Financial Officer

Seeing higher turnover of nurses as demand for nurses strong

“We think you know we are seeing higher turnover of recently than we’ve historically had. And we think there is a lot of other supply in the marketplace and demand for nurses. We’ve got a host of efforts around recruiting. We talked about on our call our efforts to hire nurse graduates and putting them in orientation and onboarding them a little bit differently so that they have — the retention is longer for those new nurses.”

See continued strong economies in the majority of our markets

“We see continued strong economies in the majority of our markets and I think that provides really fundamental momentum for the company and those trends don’t appear quickly, nor do they disappear quickly. So, we are optimistic that our market trends, we are seeing has some durability to it in the future.”


Comerica’s (CMA) CEO Ralph Babb on Goldman Sachs U.S. Financial Services Brokers Conference

Energy reserves at 3% of total energy related loans

“if prices remain low for longer, we expect to see continued negative credit migration and losses to emerge yet we believe they will be manageable. We have increased our reserves for energy loans in each of the past four quarters, as a result of an increase in criticized loans and sustained low energy prices. Because investors have been particularly interested in the size of our energy reserve allocation note that at the end of the third quarter, we had reserves amounting to more than 3% of our total energy and energy related loans.”


U.S. Bancorp (USB) Presents at Goldman Sachs US Financial Services Brokers Conference

CFO, Kathy Rogers

Planning for three interest rate increases in the next 12 months including next week

“as we look out into 2016, I do think that we are seeing an economic environment that is somewhat similar to what we saw this year, may be slightly improved. As we think about the interest environment, we are projecting in our plan, a potential for two interest rate hikes next year, and then December 1 of this year; so a total of three if you look out over the course of the next 12 months.”

Not seeing any deterioration of credit outside of energy

“the simple answer is no. We’re really not. Outside of energy, it’s really relatively benign, no significant change.”

We’ve probably gotten to a point where reserves will start building again (but not necessarily because of credit deterioration)

“I think one of the things that you’re going to see is that we are getting to that point in the cycle where many banks, including ourselves, have enjoyed a nice outcome of reserve releases. And I do think we’re coming to the end of the cycle. And I think that you’ll start to see reserves starting to build as we move out into later quarters.”


Lululemon Athletica’s (LULU) Laurent Potdevin on Q3 2015 Results

Start of Q4 has been mixed

“In line with macroeconomic trends, the start of Q4 has been mixed. We saw lower traffic in the final weeks of Q3 and into the first couple of weeks of Q4, with steady improvement in Thanksgiving. Given the current environment, we’re taking a conservative stance with revenue in Q4, while taking the necessary actions to manage inventory and control expenses.”


Moody (MCO) Barclays Global Technology, Media and Telecommunications Conference

Mark Almeida, who is the Head of the Moody’s Analytics Business

November was a good month from an issuance standpoint and December has gotten off to a strong start as well

“November was a good month from an issuance standpoint, and December has gotten off to a pretty good start as well. So I think things have firmed up a bit, since some of the weakness that we saw in the summer time.”


Korn-Ferry’s (KFY) CEO Gary Burnison on Q2 2016 Results

Even in a digital world, it still pays to have people housed in the same location

“I think that creating connectivity of people and clients in an environment of collaboration is incredibly important and although we live in a virtual world, I fundamentally believe that the people need, to the extent possible, need to be housed in the same location.”

Gregg Kvochak

“global demand for our Executive Recruitment services remained strong in the second quarter.”


McGraw-Hill Companies’ (MHFI) CEO Doug Peterson Presents at Goldman Sachs U.S. Financial Services Conference

Issuance is down 30% year to date

“we’ve seen a choppier market, issuance is down during the quarter and year to date overall issuance is down globally about 28% and in the quarter its down again over 30%, 35%, 37%, depending on which element of the markets that you look at. So we’ve seen some volatility in the ratings business.”


Avnet (AVT) Presents at Raymond James Technology & Communications Investors Brokers Conference

Kevin Moriarty, CFO

Our product is service

“Avnet’s product is, our product is service, has been and always will be. Models change the way we get compensated for that service. We need to continue to be nimble and agile to be able to move with that”

We feel pretty good about the environment

“I would characterize the current lead times as stable, short. We haven’t really seen any significant changes in push outs, cancelation rates. So we feel pretty good. EM, we continue to experience growth within our European business. I would characterize the Americas as sluggish overall on the component side.”


ConocoPhillips’s (COP) CEO Ryan Lance on 2016 Capital Budget and Operating Plan

We see dividend as highest priority

“Despite the tough market, our dividend remains the highest priority use of our cash. We view the dividend level as a long-term decision. And we’ve been in the current low price cycle for relatively short period of time”

Capital budget down ~25% from last year, -54% from 2014

“We’re announcing a 2016 capital budget of $7.7 billion that’s $2.5 billion lower than 2015 capital guidance and more than $9 billion lower versus 2014. In setting our budget, we’re flexing capital down appropriately for the price environment without losing opportunities or sacrificing the safety or integrity of our operations.”

Moodys 3Q15 Earnings Call Notes

This is the first week that we’ve seen issuance pick back up

“This has been a particularly difficult period, which makes our job for the end of the year here a high little bit more difficult to forecast, which is what we’re trying to work through. Now for investment grade bonds, the expectations for October now, is about $126 billion of U.S. issuance in investment grade bonds. It has been very choppy however. Late August and early September had three weeks of zero issuance, and October until this week had been quite light for supply. And only recently, only this week, have we seen issuance pickup. ”

Spreads have come back in

“a lot of this is caused by the spread. Spreads widened out, and in fact now they are 5 basis points higher than their lows in August, and they’ve retraced or come back in 15 basis points from the highs in early October. So it is possible that with spreads coming back in and only being 5 bps up from August, that we could continue to see heavier issuance as we move into November out of the blackout period, and in fact the pipelines look pretty good for next week.”

High yield has been very subdued but spreads have come in from their lows

“High yield is a different story. October month to-date had been about $3 billion and year-to-date about $230 billion, which is down 15%. The market has been quite subdued. September and October were the two lowest volume issuance months in 2016, and the issue here is spreads. And spreads are 40 basis points wider than at the August lows, but they have come in a 100 basis points from their recent highs in October. So you might want to think of this as spreads have come in two-thirds from the recent highs, which is a good trend”

Structured finance pipelines are also good

“I would also note that the pipelines in Structured Finance are good, but the movement through those pipelines is again going to be sensitive to spreads. And so we’ll have to see if spreads continue to move in from where they were earlier in October. Secondly, we still think that the non-U.S. business is going to be probably more challenged overall than the U.S. business through to the end of the year. ”

Volatility in Chinese equity markets hasn’t really affected us, but we could be affected if something happens in areas that have been considered bubbles

“there is certainly been some market volatility in China. It’s been primarily focused on the equity markets. We continue to see growth in our joint- venture and in our cross-border business. So that has not – neither one of those legs of our China strategy had been harmed or had a decline in business as a result of the volatility. What we would be more concerned about is it’s some of the areas where there have been concerns about bubbles such as perhaps property sector or municipal debt in China. If those areas become under more acute stress, and that I think would be a more direct – have a more direct impact on our fixed income business over there.”

Moody’s 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

Lower volume of issuance, but higher number of deals

“Despite a year-over-year decline in global non-finance corporate bond issuance volume and flat rated bank loan issuance volume, Moody’s benefited from a greater number of smaller deals.”

Global structured finance revs up 22%

“global structured finance revenue for the third quarter was $102 million, an increase of 22% from the prior year primarily reflecting increased rating activity for U.S. collateralized loan obligations or CLO.”

Investment grade debt issuance looks like it’s stabilized

“For investment grade we have had a very good settling of the market since last week. Last week did see in the U.S. reduced investment grade issuance of only $6 billion. This week and I just checked before I came upstairs it’s probably going to be a $20 billion week, a little bit better. Next week looks to be the same or a little bit better. What we are seeing now is that pipelines are robust. The pipelines are quite strong. We are expecting a heavy fourth quarter in investment grade because we have $100 billion of M&A pipeline that needs to be financed before the end of the first quarter in 2015. So investment grade looks like it stabilized and looks quite strong.”

High yield and leveraged loan pipelines look average

“High yield did take a step back last week and had only one deal priced last week. This week it’s been quite a good bit healthier though. So I think we characterize state of the high yield markets as improving. And we have seen some transactions that are looking ready to come next week so that’s good. The pipeline would be viewed as average however. And on leverage loans we also see an average pipeline and we do see perhaps $20 billion in leveraged loans for October. So again that pipeline is looking a little bit on the average side as well.”

Get about 5 bps per deal

“I think we would say the 5-ish basis points we get on investment grade deals that service us very well and we think provides good value for the issuers as well. On larger deal particularly, deals as large as Verizon we wouldn’t apply that same basis point level to a deal of that size. So I wouldn’t make an overall judgment thereon on what the price yield would be on those, but 5-is basis points on per issue pricing would be about right.’

When the 10 year traded to 1.87 there was a view that it was because firms aren’t ready to provide the liquidity that they once did

“last Wednesday when the ten year traded down to 1.87, there was a view that a lot of that unusual decline was because capital markets suggest that various firms are not holding the same sorts of bond inventories that they did before to act as a shock absorber as rates move around.”