BBF 59017793 PDF

This document is being provided for the exclusive use of VICENTE ORTI at REGENT'S COLLEGE
From earnings statements commencing July 1, 2013
This is the second quarter 2013 Orange Book - a compilation of macroeconomic anecdotes gleaned from comments made by CEOs and CFOs on quarterly earnings conference calls since July 1, 2013. Similar to the Federal Reserve's Beige Book, it seeks to provide early signals of economic conditions before hard data is released. The latest entries showed corporate concerns regarding the higher interest rate environment a heightened concern amid possible Fed-tapering and the subsequent effects on housing and demand for goods related to the home. The restaurant and some apparel retailers complained about decreased traffic, softer consumer spending, a smaller ticket, and extremely promotional environment. Global conditions were mixed, with the U.S. and Europe believed to be the best of the bunch. The Bloomberg Orange Book Sentiment Index was 48.19 during the week ended Oct. 4, essentially unchanged from the 48.28 registered during the week ended Sept. 27. The Bloomberg Orange Book Sentiment Index marked its thirty-fourth consecutive week below 50. Sub-50 readings suggest contractionary conditions, while above-50 is indicative of expansion. Full functionality for the Orange Book may be seen at ORANGE <GO> on the Bloomberg terminal.
This document is being provided for the exclusive use of VICENTE ORTI at REGENT'S COLLEGE Q2 2013 the Orange Book
Index by Company (click to go to article)

Alcoa ............................................... 4 Monsanto ........................................ 5 DuPont ............................................ 5 Dow Chemical ................................. 7 Eastman Chemical ........................... 7 Texas Industries .............................. 9 PPG Industries ................................. 9 Universal Forest ............................ 11 Packaging Corp .............................. 12 Boise Cascade Co ........................... 13 Air Products................................... 14 Weyerhaeuser ............................... 14 Deltic Timber ................................. 16 International Paper Co .................. 17 Vulcan Materials ........................... 18 Sealed Air Corp. ............................. 19 Intl Flavors Inc. .............................. 20 US Concrete Inc. ............................ 21 Manpowergroup Inc ...................... 21 Amazon ......................................... 22 Kelly Services ................................. 23 Yum! Brands .................................. 25 Chipotle Mexican Grill ................... 26 Del Friscos Restaurant .................. 27 McDonalds .................................... 28 Dominos Pizza .............................. 29 Wendys ........................................ 30 Cheesecake Factory ....................... 30 Ruby Tuesday ................................ 31 Starbucks....................................... 32 Famous Daves Of America ............ 33 Texas Roadhouse Inc. .................... 33 Dunkin Brands Group Inc .............. 34 Dennys Corp ................................. 35 Buffalo Wild Wings Inc. ................. 35 BJs Restaurants Inc. ...................... 36 Kona Grill Inc. ................................ 37 Ruths Hospitality Group ............... 37 Brinker International ..................... 38 Jack in the Box ............................... 39 Papa Johns ................................... 40 Red Robin Gourmet ....................... 41 Pier 1 Imports ................................ 41 Bed Bath & Beyond ....................... 41 WD-40 ........................................... 42 Mattel ........................................... 43 Hasbro ........................................... 44 Kimberly-Clark ............................... 44 Whirlpool ...................................... 46 Tupperware Brands ....................... 46 Colgate-Palmolive .......................... 47 Ethan Allen Interiors ...................... 48 P&G ............................................... 49 Clorox ............................................ 50 Avon Products ............................... 52 Revlon ........................................... 53 Church & Dwight ........................... 53 Furniture Brands ............................ 54 Elizabeth Arden ............................. 55 Estee Lauder .................................. 56 Hooker Furniture ........................... 57 Gannett ......................................... 58 Six Flags Entertainment ................. 58 Wyndham Worldwide.................... 59 Caesars Entertainment Co ............. 60 Wynn Resorts ................................ 61 Choice Hotels ................................. 63 Royal Caribbean............................. 63 Starwood Hotels ............................ 65 Marriot .......................................... 67 Hyatt Hotels Corp .......................... 68 Disney ............................................ 69 Host Hotels & Resorts .................... 69 Ricks Cabaret ................................ 71 Levi Strauss & Co ........................... 71 Wolverine World Wide .................. 71 VF Corp. ......................................... 73 Hanesbrands.................................. 74 Coach ............................................. 75 Jones Group ................................... 76 Steven Madden ............................. 77 Ralph Lauren Corp ......................... 78 Fifth & Pacific Co Inc. ..................... 79 Brown Shoe ................................... 80 Guess? ........................................... 80 Rite Aid .......................................... 82 Family Dollar Stores ....................... 82 Safeway ......................................... 84 RadioShack .................................... 85 Tractor Supply Co .......................... 85 Whole Foods Market ..................... 87 CVS ................................................ 87 Wal-Mart ....................................... 88 Macys Inc. ..................................... 90 J.C. Penney .................................... 91 Home Depot .................................. 91 Kohls ............................................. 92 Urban Outfitters ............................ 92 Nordstrom ..................................... 93 Best Buy ........................................ 94 Bon-ton Stores ............................... 94 ANN Inc. ......................................... 95 Ross Stores .................................... 95 New York & Co Inc. ........................ 96 Buckle Inc....................................... 96 Claires Stores ................................ 96 Bebe Stores .................................... 97 Tiffany & Co. .................................. 98 Chicos FAS ..................................... 99 Express Inc. .................................... 99 William-Sonoma .......................... 101 Zale Corp ...................................... 101 DSW Inc. ...................................... 102 Shoe Carnival ............................... 103 Aeropostale ................................. 104 Lowes.......................................... 105 Dollar Tree Inc.............................. 106 McCormick & Co. ......................... 106 ConAgra ....................................... 107 Constellation Brands .................... 108 Coca-Cola ..................................... 108 PepsiCo ........................................ 110 Hershey........................................ 111 Kellogg ......................................... 111 Kraft Foods Group Inc. ................. 112 Boston Beer ................................. 113 Pilgrims Pride .............................. 114 Tyson Foods ................................. 115 Archer-Daniels-Midland ............... 117 Molson Coors ............................... 119 Beam Inc. ..................................... 120 Dean Foods .................................. 123 Flowers Foods .............................. 124 Hillshire Brands ............................ 124 SYSCO .......................................... 125 Bob Evans Farms .......................... 126 Brown-Forman ............................. 127 Sanderson Farms ......................... 128 Hormel Foods............................... 129 Sherwin-Williams ......................... 130 United Rentals ............................. 132 A.O. Smith.................................... 132 Armstrong World ......................... 133 Stanley Black & Decker ................ 135 Ryland Group ............................... 136 D.R. Horton .................................. 137 PulteGroup Inc ............................. 138 Waste Management .................... 138 Masco Corp .................................. 139 Beazer Homes .............................. 140
Scotts Miracle-Gro Co .................. 141 AutoNation.................................. 142 Genuine Parts Co ......................... 143 Ford ............................................. 144 Hertz Global Holdings .................. 145 Harley-Davidson .......................... 147 GM .............................................. 148 Fastenal ....................................... 148 Johnson Controls ......................... 149 Sonoco Products Co. .................... 150 Dover Corp .................................. 151 Danaher ...................................... 152 Textron ........................................ 153 GE ................................................ 154 Federal-Mogul Corp ..................... 154 Illinois Tool Works ....................... 156 United Technologies .................... 157 Honeywell ................................... 158 Lockheed Martin ......................... 159 Caterpillar ................................... 160 General Dynamics ....................... 161 Leggett & Platt ............................ 161 BorgWarner ................................. 162 3M ............................................... 163 Raytheon ..................................... 164 Parker Hannifin ........................... 164 Deere .......................................... 165 Briggs & Stratton ......................... 166 Union Pacific ............................... 167 CSX .............................................. 168 Kansas City Southern ................... 169 UPS .............................................. 171 Norfolk Southern ......................... 172
Paccar .......................................... 173 Boeing ......................................... 174 US Airways .................................. 175 Delta Air Lines Inc. ....................... 176 Knight Transportation.................. 177 Alaska Air .................................... 177 Southwest Airlines ....................... 178 Swift Transportation Co ............... 179 Cummins ..................................... 180 JetBlue Airways ........................... 182 Goodyear Tire .............................. 182 Genesee & Wyoming ................... 184 YRC Worldwide ............................ 185 Arkansas Best .............................. 185 Visteon ........................................ 186 Avis Budget Group ....................... 186 Microsoft ..................................... 188 Verizon ........................................ 188 Advanced Micro Devices .............. 188 Intel ............................................. 189 IBM .............................................. 190 Apple ........................................... 191 Texas Instruments ....................... 191 AT&T ........................................... 192 Time Warner Cable Inc. ............... 193 Cisco ............................................ 194 Applied Materials ........................ 195 Hewlett-Packard .......................... 196 Johnson & Johnson ...................... 197 Abbott ......................................... 198 Eli Lilly ......................................... 200 Bristol-Meyers ............................. 200 Pfizer ........................................... 201
Merck .......................................... 201 Becton Dickinson and Co.............. 202 Wells Fargo .................................. 202 JPMorgan ..................................... 205 Citigroup ...................................... 206 Bank of America ........................... 207 Blackstone Group LP .................... 207 Goldman Sachs ............................ 208 American Express ......................... 210 CIT Group Inc ............................... 210 Visa .............................................. 211 Simon Property ............................ 211 Western Union ............................. 213 Boston Properties ........................ 213 ADP .............................................. 216 MasterCard .................................. 217 Kimco Realty Corp. ....................... 219 Tanger Factory Outlet .................. 219 H&R Block .................................... 220 Baker Hughes ............................... 220 Schlumberger ............................... 221 Halliburton................................... 222 Peabody Energy ........................... 223 Arch Coal ..................................... 223 Anadarko ..................................... 224 Exxon ........................................... 225 ConocoPhillips ............................. 225 Marathon Petroleum Corp ........... 225 Hess Corp ..................................... 226 Chevron ....................................... 226 Marathon Oil ............................... 227
Index by Industry (click to go to article)

Index by Company (click to go to article) ............................................. 2 Index by Industry (click to go to article) ............................................. 3 Basic Materials ................................ 4 Metals & Mining............................4 Chemicals ......................................5 Paper & Other Products ................9 Consumer ...................................... 21 Restaurants ................................. 25 Household Goods ........................ 41 Hotels/Casinos/Entertainment.... 58 Apparel/Footwear/Accessories ... 71 Retail ........................................... 82 Food & Beverages ..................... 106 Housing/Construction ............... 130 Automotive ............................... 142 Industrials .................................... 148 Capital Goods ............................ 148 Transportation .......................... 167 Information Technology ............... 188 Health Care .................................. 197 Financials, Insurance, Real Estate. 202 Energy .......................................... 220
Basic Materials
Metals & Mining
Alcoa
[AA] Earnings Call 7/8/13 Klaus Kleinfeld, CEO: We do see strong revenues despite lower metal prices metal price has declined 8% in the last quarter record profitability in the downstream, the after-tax operating income is up 23% year-onyear, Alcoa's value add business in the first half of the year now makes up for 57% of our revenues and accounts for 80% of the segment after-tax operating income. William Oplinger, CFO: Transitioning to the third quarter, aerospace demand is expected to be impacted by higher inventories and seasonal shutdowns as well seasonal decreases in packaging in this segment. Auto demand is expected to remain strong. And lastly, we expect to see continued pressure on prices and demand in North American industrial products and European industrial products. With that said the overall view of this segment is for earnings to remain relatively flat sequentially excluding currency and assuming no change in metal pricing quarter-over-quarter. Oplinger: Looking out to the third quarter, pricing is expected to follow the 15 day lagged LME, energy costs are expected to increase in Europe due to peak consumer demand and we expect productivity gains to continue. Kleinfeld: In Europe, the picture is not that pretty. We expect a production decline and we've upwardly adjusted it but the upward adjustments still comes up with a negative number: minus 3% to minus 8% but before we had a minus 6% to minus 10%. There's a special effect in here why we've done that which pulls forward the demand and it's an effect through regulation requiring Euro 5 production and that's preceding the more expensive Euro 6 which is required by January 2014. That's why we saw in March, April and May orders were up 8.1% so that's an exceptional thing happening there. Kleinfeld: Going into the second half of the year in Europe we have seen that gas fired power generation is getting squeezed by lower priced coal and by subsidized renewables and in the U.S. we see a little bit of a different picture. The natural gas prices have climbed so coal has been able to claw back some of the market share that gas has been winning before. Some of you may remember I talked about it. However, there is very good news in it for us because we are a blade manufacturer so for us it's important to see utilization is up. Gas turbine utilization is up and that basically influences a spare part demand that is robust and we see that, that more than offsets the decline in the new builds. So that concludes the industrial gas turbine picture and also concludes the end market overview.
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Chemicals
Monsanto
[MON] Earnings Call 6/26/13 Hugh Grant, CEO: Our 20% plus growth comes after we've excluded the historic $0.25 of EPS from the Brazilian soybean business and worked through the significant effects of the 2012 drought in corn and the pullback in planted acres in cotton. Grant: While we often get caught in the debate of acres and products in the U.S., the reality is that this year some of our strongest growth from key platforms like corn has come outside of the U.S. borders. Brett Begemann, CCO: We see volume growth. The best example of this is our global corn portfolio in which we expect to hit a third consecutive year of record total volumes, even with the possibility that U.S. planted corn acres come in lower than initial estimates. That continues in 2014 and we expect to set another record with our global corn volumes. We see pricing opportunity. I like the fact that every year we see incremental pricing opportunity backed by the fundamentals of our business. The mix upgrade is our biggest overall driver, whether that's our global germplasm portfolio or the acceleration of traits, and the consistent approach we've taken to pricing has resonated very well with our customers. This year is a good example. Pierre Courduroux, CFO: Our global corn business. It is the biggest contributor to overall earnings in the year and it is also the one driver that we have seen contributing to growth across the board. For the year-to-date, our corn sales growth is 14%. Combined with a strong outlook for corn going into the fourth quarter Latin American season that keeps us on track for mid-teens sales growth across corn for the full year. From my perspective, seeing that consistent growth is critically important not just to delivering our numbers this year, but also for supporting our confidence in the next few years. Grant: We had a record year this year, very strong volume and a nice mix effect. Were very encouraged by what we're seeing in the international business as well. Begemann: I think as we look at 2014, it's important to step back and recognize that the global demand for corn continues to grow by a significant amount. And as we project forwards, it's going to continue to take some new acres, which we look to in Eastern Europe; but just as importantly, the strength of our portfolio as we continue to perform well and look for share opportunities around the world in our global footprint. So between a look to total acres globally, not country-by-country, and we look at it as share contribution. We feel good about projecting 2014 growth. Grant: I'd say the headlines in corn despite a really tough planting season for our customers, record volumes, good growth, I'm delighted with the mid-teens growth that we've seen in corn and for us, a conscious decision around consistency and maintaining consistency between years. So we saw we ate costs this year and frankly see it as an investment in our customer base. So we consciously absorb that cost with the expectation that we'll see some of that coming back as an advantage, both in customer sentiment and margin next year.
DuPont
[DD] Earnings Call 7/23/13 Ellen Kullman, CEO: In Agriculture, the second quarter marked the end to the Northern Hemisphere planting season, which spans the first half of our calendar year, and our Ag businesses posted industry-leading results CLICK HERE TO RETURN TO INDEX
in seed and crop protection products. While the weather caused us to incur more cost to service our customers this season and tempered our earnings growth a bit, our leading products in both of our Ag businesses performed at the top of their industries. We saw continued rapid adoption by farmers of our newest AcreMax and AQUAmax feed corn products, and we now see sales of Rynaxypyr insecticide approaching $900 million for the full year. And we are excited about what we see coming later this year in the Latin America growing season. Kullman: Regionally, our best growth this quarter occurred in developing markets of Europe and Latin America, led by our Agriculture businesses and in ASEAN across all of our business segments. In North America, our Safety & Protection and Performance Materials and Agriculture segments benefited from the recovery in U.S. housing, low-cost ethane feedstocks, and a strong ag environment. In Europe, we continue to see slow growth environment, particularly in the automotive segment. However, sales in our Agricultural and Industrial Biosciences segments were solid, and volume in developing Europe was up 10%. Across Asia, we see strong demand for our Agriculture products. In developing Asia, while sales were down 5% in the second quarter, volumes were up 2% and included the steep decline in photovoltaic volume versus the last year. Second quarter sales in China, excluding photovoltaics, increased 4% due to the strong growth in packaging and automotive demand, coupled with improving demand for titanium dioxide. While macroeconomic uncertainty continues and demand levels are far from robust, we continue to expect gradual, sequential improvement in the rate of growth in industrial production for markets that demand our products. Nicholas Fanandakis, CFO: Our Ag segment had another tremendous first half, with operating earnings growing about $175 million or 8%. These results reflect strong corn seed, insecticide, and fungicide sales in North America and Latin America. We expect this momentum to continue into the second half. And for the full year, we're anticipating our Ag segment to achieve double-digit earnings growth. Our remaining businesses generally were impacted by sluggish demand in industrial markets during the second quarter on a year-overyear basis. However, as expected volumes improved sequentially for many of these businesses in the second quarter versus the first. On a seasonally adjusted basis, our Electronics & Communications volume sequentially increased in the second quarter by 10% on higher PV installations in China. Fanandakis: Second quarter results were in line with our expectations, with lower TiO2 prices being the primary cause for the earnings decrease on a year-over-year basis. These results also reflect strong Ag sales for the quarter and for the first half. Last, as we expected, volumes were up 5% sequentially on a seasonally adjusted basis, with increases in all regions of the world, including improving TiO2 volumes. Fanandakis: Our current market environment is a dynamic one. All of our businesses are staying close to their customers to adapt to changing demand signals and continue to serve their needs. Additionally, our businesses are taking actions to drive productivity in a variety of ways, including reducing expenditures and tightly managing their cash. They are also shifting resources as new opportunities are identified. DuPont's leadership team remains confident in our business plan s and our ability to execute against those plans. Kullman: Looking forward, with the titanium dioxide market recovering, and anticipating a gradual improvement in demand from industrial markets, combined with a strong second half in Agriculture in the Southern Hemisphere, we expect second-half operating earnings to be about 60% greater than last year.
Dow Chemical
[DOW] Earnings Call 7/25/13 Andrew Liveris, CEO: This was a strong quarter for Dow, and our results reflect the deliberate actions we've taken and continue to take across our portfolio. We are pleased with our performance despite ongoing macroeconomic headwinds in most parts of the world. William Weideman, CFO: Emerging markets demonstrated ongoing strength this quarter, achieving a 9% increase in volume, led by strong performance in Latin America and Asia Pacific. North America also saw increased volume. However, conditions in Europe continued to be weak, demonstrated by a nearly 3% decline. However, excluding the impact of our asset rationalizations, volumes in Europe were actually flat. Price declined 2%, driven by a declining raw material environment primarily in feedstock and energy, and ongoing currency headwinds which represented nearly one third of the decline in price. Liveris: Heading into 2013, we hold the view that from a macroeconomic perspective, this year would largely be a replay of 2012 and calibrated our business plans accordingly. Looking at global market dynamics again this quarter, this continues to be the right view. Having said that, there are promising signs out there. For one, the US continues to be a bright spot, with the housing market recovering and signs of life with the consumer. Secondly, emerging markets are a surprising pillar of strength and we expect there will be growth in the second half that was not seen in the first half, especially in Asia with China appearing to be stabilizing. The leadership there is in place and very focused, and we are confident that it will course correct with positive signs beginning even in this recent quarter. However, we maintain the view that while growth continues in China, we all have to reset expectations below historical rates. And the downside continues to be in Europe where our view remains unchanged as weakness continues with no material signs of improvement on the near term horizon. Liveris: So furniture, bedding, construction, these are all very important things that are associated with spray foams. And as the US is showing strong demand in the consumer side on housing and the renovations and all that, and China becomes more of a consumer society. Very instructive in China for us this quarter was how much demand was coming out of West China. This is all new consumer demand. So look, we're not declaring victory on China yet. China's got a long way to go to recalibrate its economy, and it will recalibrate it around consumption that's more domestic consumption, consumer driven which will help polyurethanes and therefore help MDI.
Eastman Chemical
[EMN] Earnings Call 7/30/13 Jim Rogers, CEO: Progress on the Solutia integration continues to exceed our expectations. We have been one company for just over a year now, and I can say, we are ahead of where we thought we would be last July. I'm quite pleased with how the integration is going and how well these businesses and cultures have come together to create value. Rogers: Revenue in Europe was flat for the quarter and, frankly, given the state of their economy, this is really solid performance. And Latin America revenue was up $6 million or about 5%. So our geographic diversity continues to be a source of strength for our portfolio, and our second quarter results reflect that. Rogers: Looking at the full year, we're expecting second half earnings to be slightly higher than first half as tire additives are expected to benefit from somewhat higher sales volume and improved capacity utilization CLICK HERE TO RETURN TO INDEX
and lower raw material energy cost in the second half of the year. And our solvents product lines are expected to benefit from higher sales volume in part due to an expansion of ethylene oxide derivative capacity at our site in Longview, Texas. As a result, we continue to expect full year 2013 operating earnings of approximately $410 million, which would be a solid improvement over 2012 in an economic environment that remains challenging. Rogers: Focusing on adhesive resins, we continue to see demand weakness in consumables, in pa rticular, for packaging tape and labels. Coupled with a weak demand, the market is also experiencing increased supply contributed primarily to increased raw material availability, resins in particular, and these factors combined have led to lower selling prices. In addition, customer destocking has also been a factor in the first half of the year, though we are cautiously optimistic that this is largely behind us. For Plasticizers, we continue to face competitive pricing from producers who, in response to slower growth in Asia and European markets, have increased exports to other regions. We also continue to see manufacturers of phthalate-based plasticizers trying to defend market share. Rogers: Given our strong first half of the year, we're raising our full year expectations for 2013 EPS to a range of $6.40 to $6.50, and this is despite slow global economic growth and weakness in certain markets like European autos and adhesive resins. We're expecting earnings in the second half to be slightly lower than the first half due to seasonally lower volume. And I would add that in the third quarter, we also have several shutdowns But in the fourth quarter, we expect higher year-over-year capacity utilization, which we expect will result in lower unit cost compared to what we had in the fourth quarter 2012. Mark Costa, President: We've seen some slight improvements in demand on tire demand in Asia. But by no means are we seeing any signs of the anticipated restocking event for the tire industry. It's still somewhere out in the future and there's no clear indication of when that may occur. In regards to building construction, certainly have been also solid. I wouldn't say that this seasonal demand pattern has been as strong as some past ones. So as we see this pickup in residential construction in North America, there's a bit of a lag effect for our markets like painting a house takes a while before you get around to that step of the process. So I would call it solid but not incredibly strong from a B&C point of view so far. But those two key markets are good. Consumables is holding together fairly well. I would just describe it as solid. Ronald Lindsay, Senior Vice President: I would say that we still have a sluggish market or sluggishness in end markets. On the Plasticizer side, we continue to see, in the midst of all of that, continued nice progress on switching. If you don't mind, just take an opportunity to highlight that. We talk about that some, but just to give you a sense of it, we made the acquisition of the Texas City site some time back, converted a line over, one of two, over to make non-phthalate plasticizers. Costa: Going from 2011 to 2012, we certainly hit some headwinds with the European economy and some of the Solutia business was given their exposure to Europe and that hasn't improved significantly yet. But we are very well-positioned to grow these businesses. Overall, the gross margin dollars this year will be higher than last year for these businesses. So they are stable and well-positioned for growth. All the key products, whether it's Crystex, the interlayer products, performance films have sufficient capacity to support growth and economic recovery in those businesses as you look over the next three years. More importantly, the premium products are doing quite well. So the acoustic sales and interlayers is very solid growth. We're setting records in acoustic sales in the last two months, which certainly, a very strong mix upgrade there. Costa: The automotive segment overall is growing, but it depends on where it's growing. I do want to come back to the underlying mix in the acoustics product has been performing quite well; very consistent with our CLICK HERE TO RETURN TO INDEX
Investor Day presentation. Our strategy is to drive the mix up, have solid volume growth, leverage the capacity utilization of this business to improve the earnings and we're seeing all three of those levers play out as we've laid out in our strategy.
Paper & Other Products

Texas Industries
[TXI] Earnings Call 7/11/13 Melvin Brekhus, CEO: Construction activity continues to improve in our major markets. Shipments during the fourth quarter were at levels we haven't seen for quite some time. Cement shipments in the fourth quarter were up 32% compared to a year ago. Texas shipments were the highest May quarter shipments since 2008 and California shipments for the quarter were the highest May quarters shipments since 2007. I expect demand for building materials to improve further during the upcoming year and I believe, we are uniquely positioned to meet this growing demand. The completion of the commissioning of our new cement kiln in Central Texas gives us the immediate ability to supply an additional 500,000 tons annually. James Rogers, COO: In May, housing starts in the four major metropolit an markets in Texas reflected or continue to reflect double-digit improvement year-over-year. California's major markets showed 40% or better improvement. Given the improvement in demand, pricing in Texas for all products improved during FY 2013 and I believe that that momentum will continue during the current year as well. Rogers: I think we had a little bit wetter weather in June in Texas than we expected and we saw that in our daily shipments Kenneth Allen, CFO: We not only have our markets improved dramatically, but we've come out of the winter into the spring and so the ship seasonal shipment cycle has been pretty dramatic as well. And I think we've struggled a little bit to keep up with all of that. And that's caused some a little higher cost. But as we go through this summer and have a little more time to adjust, I think you'll see things settle down.
PPG Industries
[PPG] Earnings Call 7/18/13 Charles Bunch, CEO: For the past several years, under a variety of different economic circumstan ces, we have delivered consistent earnings growth. We are pleased to continue this trend as the second-quarter financial results included all-time records for both sales and adjusted earnings per share. Our adjusted earnings per share of $2.45 from continuing operations exceeds our prior record set last year. Of equal importance this quarter, we more than fully replaced the earnings-per-share reduction stemming from separating our former Commodity Chemicals business. Bunch: During the quarter, we benefited from generally modest, but consistent growth in most North American end-use markets. Solid growth also continued for all our Asian businesses, except the marine coatings market. Yet again, demand in Europe was lower year-over-year, although we are experiencing a fairly consistent pace of business in the region, and a few of our businesses did achieve volume growth in that region this past quarter. Bunch: If you look at several of our businesses like Aerospace and Packaging, we still have growth in those CLICK HERE TO RETURN TO INDEX
businesses. However, if you look at the automotive markets or the architectural markets, those are businesses where from an overall market standpoint, we're still seeing negative growth. Bunch: We're looking overall at stable raw material pricing in the second half of the year. We continue to have success in terms of improving our productivity. Bunch: It was a disappointing quarter for actually both business units in glass, for slightly different reasons. In our Flat Glass business, we had a poor quarter from a, let's call it, manufacturing and supply chain performance. We also saw some volume declines as we looked at some of our end use markets like solar that were lower. And we didn't get enough of a pickup on the commercial construction side, which is our biggest market for that business. We also saw some year-over-year licensing revenue that was lower. So, I would expect that the third quarter, we're going to improve our operating performance. And so, I expect the Flat Glass business to still be challenged, but not to the same level that they were in the second quarter. On the Fiberglass side, we had lower volumes, especially in Europe. And we had lower equity earnings out of our PFG joint venture in Asia, which is targeted at the electronics market. So, I don't expect a significant improvement on the Fiberglass side. We had pretty good results here in North America, but I would say that we are looking to improve slightly over what you saw in the second quarter. But certainly, I think we're going to face some of the same challenges here in the third quarter. Bunch: I don't think the weather the weather hasn't been good the first half of the year. It wasn't good in the first quarter. It wasn't especially good in the second quarter either. Only hope things are going to get better. Some of the weather impact in the second quarter was, we have leading positions in many of the country markets in Eastern Europe. And they were heavily impacted by the flooding. And so, I think there were some volume declines resulting in that. But I would say, to blame most of this volume decline on Eastern European flooding would be a stretch. Maybe a couple of percentage points, yes. But the rest of it was overall market weakness in many of the key market areas. And we're not seeing a recovery in any of the markets, except the UK. The UK trade market I think has been slightly improved. And I think the UK economic recovery is maybe just a step ahead of what we've seen so far in Europe. Bunch: I would say that I'm more optimistic going forward that I think the second quarter will be our lowest point in terms of year-over-year comparables, especially for our sales. We'll start to see some improvement in this rate of decline over the next couple of quarters, not nearly as dramatic as what we've seen here especially by the time we get to the fourth quarter and we may begin then to see some improvement as we move through 2014. David Navikas, CFO: As we look at the working capital results, particularly in our Coatings businesses, we certainly saw the result of some concerted efforts really over the last several quarters that bore fruit here, bore us in Q2, good inventory performance from a reduction perspective in all of the businesses. The improvement that we saw in working capital, both inventory and receivables, was spread through all of the businesses, so I think it's a positive that this was an across-the-board kind of improvement. Good performance from a receivable collection perspective, so percent current in good shape. So we're pleased to see the results here in the second quarter, and certainly our expectations will be to keep the focus on this area and hopefully be able to retain the improvement that we see here. Bunch: From a European auto build standpointwe still feel good about that. But if you look at the overall market, certainly in the next two quarters, I think it's going to be down. Now, when you look this year, the first quarter was abnormally weak.
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Bunch: The toughest market in auto refinish has been Europe. We've seen good growth in Asia -Pacific and in particular, China. That's the fastest growing auto park in the world. We're well positioned there. We're the leading player in automotive refinish in China. So we see good growth there. And in the rest of the world outside of Europe, we feel that we have a very strong position with the new water-based technologies for automotive refinish. That's positioned us well. In Europe, despite this leading water-based technology, things are weaker there. Bunch: The Canadian market was a little weaker in this second quarter, our first quarter of ownership for the business. They are I think they've been challenged by the same weather conditions. Been pretty cold up there. Short season. And their housing cycle is maybe a little different than ours. They don't have the same kind of growth from this very low level. They maintain pretty stable position, in terms of overall housing starts and overall construction market during the crisis. So right now I would say the market up there is more stable. And they had a rougher second quarter, I think, in terms of the weather than even we had down here. Bunch: yes, the economy overall is doing better. People are more confident. And regardless of what we've seen, even with all these new car builds, hasn't really affected overall the average age of the car park. I think what you're seeing is some positive weather, more usage with the water-based technology and the opportunities that that's giving us. And I think there's more of a propensity to repair cars that have been in collisions because the economy overall is better. Bunch; The coil and extrusion coatings, that hasn't been very strong. Because that's been tied, again, to the steel industry and some of the commercial construction. Not as strong. Electronics if you look within electronics, personal computers that take a lot of coatings that's been down. Coatings on smartphones up, but surface area, that hasn't been as good. Appliance coatings, good here in North America, because we have a nice construction and housing recovery. Poor in Europe because overall construction markets are weak.
Universal Forest
[UFPI] Earnings Call 7/18/13 Matthew Missad, CEO: With sales up nearly 25% over 2012 and healthy earnings increase, we are on our way to meeting our robust growth goals. And it's an exciting time to be here and to be a part of this great workforce and management team. Many good things happened in the second quarter, some driven by improvements in our markets, better housing starts and consumers' willingness to invest in more outdoor projects. More, however, was driven by the tireless efforts of our people. For instance, we worked hard to manage through a challenging lumber market. Lumber prices dropped dramatically during the quarter, but we managed that and still were able to post a 24% increase in sales and a 19% increase in earnings from operations over 2012 numbers. Missad: The retail building materials sales were up 12.9% over the second quarter of 2012. Although April sales to this market were not as good as we anticipated, May and June were much improved. We are pleased with the performance of some of our branded products including ProWood treated products and our Dura Color line of products. We're also pleased that we're growing our retail customer base and providing new and better products to meet consumer needs. And our industrial packaging and components sales totaled $193.4 million, up 20.6% over the second quarter, again, not as robust in April but improved in May a nd June. Missad: Manufactured housing sales increased 35.7% over the same period of 2012. Although some customers have chosen to vertically integrate certain product lines, we still were able to grow sales due to the CLICK HERE TO RETURN TO INDEX
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growth of the overall market and to some of our strategies to sell more products for every manufactured home built. That said, we still have room for improvement in parts of our distribution business. Missad: Our international effort is starting to pay off as well, although a bit slower than we would like. We have added manufacturing in Durango, Mexico, and Mexico City, which should generate another $12 million in annual sales, and we've added sales efforts in Europe, the Middle East and Northern Africa to go along with our improving sales in the Caribbean, Central and South America. The combination of our international purchases and sales, not including Canada, is over $100 million, and we need to capitalize on our existing relationships to grow that more rapidly.
Packaging Corp
[PKG] Earnings Call 7/17/13 Mark Kowlzan, CEO: We had an outstanding quarter in all aspects of our operations with record earnings driven by higher prices for containerboard and corrugated products and higher corrugated products volume. The annual outages at three of our mills went extremely well with very efficient startups, and the mills set a new quarter record for tons produced per operating day. Earnings were higher than our second quarter guidance, driven by better-than-forecasted containerboard and corrugated products volume and price, and lower-than-forecasted costs. Kowlzan: Recycled fiber costs were lower than last year's second quarter, improving our earnings by about $0.01 per share. And industry-published prices for recycled fiber, excluding the delivery costs, were down about $15 per ton in the second quarter compared to the second quarter of last year. Kowlzan: Now moving ahead to the third quarter, we expect higher corrugated products prices, higher sales volume, and with no planned annual outages, increased mill production and lower mill operating costs. We also expect higher purchased electricity costs with summer pricing, higher amortization of annual outage repair costs and a higher tax rate. Considering these items, we expect third quarter earnings to be about $0.88 a share. Paul Stecko, Executive Chairman: The market is not corrected, so we missed it again. In other words, if we had it to do over again, I wish we had bought shares back during the quarter. We didn't. On the other hand, the stock kept going up. So I hate to root for the stock to go down, just because we want to buy shares. So I'm kind of in a dilemma. I win both ways or lose both ways, however you want to look at it. We did increase the dividend. Mark Kowlzan, CEO: Regarding fiber, we're seeing basically flat trends currently on virgin fiber pine and hardwood across the country. We had a few periods with wet weather that caused some momentary increases in the Southern states. But again, as we go into the middle of summer right now, everything's flat with wood-based fibers. A little bit of upside increase on recycle we're seeing around the country, but nothing dramatic. Stecko: Our business has been stuck in a rut pretty constant. The good news, it's a high-earnings rut, so we're not complaining. But, we've been pretty consistent. We've not seen any change. We've heard, as you've heard, and report ups that if the Fed changed its policy, it may have an effect on the economy, et cetera, et cetera. So we're kind of like you, we're waiting to see what happens. But we don't know what's going to happen. But if it says where it is, we'll be pretty happy. If it gets better, we'll be happier. So that's about all we could add on that. We really don't know where the economy is going. CLICK HERE TO RETURN TO INDEX
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Stecko: Obviously, energy prices are up, coal, gas, labor and fringes are up. Our incentive compensation payments will be up. If we continue at this rate, we'll make appreciably more earnings than we did last year and our bonus plan is a function of profitability. The more profitable we are, the higher bonuses we can play.
Boise Cascade Co
[BCC] Earnings Call 7/23/13 Thomas Carlile, CEO: Housing starts continue to strengthen in the second quarter compared with the level s seen in the same period of 2012. Total U.S. housing starts were up 17%, with single-family starts up approximately 14%. The Blue Chip consensus forecast for 2013 remains at about 1 million total starts as of the July report, which is encouraging. We are seeing impact of more residential construction activity on demand for our products in most areas of the country. While June housing starts were lower than most economists had expected, overall housing demand continues to trend positively and long-term forecast still point to underlying housing demand around 1.4 million to 1.5 million starts per year. Carlile: While June housing starts were lower than most economists had expected, overall housing demand continues to trend positively and long-term forecast still point to underlying housing demand around 1.4 million to 1.5 million starts per year. Carlile: Commodity prices for panels and lumber began to rise in 2012 and posted sustained increases through the end of the first quarter of 2013. In early April 2013, prices peaked and began a steep descent that continued throughout second quarter 2013. In our Building Materials business, periods of increasing product prices can provide opportunity for higher sales and increased gross margin as we experienced during the first quarter of 2013. Sharply declining commodity price environments negatively impact profitability as we experienced during the second quarter of 2013. Composite panel and lumber prices are moving up as we begin the third quarter. Wayne Rancourt, CFO: The higher average prices for commodity wood products gave the Distribution business additional revenue lift in the second quarter of 2013. However, declining commodity prices in the quarter negatively impacted margins. Stanley Bell, leader of Building Materials Distribution: Certainly, we are seeing some uptick in pricing across the system. I think, inventory levels with our customers, we are seeing those at fairly average levels out there. I think having gone through the big downturn in the second quarter, there's a lot of customers who are reverting back to buying smaller quantities out of our inventory. And of course, that keeps our yards busy but it's a higher margin business for us. But don't see a lot of wood stacked up that should affect the pricing in the third quarter to any great extent. Rancourt: As expected and as we discussed in the first quarter, I mean most of the pressure we've seen on costs on logs compared to 2012 has been in the West where we've seen increases in the low teens, and in the South, it's been mid-single digits. So much more moderate in the South as expected given the growth rates there and given the stocking levels. And it's moderated a little bit in the West with less pressure on exports to Asia. Thomas Corrick, leader of Wood Products operations: As we talk to builders, I think the general theme that we're hearing is that they're feeling pretty restricted across a number of fronts. Certainly, labor is the big one. But honestly, land, I think, is the bigger one. And what we're hearing pretty routinely from them is that they could sell more houses than they can build right now. And they really don't want to, one, get in a position CLICK HERE TO RETURN TO INDEX
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where they run out of inventory to sell. And two, sell houses at a price that they think they could sell it for more next year. And so they've been pretty aggressively raising prices, the people we've been talking to, to keep a good balance between supply and demand. And because they are seeing constraints on both land and labor, I would say they're being pretty measured on how they are approaching this situation, in terms of managing the supply and demand.
Air Products
[APD] Earnings Call 7/23/13 John McGlade, CEO: While we did see signs of improvement, the quarter generally continued the pattern of weak economic growth and a soft electronics market. Despite this, our earnings did come in above the midpoint of our range. Our underlying volumes were flat versus prior year excluding the impact of our decision to exit the Polyurethane Intermediates business. As we said last quarter, we expect this slow growth environment to continue for some time. Most importantly, we continue to stay focused on actions within our control. Last year's European restructuring is complete and delivering the full $60 million per year run rate benefit we expected. Scott Crocco, CFO: Let me provide you a few comments around what we are seeing. In North America, we continue to experience modest growth as the economy decelerates due to the impacts of higher taxes from the fiscal cliff and sequestration spending cuts. In Europe, the economy is worse than we expected and continues to contract versus last year despite some weak sequential growth during the quarter. In Asia, China continues to grow below trend line as the new government policies focus on reforms in addition to growth. And the slower growth in China and the developed markets is impacting other emerging economies in Asia and South America. The electronics industry has remained soft with new fab construction delays, and the outlook for silicon processing remains below last year. Nonresidential construction did not pick up during the quarter as we had expected, and this has impacted our Performance Materials volumes. Simon Moore, Director of Investor Relations: Autos and the U.S. housing market continue to be positive, while nonresidential construction was weaker than we expected and marine coatings continued to be weak. Crocco: In Asia, we expect a gradual acceleration in manufacturing growth to continue, particularly in China. However, the recent government focus in China on reform is expected to temper growth going forward. And in South America, we expect the year to be at the low end of our original expectations. Moore: We obviously aren't in a robust growth environment from Electronics, and it's still a good job by the team to show margin improvement, specifically year-on-year we did have a mix effect in the Electronics equipment business that helped that as well.
Weyerhaeuser
[WY] Earnings Call 7/26/13 Kathryn McAuley, Vice President, Investor Relations: Log costs were higher in the West. Manufacturing costs increased due to downtime and repairs associated with a fire at our Arcadia, Louisiana OSB mill. Engineered Wood Products maintenance expense was higher than normal and raw material costs increased. Margins in the distribution business were adversely affected by the steep drop in commodity prices during the quarter. Daniel Fulton, CEO: Earnings for the second quarter increased significantly from the first quarter to more
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than double last year's second quarter results. As noted in our earnings release, it is a four-fold increase before special items. During the quarter, the U.S. economy sent mixed signals. Private sector employment is increasing, partially offset by fiscal contraction. Consumer confidence in June increased to its highest level in five years. This is a big factor in bringing buyers back into the housing market. Fulton: Home prices for both resale and new homes continued to rise in most markets. Both the recent Case Shiller and National Association of Realtors indexes report year-over-year increases of 10% to 15%. Fulton: The greatest uncertainty in the U.S. economy today seems to be the role of the Fed in managing interest rates and the signaling about its strategy to taper asset purchases. Global economic activity affects our Cellulose Fibers and Timberlands business segments and growth remains fragile. The U.S. dollar continues to strengthen against the Canadian dollar and the euro and we're seeing a significant weakening in the Japanese yen as a result of government policy designed to spur domestic growth. Fulton: Japan remains our primary export market but all of our Pacific Rim markets remained strong with volume and price increasing in the quarter. Our new Longview Timber acquisition is a perfect fit with this strategy as these acres are well positioned to flow volume to Weyerhaeuser's strategically located Pacific Coast export facilities and then to overseas markets. Fulton: Over the last few months, a question frequently asked is whether the market has bottomed. We entered the second quarter with lumber and OSB prices at levels not seen since the top of the last housing boom. Prices peaked in the early weeks of the quarter then fell steeply until bottoming around the end of the quarter. Fulton: Housing is recovering, but has a long way to go before reaching trend. Our Wood Products volumes in the second quarter support this point. We had solid volume takeaway across all product lines. As we look forward, we continue to be encouraged by the opportunities we have in Wood Products. We're taking advantage of improving demand for our lumber, OSB and Engineered Wood Products. At the same time, we continue to focus on operational improvements that reduce costs and improve revenue opportunities. Fulton: Second quarter sales activity was strongest for us in the California markets of LA, Ventura and the Inland Empire, followed by Phoenix and Houston. Prices were up in all of our markets quarter-over-quarter. Last quarter I expressed concerns about cost increases eroding margins of pre-sold homes. However, our experience in the second quarter is that prices are increasing faster than costs, allowing us to maintain and gradually grow margins. Patricia Bedient, CFO: In the West, export price realizations and volumes are expected to be lower for the quarter. The Japan market is normally seasonally softer during the summer months due to rainy weather and Japan continues to experience carpenter and construction labor shortages as a result of the strong housing market. In addition, China has entered its typical July slowdown. Domestic log markets in the West are anticipated to be weaker during the third quarter due to lower saw mill production in the West as a result of pressure on lumber pricing. In addition, we typically see more logs coming to market in the summer from the small, private, non-industrial landowners who don't have adequate road systems to harvest on a year-round basis. As a result, we traditionally plan a lower fee harvest volume in the West for the third quarter. Bedient: In Real Estate, we expect continued improvement in our single-family homebuilding business as a result of a strengthening housing recovery, especially in Southern California, as well as a seasonally stronger
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third quarter compared to the second quarter. Sales have continued at a brisk pace and we expect to close over 700 homes in the third quarter compared to the 636 closed in the second quarter.
Deltic Timber
[DEL] Earnings Call 7/25/13 Ray Dillon, CEO: The current market from medium density fiberboard is strong. MDF prices increased during the second quarter. As such, the timing of our acquisition has proved to be very beneficial. For the second quarter, the plant generated approximately $1.5 million of operating income for Deltic. Improved housing starts and increased residential repair and remodeling activity has resulted in increased demand for the dimension lumber and MDF produced in the company's manufacturing facilities, resulting in higher prices for these products for the second half of 2012 and the first half of 2013. Due to these factors, our vertical integration strategy continue to be very beneficial to Deltic's financial performance during the second quarter of 2013. Dillon: While lumber consumption has increased from the low levels in the depth of the housing recession, housing starts are still below the historical trend level of approximately 1.5 million new home starts per year. With this, existing lumber production capacity still exceeds the current lumber consumption level. During the course of the second quarter, we saw additional lumber supply entered the market as production by idled or curtailed capacity geared up to provide the lumber for the level of annualized housing starts at the end of 2012 of approximately 1 million new homes. However, this annualized level has only averaged about 930,000 starts thus far in 2013. As such, customers and distributors deferred or reduced their orders for lumber during the second quarter as the supply chain became overfilled and distributors anticipated a deflating lumber market. They no longer needed the volume to meet an expanding housing market, nor did they anticipate supply shortages. Buyers also anticipated benefiting from reduced prices if they waited to purchase lumber as they needed it. This reduced the volume of lumber that Deltic sold for this period. Dillon: As the housing market recovers, we are investing in projects in our sawmill operations to further increase hourly productivity rates as well as total production capacity to capitalize on future market opportunities. We've also invested in projects to improve plant production efficiencies at our MDF facility. Dillon: Our Woodlands segment continues to benefit from oil and gas revenues. Natural gas p rices improved slightly from a year ago. As such, the impact of reduced production volume from wells in which Deltic receives a royalty interest when compared to the second quarter of 2012 was more than offset by the improved prices received for the gas produced. However, the amount of lease rental income recognized by the company continues to steadily decrease, as expected, as a greater amount of the company's available net mineral acreage becomes held by production rather than by a lease. Dillon: We see housing demand returning, and like in many areas, the availability of residential lots and new homes had declined. So, the inventory of those products was, let's just call it, decreased. And so, there was people were ready to get back and actually build houses, and many of the lots that we sold, spec houses were built on, and we think they're selling very, very well. That's what we hear from the builders. Dillon: We would certainly expect there to be some decrease in activity in the fourth quarter and we would characterize that as seasonality. But we're expecting the lumber business to improve moderately as we're going forward. And then you've got to take into account the fourth quarter, which is typically a slower quarter from a seasonality standpoint. CLICK HERE TO RETURN TO INDEX
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International Paper Co
[IP] Earnings Call 7/25/13 John Faraci, CEO: I'd say, very solid results out of Brazil and our European/Russian paper business. Those were the biggest drivers of our group results during the quarter. We continue to see improved business conditions in our coated paperboard business, as evidenced by increased volume and pricing momentum that increased through the quarter. Carol Roberts, CFO: It was a good quarter with good improvement in pricing, seasonally stronger volumes, largely driven in Industrial Packaging, but we also saw that in our Consumer Packaging and Brazilian Paper business. Additionally, our operations in cost performance across the businesses was solid and we executed our outages very well. Roberts: Global input costs was a bit of a mixed bag in the quarter, with fiber and energy providing a bit of a headwind, while chemicals actually decreased slightly in the quarter. OCC costs were up during the quarter and wood cost negatively impacted our Printing Papers business. And I would say looking forward, due to the weather challenges that continue to play in the eastern U.S., we see wood cost as a growing concern and a cost headwind as we move into Q3. Roberts: What we're seeing in Europe, is our margins that are under pressure are due to some rising board cost and lower box prices. This was made more difficult for us because of a subpar agricultural season, which was really impacted by the weather that had transpired over winter and into the spring. And this impacted our sales volume in the strong fresh fruit and vegetable segment for us. Roberts: The second quarter saw the greatest impact with startup costs roughly double what we saw in the first quarter. And although the startup costs will be significantly less in the third quarter. There are still costs that are associated with ramping up the new capabilities to full production, that continues to be somewhat of a headwind. Ilim does expect to have the vast majority of the start up and ramp-up costs behind us by the fourth quarter, at which time we'll really start to see more significant benefits from the project. Roberts: We do expect some headwinds on input costs, primarily fiber and that comes in a number of places. Wood in North America papers, higher wood and energy in European and Russian papers and higher in OCC and wood in our Industrial Packaging business. Maintenance outages will be significantly less, $94 million or lower than the second quarter which was our peak. And while the startup costs associated with the Ilim projects will be substantially less, as we spoke, ramp-up costs, along with some potential near-term risk to pulp prices in China, will likely result in a relatively flat operational quarter and we will then have the benefit of the non-recurrence of the second quarter currency swing. Faraci: I feel good about where we are and how the second half of the year is shaping up. Not based on, so much on a robust economic outlook, but more on our ability to execute and deliver results in the second quarter and the run rate and momentum we came out of the second quarter, at June going into July. The U.S. and global economies are still recovering, but the cash flow we're able to generate, I think, is gives me encouragement that we're going to have a substantially better second half of the year than the first half. Faraci: We can capitalize on our global footprint and capabilities in the Printing Papers business, as we effectively and profitably move mix around the world to optimize margin opportunities. We've got headwinds mainly in the form of softer demand, probably everywhere in the world. And pulp prices that continue to be well below mid-cycle levels. The oversupply situation that exists in coated paperboard in China, is going to be with us for a while. That joint venture's operating well, but there's a lot of excess capacity and we didn't see all CLICK HERE TO RETURN TO INDEX
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that at the time. Faraci: Our box business in Europe is France, Italy, Spain, Morocco and Turkey. Morocco and Turkey are doing quite well from the demand standpoint and from a profitability standpoint. We're going to have a record year in Morocco. So the geographic footprint is really the fruit and vegetable segment for Europe and what Southern Europe exports to other parts of the world, like Russia. We like that. There's no getting around the fact that the industrial segments in France, Italy and Spain are just what you would expect they would be, very soft. So we're going to have to manage through a difficult time, but I think we like the fact that we bought out our partner wanted to sell us their stake in the joint venture we had in Turkey, so now we own 100% of it. We were able to do that, at what we felt was a fair price and a good price and so we own 100% of that business. And we certainly are glad that we invested in Morocco when we did.
Vulcan Materials
[VMC] Earnings Call 8/1/13 Donald James, CEO: Aggregate shipments increased 2% compared to last year despite significantly wetter weather in all of our markets in the eastern half of the United States. Our shipment levels in the first two months for the quarter were well above the same period last year. June shipments were sharply lower as wet weather blanketed many of the markets we serve. Assuming more normal weather conditions in the second half of the year, we anticipate the trend of improving shipments to continue and to be driven primarily by growth in private construction activity. James: As we look ahead we remain encouraged by improving trends in private sector construction. Vulcan served states are among the fastest growing in the country, accounting for more than 60% of all new construction in both housing starts and contract awards for private non-residential buildings, as measured by square feet. This trend bodes well for earnings growth both in our aggregates businesses and in our nonaggregate segments. We're also pleased to see contract awards for highways were up 10% through the first half of the year, an indication that highway funding stability is returning now that a federal highway bill is in place. Danny Shepherd, COO: Aggregates gross margins increased 130 basis points due to higher volumes and pricing. Aggregate shipments in a number of markets increased sharply versus the prior year, and furthermore, instead of a series of major storms leading to the wet weather, the consistent, steady rainfall meant that many locations never completely dried out. Wet weather not only results in lower aggregate shipments, but it also leads to production inefficiencies, which impact cost. For the first two months of the quarter, aggregate shipments are trending nicely, up 5%, setting us up for a strong June finish to the quarter. Typically June shipments are greater than May shipments, as the construction season ramps up. However, June shipments were less than the prior year and were lower than May shipments, an outcome that has only happened once before in the last 10 years. Markets in the Midwest and Virginia reported year-over-year declines in shipments due to wet weather and the presence of some large project work in the prior year's second quarter. Markets in Arizona, Texas and California reported 56%, 23%, and 13% increases in shipments due primarily to growth in private construction. Additionally, we were pleased to see many markets achieve quarterly volume growth despite wet weather conditions. Aggregate shipments in Florida and along the central Gulf Coast are examples of markets where we experienced strong volume growth despite wet weather conditions. James: Housing starts were up sharply versus last year, indicating a continuation of broad -based recovery in CLICK HERE TO RETURN TO INDEX
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residential construction. In fact, most Vulcan-served states realized double-digit growth in housing starts for the trailing 12 months. More importantly, we are seeing significant growth in key Vulcan-served states, including Florida, Texas, California, Georgia and Arizona. Seven of the top 10 states with the largest absolute growth in trailing 12-month housing starts at June 30 are Vulcan-served states, with Florida and Texas leading the way. James: Obviously, the states that were hit hardest in the downturn are the ones that are coming back very strong. Clearly, Florida, Arizona, California are doing very well now. Texas is doing extremely well. As you know, it didn't have quite the downturn that some of the other states have had. But clearly, as we've indicated, our business in Florida is coming back very strongly. It's come back very strongly in Arizona, and California is coming back nicely, and Texas is very strong. The middle part of the country is still not as strong, even though we had a lot of wet weather in the east, particularly up the east coast as you can see from the map that's in the slides. We actually had volume growth in several of those states, but we know that we lost a lot of volume, particularly in those markets, at high margin volume in the quarter, which we're looking forward to capturing through the remainder of the year. James: Housing starts have started up earlier, are more robust today, but private non-res is certainly recovering strongly based on contact awards. So we're, I think, cautiously optimistic that the pattern of prior recoveries in private construction led by residential followed by private non-res is repeating itself.
Sealed Air Corp.

[SEE] Earnings Call 8/2/13 Jerome A. Peribere, CEO: All our divisions reported net sales growth on a year over year basis despite the continued challenge in the macro economy. Peribere: Regionally, we continue to experience above market growth in AMAT and in Latin America where we benefit from not only rising beef production prices, but also our breadth of innovative products and sanitation solutions in food and beverage. Peribere: In North America and Europe, our more mature markets, where we are currently in a down cycle for beef production, our growth is driven by our ability to provide our customers with value-added services and new applications. Examples of value-added services include helping our currency our customers minimize operations downtime and increase automation. Peribere: In North America, we were pleased to see another quarter with positive volume growth. This was due to the combination of new customer wins in healthcare, increased building care chemical sales in the retail sector and the product launch of our floor care equipment. In Europe, which accounts for almost half of the I&L sales, we reported a 1.2% decline in constant currency, which was slightly better than recent quarters. And our business is still challenged in Southern Europe, which declined in the mid single-digit range, but this decline was partially offset by positive trends in Eastern Europe. Peribere: Sales in the UK, Germany and Italy were flat to up 1%, while France again declined by more than 10%. Not surprisingly, this business is highly sensitive to the global industrial economy and we experienced decelerating trends throughout the quarter. In the U.S., we had unfavorable product mix with continued growth in e-commerce and retail and also suffer from distribution destocking inventory. Peribere: In Europe, we've seen a lot of weakness. The auto industry has been extremely weak and the auto
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industry for us is traditionally a strong high-value type of business because there's a lot of cushioning there. May has been very weak. June has been a little bit better in Europe. But the economies are what you know what they are. Peribere: This economy is not strong. I was listening to NPR this morning in the car coming to the office and somebody was making the comment, saying that we are in the fourth year of the recovery and it doesn't feel like a recovery. Because it's the first time ever that things, four years within a recovery, are feeling so iffy. So when our protective business is heavily dependent we talking about 15% to 20% being on e-commerce, it means that 80% to 85% is based on industry. Well, industry is not doing well. And we're seeing that in our protective packaging in China, for example. It's not doing well. And we do have a few nice spots, but we've got to be reasonable here. Periibere: We are by far the technology leader in food packaging. We are by far the big dog in the protective packaging industry. We are not having highly tense conversations. It's not always about just price. It is about the value that you create to your customers. So when we tell our customers that next round when their business is going to continue growing, they will ask for new volume and additional volume, and that when we run at capacity we are not going to be able to supply them because we don't have reinvestment economics. They understand. They don't like it, but they understand. It is about this equation of cost competitiveness and performance and so we need price increases. We have had our food packaging business, which has had which was, 10 years ago, much higher quality than it is today. It has constantly been going down and that is not acceptable.
Intl Flavors Inc.

[IFF] Earnings Call 8/6/13 Dougulas Tough, CEO: Operationally, we had an excellent quarter with all of our profitability metrics up over the prior year quarter. Our top line growth reflects momentum in many areas of the business, notably in Fine Fragrance and Beverage as well as continued growth in other areas of the business. All of the regions contributed to our second quarter performance led by double-digit growth in Latin America and high singledigit growth in the other regions. The emerging markets continue to grow at a rate of 10% or twice the rate of the developed markets. We achieved strong levels of growth in Western Europe, Brazil, China, Indonesia, Thailand and Argentina. Both business units contribute to the growth with a high level of new wins from both segments based on our technology, creativity and customer intimacy. Nicolas Mirzayantz, Group President-Fragrances: In Fragrance Ingredients, we experienced improved performance from Q1 as a result of improved volumes in the specialty segment, which somewhat offset decline in the high-volume ingredients area of the portfolio, which remains under pressure. Also, the migration of some volumes from Fragrance Ingredients to Compounds has been delayed and we won't see the impact of this development on our volume until the third quarter of 2013. Kevin Berryman, CFO: We anticipate that going forward the improved year-over-year margin improvement trend will begin to slow. Especially, as we start to compare our margins to year ago figures that have already benefited from the margin enhancement efforts embedded in our strategic initiatives. Berryman: Due to the amount of volatility in the foreign exchange markets and the timing, which was late in the quarter during the month of June, we experienced a larger than normal book loss on outstanding accounts payable items. The impact was primarily experienced in a handful of countries, including Argentina, Brazil, CLICK HERE TO RETURN TO INDEX
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India and Thailand. Although we are not able to anticipate movements in currencies, we do manage this risk with forecasting of foreign exchange balances and natural hedging programs. The significant volatility that we experienced in June is certainly high versus our historical performance. And as a result, this is not expected to be a systemic issue. Importantly, had there been no foreign exchange losses in the second quarter, our adjusted EPS would have been $0.04 higher or $1.18 versus our final adjusted figure of $1.14. Tough: Looking forward, we expect to be able to deliver continued growth in the second half of the year, noting that we are entering into a more challenging period on a comparable growth basis and that the environment still poses certain challenges. However, we remain focused on our strategic priorities and believe we have the right teams in place to continue to provide customers with superior customized products that deliver improved performance to consumers.
US Concrete Inc.
[USCR] Earnings Call 8/8/13 William Sandbrook, CEO: Inclement weather presented challenges during the quarter, particularly during June in New York, New Jersey, Washington DC, and Texas. Nevertheless, we generated year-over-year volume and revenue growth in all regions of our business for the quarter. William Brown, CFO: We've shown resolve in the first half of the year despite unfavorable weather patterns and are poised to capitalize on what we hope is more normalized weather in the back half of the year. As we've shown, we remain committed to strengthening and expanding our current market positions and capitalizing on the positive economic trends we are experiencing in our marke ts. Sandbrook: We saw exactly what everybody else is reporting in the public space right now, that the northeast, southeast, upper Midwest, and parts of Texas were significantly impacted. In our operations, Texas was more impacted in June and New York and New Jersey and Washington, D.C. were impacted in June. July, there was a minor effect in Texas, for some unusual rain events. And so far in August, it's been benign. So it's very good, more normalized weather pattern here that we've seen. Sandbrook: We do have some price increases in our cement raw material coming through in certain markets in August 1 and September 1 but not to the effect that they were in the springtime period. But our efforts to continue to raise prices. We believe we are going to overcome that and we should be able to further expand that material margin, at least marginally.
Consumer
Manpowergroup Inc
[MAN] Earnings Call 7/19/13 Jeffrey Joerres, CEO: We had a very solid second quarter, particularly with the backdrop that Europe, while it has become a bit less volatile, clearly has not righted itself. Despite that, we were able to achieve solid results. Our initiatives to take the correct revenue, broaden our solutions business and recalibrate our costs are all ahead of schedule. And as a result, you are seeing the improved second quarter over what we had originally anticipated. Our revenue for the quarter was $5 billion, down 3% in constant currency as well as in U.S. dollars. Contributing to the less than expected revenue decline was a better than expected performance in CLICK HERE TO RETURN TO INDEX
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Southern Europe. Joerres: We are still experiencing moderate gross margin pressures, particularly in Northern Europe. And while we're maintaining our discipline, it underscores the importance of focusing on our efficiency and recalibration effortswe are still experiencing difficulty in Northern Europe. It doesn't mean we are under price pressure in other parts of the world, rather it's more of the normal competitive pricing environment that we've seen over the last several months and a few years. Michael Van Handel, CFO: Revenue growth in our Mexico operation has been softening the last few quarters and was down 1% in constant currency. Despite the softness in staffing trends, we are able to sell more higher value solutions business which resulted in total gross profit growth of 4% or gross profit margin expansion of 70 basis points. Van Handel: Our UK operations produced constant currency growth of 1%. Our SMB-based Brook Street business delivered strong revenue and profit growth on superb execution, while our Experis IT business continued to see a challenging market, especially among our large accounts. Van Handel: We still see revenue declines in many of our markets. However, those declines have stabilized in many cases. In some markets, the sentiment seems to be getting better, but we're not seeing a breakout recovery in any of our markets. With this as the backdrop, we're anticipating third quarter revenue declines on a consolidated basis to be only slightly better than second quarter. Van Handel: We're forecasting constant currency revenues to be down between 1% and 3% after giving consideration to slightly easier prior year comparable numbers and the fact that a few of our operations have one more billing day in the quarter compared to the prior year. We expect our gross profit margin to continue to be stable, falling in the range of 16.5% to 16.7%. Joerres: The second quarter was a very strong quarter. Given the economic backdrop, I am very pleased with the results of the organization and the quality of actions that we took throughout the second quarter are even more satisfying. We have not only far surpassed our goal in recalibration, we have very much reset the marker for the organization when it comes to, if you will, are per unit cosNo doubt there remains a lack of clarity regarding some of the economic challenges ahead throughout the euro area and, for that matter, even in some areas of Asia. Having said that, the conversations that we've had with our clients and prospects would lead us to believe that there was a more positive sentiment, even though we haven't seen that show up in our numbers yet. We did improve our overall revenue from the first quarter which is seasonally typical. Joerres: Within Europe, we saw some improving year-over-year declines in France and Italy, suggesting that we may start a bounce off the bottom of where we were. The new labor laws which have yet to really have a sizeable impact on us, we believe over time will continue to drive towards a more favorable secular trend in this marketplace. Business mix is an important part of how we are driving the strategy in the organization and we continue to make progress in this area.
Amazon
[AMZN] Earnings Call 7/25/13 Thomas Szkutak, CFO: For Q3, 2013 we expect net sales of between $15.45 billion and $17.15 billion, a growth between 12% and 24%. This guidance anticipates approximately 300 basis points of unfavorable impact from foreign exchange rates.
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Szkutak: One thing to keep in mind is our digital units are growing at a faster rate than physical and those digital units are primarily first party units. So if you take out digital units out in both periods, we're actually up approximately 300 basis points. So our physical seller businesses is growing very nicely. It's growing at a faster rate than retail and it's doing very well. And so very pleased to see that. Szkutak: In terms of China, we are investing heavily in China and we have been for some number of years. We have a good customer experience there. We continue to look at ways to make that even better. We're adding selection across many categories right now. It's in a very interesting geography and so we'll continue to work on that experience for customers. You should expect us to be in investment mode for some time and but it's a very sizable segment a very interesting long-term growth opportunity and will continue to work on making that better for customers and for investors over time. Szkutak: In terms of Spain, we're very excited about what we see. It's growing very fast, we're in investment mode and it's an exciting geography for us and we're very optimistic over time it'll be a great geography for us. So we're very happy to serve customers in Spain and we continue to, as we've done in other geographies that we'll continue to serve customers and continue to do expand selection and get service levels even better over time and so we're very excited about that. In terms of Brazil, we do have a Kindle Store and we have devices at physical retailers. So from a Kindle perspective that's what we're doing in Brazil. Szkutak: In terms of North America total growth, we saw an acceleration from last quarter from 26% to 30%. We saw an acceleration in both North America Media as well as North America EGM. Within EGM, it was very broad in terms of growth. We saw very strong growth across many different categories and so very pleased with that. I called out a couple that were notable in terms of apparel as well as in consumables. Certainly those are getting a larger and still growing very fast.
Kelly Services
[KELYA] Earnings Call 8/7/13 Carl Camden, CEO: Our performance was in-line with our expectations in this persistently sluggish economic environment. Revenue was flat year-over-year. Excluding restructuring and impairment charges, we held our expenses flat and, thus, making targeted investments in our long-term growth, and we achieved an adjusted operating profit of $19 million. Our gross profit rate for the quarter was 16.1%, down from the 16.3% reported in the second quarter of 2012. Camden: We continue to experience soft revenue demand in the Americas, as customers remain cautious about the economic environment. Combined staffing revenue for the region was down roughly 2% year-overyear for the second quarter, a slight improvement from the 3% year-over-year decline in the first quarter. Americas' commercial revenue was down 3% year-over-year for the second quarter. This compares to the 5% decrease we reported in Q1. Camden: Americas PT revenue was down 1% from the prior year compared to the flat growth we reported in the previous quarter. We continue to see some softness on the higher-end PT market, stemming from many of our customers delaying new project implementations. Within PT, we saw revenue declines in our science, IT and finance businesses, somewhat offset by strong growth in engineering and healthcare. We also saw a softening in demand in fees. Combined temp-to-perm, direct placement and other fees saw a 4% revenue decline during the quarter, down from the 13% year-over-year increase we reported in the first quarter. Americas' gross profit rate was, once again, 10 basis points higher than the same period last year. CLICK HERE TO RETURN TO INDEX
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Camden: Economic and business conditions continue to be difficult across EMEA, with the exception of Eastern Europe. For Kelly specifically, revenue in Eastern Europe was up 16% year-over-year, due primarily to the strong performance of Russia and Hungary. The performance of our operations in Switzerland and Portugal fueled growth of 2% in Western Europe year-over-year, while the Nordics experienced a decline of 6%. During the quarter, we also saw a decrease in our fees across this region. The revenue for the second quarter was down 15% year-over-year. The decrease can be seen across both our commercial and PT segments. Patricia Little, CFO: Looking ahead to the third quarter of 2013, we expect revenue to be flat to up 2% on a year-over-year basis, flat sequentially. We expect continued pressure on the gross profit rate holding us flat on a sequential basis, down 70 basis points year-over-year. We expect SG&A to be up 1% to 3% both year-overyear and sequentially. Little: Our tax rate is highly dependent on the mix of our business especially the amount of U.S. lid business, which drives work opportunity credits, the geographic mix of business, earnings or losses from our deferred compensation plans, and tax planning. Camden: We continue to keep a close eye on expenses making strategic targeted investments that support our long-term growth while delivering an operating profit in the face of flat revenue. This progress confirms that Kelly's strategy is responding to secular trends in the labor force, trends that require holistic hiring work force solutions for larger companies and highly skilled professional technical talent for firms of all sizes. We're also especially pleased with the progress we're seeing in our EMEA region this quarter as they continue successfully to execute despite the recessionary conditions there. Still while we're pleased with Kelly's second quarter results, we know that they reflect an economy that is far short of full recovery. The slow and uneven growth trends we saw in 2012 remained with us. And although we've experienced modest job growth thus far in 2013, the improvement in temporary employment in the U.S. as reported by the BLS has primarily been driven by hiring in the construction, retail, and hospitality sector, areas which we're not generally engaged in. As such staffing revenues remain constrained and there's still significant pressure on margins and direct hire fees. Looking ahead, we expect the current trends in the U.S. labor market will continue and true signs of momentum will remain elusive. The one year reprieve in the Affordable Care Act employers mandate is unlikely to lessen the anxiety of U.S. companies. Compliance will still be extremely complex and uncertainty over the impact of 2014s individual mandate will continue to dampen hiring. Camden: In my long experience with the U.S. government, the work opportunity credit is always held until the end, because it's a negotiating chip that people are able to put on the table to offset something else by saying, "Look, how good we're being for business," or, "Look, how good we're being for employment." And the only expectation I have is that nothing will be done until the last minute, because that's been my experience. Camden: Western Europe still although may be stabilizing is still in a recessionary environment and you don't see a lot of perm hiring in that environment. So, I would say, the greatest downward pressure for us has been on the fee side and then secondarily, on the mix, but not much towards a revision downward of pricing contracts. Camden: I see nothing in wearing any of the hats that I wear arguing that Europe is now on the edge of a recovery. I would argue that the downward slope in the recession, I can make a case that things have stabilized at a lower point for both the industry and for the GDP and for what passes for GDP growth there. But I for sure would not want to be the, saying the recovery is coming prophet. It's I'm not certain yet what the timing of that is going to be. CLICK HERE TO RETURN TO INDEX
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Restaurants
Yum! Brands
[YUM] Earnings Call 7/11/13 David Novak, CEO: Thank you, Steve and good morning, everyone. The second quarter was extremely challenging for Yum! Brands, but sales and profits were generally in line with what we had previously communicated. Novak: Now, there's obviously been a lot going on with our KFC business in China. Beginning in April, KFC sales in China were significantly impacted by the intense media surrounding avian flu. The quarter was also impacted by the residual effect of the poultry supply incident, which occurred in late December. Fortunately, the extensive media surrounding avian flu in China has subsided and same-store sales at KFC are on the road to recovery. In fact, our KFC same-store sales decline in June was 13% versus the 26% decline we just reported for the second quarter. This is clearly another improvement in our trend and further evidence the brand is continuing to recover from both avian flu and the poultry supply incident. Novak: Pizza Hut Casual Dining is unquestionably the leading Western casual dining concept in China, with over 900 units in 228 cities. Importantly, we continue to have less than 3-year cash paybacks on new units and the business is on track to deliver another strong year in 2013. With a terrific performance we are seeing, we continue to broaden our new unit development at Pizza Hut and are aggressively expanding into lower-tier cities. We are very bullish on Pizza Hut Casual Dining with both KFC and now Pizza Hut we are in the early stages of our growth with a long runway ahead. Richard Carucci, President: During the quarter, YRI delivered same-store sales growth of 1%, primarily due to weakness in Japan and the UK. However, our emerging market business continues to see momentum, posting 5% growth in same-store sales during the quarter. We're especially pleased with the progress in Russia and South Africa, as they continue to grow same-store sales while also developing new units. Carucci: In the second quarter, KFC delivered same-store sales growth of 3%, driven by the launch of KFC's Original Recipe Boneless Chicken. However, sales at Pizza Hut were weak. In this environment, you win by delivering consistent and compelling value message. And our competitors have simply done a better job in this area so far this year. We'll have a more consistent value message going forward and we continue to introduce new innovative products such as our flatbread pizza. We expect to deliver better sales growth at Pizza Hut during the balance of this year. Pat Grismer, CFO: Q2 is a seasonally low sales period in China, the de-leverage impact on division operating profit, when viewed on a percentage basis, was even more pronounced due to the relatively fixed nature of G&A expenses. Bear in mind that these P&L dynamics work in both directions, so as same-store sales rebound at KFC, we expect both margin and profit to benefit significantly from operating leverage. Grismer: YRI's same-store sales grew 1% in the quarter. This was lower than expected, because similar to other retailers, we experienced soft performance in some developed markets. Grismer: So, while our overall results for 2013 will be clouded by the temporary sales issues at KFC China, the balance of our portfolio is on track to deliver targeted growth. Based on our assumption that China sales are positive in the fourth quarter, we expect to exit 2013 with upward momentum. In addition, as we enter 2014, we will have opened about 1,600 new units in China over a two-year period. So with all of these new units in CLICK HERE TO RETURN TO INDEX
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the ground and operating, and assuming sales and margins recover as anticipated, we expect very strong growth in China operating profit in 2014. However, the magnitude of China's rebound next year will depend heavily on the shape of China's sales and margin recovery through the end of this year. Novak: I think the biggest thing we see going on in China continues to go on, and that's that the consuming class continues to grow. Its 300 million today, it's expected to be 600 million people by 2020. And this is backed up from a number of different sources. You also see disposable income growing as well. The economy itself is growing 7%, which still makes it the fastest-growing economy in the world. So, those are things that I think bode well for brands that are consumer-oriented. And when you look at just the infrastructure, what's going on in China, it continues to expand at a rapid rate. I think China is building over 90 airports, 6 of which will be at least as big as O'Hare Airport. Train stations are expanding, subway lines, all these really represent fantastic opportunities for our brand. And you know, I think what's happening in China today is still unprecedented. It's the largest urbanization effort in the history of the world. Novak: At the end of the day, we continue to be very bullish on China. And when you look at the long -term, we wouldn't trade places with anyone. And I think that this country is going to continue to grow very rapidly, and we're seeing it today. There's a bit of a slowdown, but their slowdown is, I think, a pretty rapid rate when you compare it to what's going on everywhere else in the world. Grismer: Based on the inflation that we've experienced maybe over the last year and our decision not to take pricing, there will be a point in time where we may need to leverage our the strength of our competitive position to take a bit more to get to the 20%. I think it's fair to say that that is an appropriate target, but it will be very challenging to get to 20% in 2014.
Chipotle Mexican Grill

[CMG] Earnings Call 7/18/13 Steve Ells, Co-CEO: We're pleased with our performance for the second quarter of 2013, which included revenues of $816.8 million, an increase of 18.2%. Comp sales increased 5.5% in the quarter and diluted earnings per share increased 10.2% to $2.82. We're particularly pleased that the strength of our performance continues to be driven by our focus on the things that really drive our business, our unique food culture and our unique people culture. Ells: Many of you have seen that Chipotle recently became the first restaurant company to voluntary label GMOs in our food. We made this decision because part of our food with integrity mission is to educate people about the realities of the food they choose to eat. Most consumers don't understand how pervasive GMO ingredients are in this country in restaurants and supermarkets. But the fact is that 94% of the soybeans and 88% of the corn in this country are genetically modified. While there is not yet a clear scientific consensus on issues related to GMO foods, use of GMO crops has been banned or restricted in a number of other countries, and there's increasing debate about the issue in the United States. Montgomery Moran, Co-CEO: While catering is still relatively new to us, it's off to an excellent start and showing great potential. Many of our customers were delighted to offer Chipotle for their recent graduation celebrations and the feedback from parents and graduates alike has been overwhelmingly positiveWe believe catering will continue to grow as we roll this out further and as more customers get an opportunity to try it. John Hartung, CFO: Year-to-date, food cost were 33% which is up 80 basis points from last year. We expect CLICK HERE TO RETURN TO INDEX
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food costs will remain at about this level or slightly higher for the rest of this year, as we expect cost pressure from higher avocado and steak cost. We expect avocado cost to move higher in the coming months from increased demand for California supplied avocados and from recent hotter weather which affects the fruit size and the availability, as well as from slightly lower expected supply from Mexico in the fall. As a result of the relatively stable food costs and a longer term general forecast of a stable or perhaps even deflationary food cost, we do not have any current plans to raise prices for the remainder of 2013. Hartung: We anticipate labor costs as a percentage of sales will move modest ly higher in the coming quarters due to seasonably lower sales in Q3 and Q4. Hartung: We want to remove GMOs and that's a significant challenge. There's going to be some costs associated with that as well. And so, we like to be patient with that as well. And so, when we do raise prices, we may be able to time that when we're doing food with integrity items like removing the rest of the GMOs in some of our ingredients. We also have had some of our supply of naturally raised meat such as steak this year will be a real challenge. We're working to get that back up to 100%. So there are things like that that we think will add to the quality of our food, but will, may add to the costs as well. And so, we think that it's wise to wait until we understand what those costs are going to be and maybe time it around some of those items. And so, right now, we don't think we need to do anything in the next two quarters. Moran: So we're very pleased in our ability to drive additional transactions through our restaurants. We're very pleased to be able to do it without adding a substantial amount of labor or any additional equipment. But we know we can do a heck of a lot better as well with the knowledge we've already accumulated about how to drive throughput. So we're excited to continue to work on achieving those gains as we get our teams more and more focused on this very important advantage of ours.
Del Friscos Restaurant

[DFRG] Earnings Call 7/16/13 Mark Mednansky, CEO: From a sales standpoint, the momentum we experienced from March into April continued with us over the 12-week period and resulted in an increase in total comparable restaurant sales of 2.5%. Now, that's on top of 4.2% gain in the second quarter of last year. Mednansky: For the quarter, the decline in comparable sales resulted in deleveraging at the restaurant level. However, unlike the first quarter, our labor component was well aligned with the number of guests that we served even as we contended with higher costs for other items, such as credit card fees and utilities. With respect to Del Frisco's Grille, we are very pleased that the brand positioning we envisioned and introduced measured so well with our experience thus far. Mednansky: Sullivan's is rightfully getting more attention at the execut ive level and we think that the changes being implemented will have a positive and a very lasting impact on this concept. Still, we caution you that it will take at least several quarters to fully assess our progress. Mednansky: We had some tough weather in the Q. And then, Boston, which is one of 10 Boston, of course, had the problem during the Marathon, where we had to shut it down for a few days. So, we were very pleased and we continue to be very pleased with the recognition that Del Frisco's gets with the high-end diner, as we dominate in every single city we're located. Thomas Pennison, CFO: From a cost of sales standpoint in beef, we feel there's still probably maybe a 3% to
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5% potential in the second half of the year just in pure costs. We're also adding additional Grilles, coming in. While those Grilles come in with some inefficiencies, they're also introducing more and more of this lower cost of sales into our mix. That has been very positive in lowering our cost of sales, so far. Mednansky: Q3 started off pretty flat with that of last year. We had some nice momentum. Very end of Q2, sales is slowing down a little and we experienced a little flatness at the beginning of the quarter. But we have some exciting opportunities. We have some marketing plans. So we're still very confident with the year-end numbers that we're guiding as far as sales increases for our company.
McDonalds
[MCD] Earnings Call 7/22/13 Donald Thompson, CEO: In the second quarter, we grew revenues, operating income, and earnings per share despite the ongoing impact of the challenging environment. This is truly a testament to the fortitude and resilience of our system, our sustainable competitive advantages, and the collective focus on execution at our restaurants. And we expect the dynamics of this cycle to persist in the near term; namely, flat to declining informal-eating-out markets, increasingly less ability to take price, cost pressures throughout our P&L, and heightened competitive activity. Thompson: The UK's business remained solid. Second quarter results and continued market share growth were driven by a balanced focus across value, core and new products, and promotional offers. Thompson: In Germany, negative comparable sales and traffic trends persist. Our traffic has declined at a faster rate than the IEO industry, which also continues to contract. It's critical that our initiatives resonate with consumers in this environment and in this marketplace, so to reestablish our momentum, we're leveraging recent consumer insights and continuing to adjust our plans. Thompson: Although market share improved in China, Australia, and Japan, comparable sales were nega tive for our Big 3 markets. Positive performance in other markets like South Africa, Singapore, and South Korea partially mitigated the overall segment's decline. Thompson: In Japan, consumers remain extremely price-sensitive. Comparable sales have been positive the last two months, and we continue to grow share by leveraging limited-time offerings, like the Chicken TeriTama and sharing options such as the Mega Potato, to keep customers coming back to our restaurants and to build our average check. Peter Bensen, CFO: Given the economic environment, in nearly all of our markets we are balancing a stronger emphasis on value, with compelling premium products, to effectively manage average check and margins. We have a strong underlying business in Europe, and we believe we are making the right strategic decisions and value investments to protect and grow the brand over the long term. Bensen: Within the next year, a U.S. customer, more often than not, will experience our brand in a more modern and relevant manner than before. We are excited about the potential that this brings to our largest market. Thompson: We do expect the remainder of 2013 to remain challenged based on existing top - and bottomline pressures. We know we're seeing ongoing global economic headwinds. We're seeing flat or declining IEO markets and ongoing competition chasing fewer guest counts as a result of lessened discretionary spending. We also know that this is a more price-sensitive timeframe, based on these economies, and we still have CLICK HERE TO RETURN TO INDEX
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ongoing P&L pressures, including higher labor and commodity costs, and we have less ability to take that price. Thompson: First of all, European economy, I can give you a perspective. All of us travel quite a bit to our markets. I don't know the economists may be a bit ahead of themselves. That's my personal perspective, but it's based upon the fact that if you look at GDP growth, even quarter one versus a year ago, or even as you roll into quarter two, France is still in a recession, two quarters now that we've seen negative GDP growth. We've got Germany, which is negative in GDP growth. Spain is still suffering. From an unemployment perspective, you've got much higher unemployment than the norm across Europe. Youth unemployment is something that is somewhat alarming, whether it be in France at 26%, Spain at 57%. You've got markets I was recently in Portugal and Ireland. You've got markets some markets may have bottomed out. I would tell you some of the larger markets are still having some challenges. So we're looking forward to the bottom-out, so to speak, and then a resurgence. At times, you'll see a resurgence in some of the markets. Europe, for us, means 39 different areas and countries that we're working in. But it's still a challenged environment. Thompson: The marketplace itself is a little bit it is a little bit tighter than we've seen. But one thing we've never done at McDonald's, we don't cry or whine over market conditions, because all of us are in these same market conditions. Timothy Fenton, COO: On China, the overall chicken market is kind of taking a step backwards as it pertains to the IEO. It's starting to dissipate now and coming back, but particularly I would say in Western QSR has probably taken the biggest decline. Thompson: We know that one of the most important things that customers look for is consistency in terms of the value platform. They want to know that they can depend on McDonald's to continue to deliver value every day, all day. And the platform for us is more than about short-term discounts. It's about establishing customer loyalty versus being aggressive for one or two months. We need long-term loyalty. We want a strong customer base, we want to make sure we drive visit frequency, and we want to support the introduction also of highermargin products, so build the base so that when we implement new products, those products have more awareness relative to our consumer base.
Dominos Pizza
[DPZ] Earnings Call 7/23/13 Michael Lawton, CFO: This quarter, our momentum continued, as we posted strong same-store sales results in both our domestic and international businesses. Patrick Doyle, CEO: In the U.S. this quarter, we posted strong sales despite the fact that we didn't feature a new product. We did promote our Handmade Pan Pizza, continuing the momentum from its fourth quarter launch. While we are not lapping our toughest comps of last year, we are still pleased with the excellent domestic results in the quarter. We got a new base of consumers and sales volume, backed by quality products such as our new Pan Pizza, value offerings for consumers and great advertising and digital marketing. We have developed a bigger brand message around transparency and consumer engagement that we believe is carrying us to a different place. We believe this is part of why we don't need constant new pizza news or limited time products to drive our business. We continue to be pleased with the positive traffic we are seeing, an indicator we monitor very closely. Doyle: Our international business has been doing a great job of producing positive results now for 78 straight CLICK HERE TO RETURN TO INDEX
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quarters. A few highlights include South Korea, where great value promotions and a strong focus on driving volume through digital channels paid off with double-digit sales increases; and Brazil, where improved operations and better pricing have resulted in a strong quarter for them. And in Canada, we've seen some good results from the release of the Handmade Pan Pizza. Doyle: Our focus on technology and consumer access via digital ordering continues to give us an edge over our competition, as we lead our pizza delivery competitors in digital ordering market share, particularly versus the smaller players that continue to lag behind. Even if the regionals catch up to the level of technology we currently offer, we're already several years ahead of them and expect to keep pushing to lead the industry on technological innovation. Doyle: You mentioned Germany. Germany is still very early in its development. Sales growth has actually been pretty good there. Germany is owned by our master franchisee out of the UK. And they gave a little bit of an earnings warning around it in terms of just the amount of resources they've had to put into it to get it going. But from a pure sales perspective and sales growth perspective, it's still looking good. So, clearly, it's working. I'm seeing the same numbers that obviously you're looking at from some of our peers in the industry. And we feel awfully fortunate that we're continuing to drive these kinds of results. But there just are no really material pockets of weakness out there to speak to. Doyle: I would say, our overall take on the consumer is that the consumer is continuing to slowly get better. There is it is still more of a headwind than a tailwind for us. You've probably heard me say it many times, but the best driver, best indicator from an economic standpoint of growth for us is employment levels more than anything else. Employed people buy more pizza than unemployed people. And so, you're seeing that slowly getting better. But I think that's leading to a category that's not moving a lot right now. And so, really, I mean, we're feeling pretty fortunate. But it appears that it is mostly share gains for us right now. Doyle: We like the results we're getting. We're getting nice same-store sales growth in China. It's something that's continuing to progress. And obviously, given the size of the opportunity, it's something we're going to continue to focus on. Still not a big driver of results yet, as the base that we're growing from is still relatively small.
Wendys
[WEN] Earnings Call 7/23/13 Emil Brolick, CEO: While second quarter same restaurant sales were only slightly positive, we produced two year systemwide same restaurant sales growth of 3.6%. We did see solid consumer response to the April introduction of our new Flatbread Grilled Chicken Sandwiches, although the price value component of our business largely offset this positive response.
Cheesecake Factory
[CAKE] Earnings Call 7/24/13 David Overton, CEO: The second quarter marks our 14 consecutive quarter of positive comparable sales and it was another quarter where our sales outperformed the casual dining industry. We believe that the heat waves and heavy rain during the quarter impacted us as the weather limited our ability to utilize patio seating. Importantly, we grew sales at full margins without discounting to attract guests. This contributed to a yearover-year increase in our operating margins as we continued to progress toward returning to peak margin CLICK HERE TO RETURN TO INDEX
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levels. As for development, our plans are on track to open as many as eight to 10 company-owned restaurants this year. We had a successful opening in Knoxville recently, which opened to long waits and high sales volume. Overton: Internationally, sales at the three Cheesecake Factory restaurants in the Middle East continued to be very strong. The first location in Dubai has been opened about a year and the ongoing popularity of our restaurant gives us confidence about the demand for our concept outside the U.S. In terms of expansion in the Middle East, we now expect one new location to open this year based on the current information we have. Douglas Benn, CFO: There are several factors impacting our comparable sales assumptions in the third quarter. We are lapping our most difficult comparison of the year; a 2.5% comparable sales increase in the third quarter of last year. Our comparable sales have out-paced the industry by a healthy margin for at least the past 18 months and we expect that trend to continue. However, we have to be realistic and consider the near-term industry environment. That being said, the magnitude of the effect is small with our third quarter comparable sales range being less than one percentage point off our historical trend. Importantly, our full year outlook suggests that we expect sales to stabilize in a normal range for us in the fourth quarter. Benn: Our weakest month is actually April, because that's the month where the Easter and spring break shift happened. Our strongest month was May and our sales performance in June was solidly positive and the industry for June, the numbers we have at least say the industry was down about 2%. Benn: Guest satisfaction scores are still high, our retention of people still remains very high, our restaurant level execution is still very good and the restaurants we're opening are doing very well. The ones we've opened over the last three years are still delivering about 10% higher sales metrics. Just with that said, the environment did slow in June. It's evident from any casual dining data as well as in retail sales. And we're not completely immune to that, but I am very confident that we can maintain our continuing positive gap in comparable store sales between us and the industry. Benn: Unemployment is down. Hiring has been at a rather steady state of 200,000 jobs or so a month being added. The housing market continues to recover and the stock market is up. So the economists still believe the overall economy will pick up in the second half of the year. And I believe in the second quarter from if you look at what GDP growth was in the second quarter, it will be an unspectacular say, 1.5%. And most economists anticipate faster growth in the fourth quarter than that up to 2.7%, and we'd expect our sales to benefit from that.
Ruby Tuesday
[RT] Earnings Call 7/24/13 James Buettgen, CEO: The fourth quarter proved very challenging, and while we are clearly disappointed with our results, we have made significant progress on our efforts to reposition Ruby Tuesday for long-term success and to strengthen our organization. Buettgen: The challenging economic backdrop during the year combined with the promotional intensity across the entire restaurant sector put pressure on both our sales and our profit performance during fiscal 2013. While we are disappointed with our financial results, we are confident that the changes we are making to the food, service, and atmosphere at Ruby Tuesday will strengthen both the brand and our business. Buettgen: The casual dining category has slowed down a bit. I think to some degree it's a continuation of
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some of the same factors that have put drag on the category for quite some time. The economy is still shaky, there is still a lot of kind of confusing news about everything from healthcare to budget changes, unemployment is still relatively high. But in terms of most of those factors don't seem all that different. I think to some degree there is a change in spend. So some other consumer categories, auto for example, houses or homes saw a little bit of a rise and I think some of that came out of some of the more discretionary spend including restaurants.
Starbucks
[SBUX] Earnings Call 7/25/13 Howard Schultz, CEO: Operating leverage and our continuing emphasis on increasing efficiency and controlling costs drove our operating margin up 150 basis points to a record Q3 record of 16.4% and an operating income of up 25% to a Q3 record of $615 million. Together, these factors contribute to a record Q3 EPS of $0.55 per share, 28% over last year's third quarter, and the second highest EPS of any quarter in Starbucks' 42-year history. Particularly noteworthy, are that these results were delivered in the face of challenging economic and consumer environments in many of the 62 countries around the world in which we operate. Schultz: Starbucks American segment is firing on all cylinders, with 9% comp growth driv en by continued beverage innovation and increased food attachment, resulting from the success of our transformed and reinvented food program. Our strong summer refreshment line-up, including the new Valencia Orange Refresher and the limited time offering of Caramel Ribbon Crunch Frappuccino is being extremely well received by our customers and exceeding even our most optimistic expectations. Adam Brotman, CDO: Our momentum as the leading retailer in the mobile payment space also continued its rapid growth in Q3. I'm pleased that now more than 10% of all transactions in our U.S. stores are made with a phone. Mobile devices have become an increasingly important part of the customer experience at Starbucks, as the fastest and easiest way to pay in our stores, and we will continue to bring more innovation to this space. Brotman: We continue to see huge traffic to our Wi-Fi network and our web pages, and earlier this month, we passed over the 4 million Twitter follower mark, and we continue to leverage Instagram, Pinterest and our global Facebook following to engage with our customers every day around our brand and topics of interest to these customers. Brotman: We currently have a robust pipeline of developments in each area of our digital ecosystem, and we expect to deliver a number of improvements and innovations to our existing programs throughout the last quarter of FY 2013 and well into FY 2014, as well as introducing new concepts and new platforms. Troy Alstead, CFO: While we experienced moderate slowing in the month of June last year, comp growth last Q3 was still a strong 7%. Despite this challenging comparison, the Americas region levered strength across all day parts and all geographies to grow at its highest rate in six quarters. Like the Americas region overall, the U.S. grew comps by 9% in the third quarter. Contributing to the comp growth was strength in beverage innovation and promotions, with the combination of the Macchiato platform, limited-time Frappuccino offerings and the still new Refreshers beverages, adding a combined four percentage points of comp growth. Alstead: Our peak hours of 7 a.m. to 9 a.m. in the U.S. again showed strong traffic trends, as did drive -thru stores, where our focus on enhancing the customer experience, while improving speed of service is paying off. CLICK HERE TO RETURN TO INDEX
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Food again contributed towards the growth in the U.S. business, adding two points of comp growth in the quarter as our lunch offerings continue to expand in popularity. Alstead: Commodities will continue to benefit us in the fourth quarter, as we expect a gross $0.02 earnings per share benefit, partially offset by our recent pricing actions down the grocery aisle. Conversely, we expect an unfavorable foreign exchange impact of approximately $6 million in Q4, driven by a weaker Japanese yen.
Famous Daves Of America

[DAVE] Earnings Call 7/25/13 John Gilbert, CEO: While the industry continued to face significant top line challenges, we saw a return to same-store sales growth for company restaurants with a positive 3.8% versus last year. And although our franchisee sales were still negative at 1.9% for the quarter, their trends have improved as well. According to Black Box Intelligence, which is the sales index service we subscribe to, Famous Dave's company restaurants have gone from the bottom quartile for the fourth quarter of 2012 to the top quartile for the second quarter of 2013. We're not only comp store positives at the company stores, but we're gaining share again in the markets where we do business. By the end of the second quarter, our year-to-date same-store sales performance was a positive 1.1%. Gilbert: We simply did not earn a bonus for 2012's performance. For most of the executive team, almost two thirds of the total compensation is at-risk compensation and that didn't bode well for 2012. 2013 is a different year with a different performance. Gilbert: Catering is really more what we're feeling there is it's regionally based and it seems to be tied to some of the government spending. If you look at the category that's down the most in catering it's those occasions that were government driven, and perhaps it's the sequester, I'm not sure what the real causal factor here is, but we're seeing a we're seeing a downtick in that part of our catering business
Texas Roadhouse Inc.

[TXRH] Earnings Call 7/29/13 Wayne Taylor, CEO: We are pleased with the momentum we continue to experience at Texas Roadhouse. Revenues were up 10% for the second quarter leading to a solid 10% increase for the first half of the year. Also, comparable sales increased 4.5% for the quarter. And while we grew restaurant level profits, bottom-line results for the quarter were impacted by our continued investment in our people. Price Cooper, CFO: We were able to leverage labor and other operating costs through a combination of traffic growth and a 2% plus average check. However, it was not enough to offset the headwind from just under 6% food inflation during the quarter. Throughout the balance of the year, we expect margin pressure from food costs to outweigh any leverage we are able to obtain from labor and other operating costs combined. Cooper: For next year, we do expect continued inflation. However, at this point, we do not expect it to be near the magnitude of what we are seeing this year. Scott Colosi, President: We are pleased with our top-line momentum through the first half of the year. And while the third quarter has started out a little softer, we are encouraged that our sales remain positive while overlapping one of our highest comp periods from last year as comp sales increased almost 6% in July of 2012. And more importantly, we are pleased that our operators continue running the business for the long-term. CLICK HERE TO RETURN TO INDEX
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And they do that by staying focused on our four-wall execution and by being fully committed to both our mission of legendary food and legendary service and our value proposition. Cooper: Sitting here today, we are not expecting beef costs to be quite as bad as they have been this year or last year driven by the fact that, I think, demand has proven to be a little lighter than people would have thought headed into the year. And another factor on that is that corn prices have really pulled back from, say, where they were, say, about $7 here a year or so ago to where the futures are down below $5, which is a positive. Cooper: Q4 will probably be our highest pre-opening spend for the year because, we do have 18 more openings this year. Those are heavily weighted towards the fourth quarter itself. So when you combine that with the fact that we will be opening more units earlier in 2014, when you combine those two facts, I think it leads us to thinking that Q4 would be our highest pre-opening quarter.
Dunkin Brands Group Inc

[DNKN] Earnings Call 7/25/13 Nigel Travis, CEO: We feel good about comp-store sales for Dunkin' in the U.S. in Q2 after a challenging first quarter during which the business was significantly impacted by bad weather. Additionally, we continue to see significant interest and I mean significant interest in restaurant development for Dunkin' Donuts in this country. And for the second consecutive quarter, Baskin-Robbins U.S. experienced positive net unit growth. And on the international front, we continue to build the foundation for the long-term growth for both brands. Travis: In Q2, we saw healthy gains in both traffic and ticket, and increases in both the number of units per transaction and the price per unit. Ticket growth was slightly higher than the traffic growth during the quarter. Our franchisees took very little pricing in the quarter, in fact less than 100 basis points. So, the majority of our ticket growth came from consumers purchasing higher priced cold beverages and differentiated sandwiches. We also saw gains in the morning and afternoon day parts as we expand our menu offerings through differentiated limited-time and permanent offerings. We continue to see wide-ranging competition in all regions, sustained economic uncertainty, and evolving challenges on the regulatory front, but we believe that our continued growth, despites these headwinds, reflects the strength of our overall business model and our plans. Travis: After a challenging first quarter, Baskin-Robbins U.S. finished the second quarter with a positive 1.6 comp-store sales growth. Travis: Cold weather at the beginning of the quarter in many of our core markets which are, of course, the Middle East, Japan and Korea, slowed momentum heading into the summer. Cake innovation remains the focus for Baskin-Robbins International, and it helped to offset some of the weather impact. Travis: The cooler weather impacted the Dunkin' Donuts International business, which had a negative 1.7% comp-store sales decline in the second quarter. The weather impact was primarily felt in Korea where summer beverage sales suffered. Korea represents 45% of the segment sales and was also rolling over record temperatures in 2012. Our partners in Korea, India and Spain rolled out a new frozen Dunkaccino product line, which is helping to grow the frozen beverage category in these markets. Travis: The U.S. businesses have rebounded nicely from challenging weather in the first quarter. Franchisee
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profitability remains at an all-time high and franchisee sentiment is very positive. Our U.S. restaurant operations have never been better. And we continue our track record of outstanding products and marketing innovation globally. Travis: We actually feel pretty good about the consumers, and I think the balance is shown by the fact t hat our ticket count was up, which is obviously always a good metric, and also the actual ticket was up, and that was the result not of pricing but of people upgrading to the higher-price items like our sandwiches. And so, if you talk of our results, you'd have to say that consumers are in a better place than they were. Talking generally, I think the consumers actually fared pretty well when you think of all the sequestration issues, the fact that we had effectively in fact had a lot of tax increases. So, I feel pretty good about the consumer. I know there's a lot of doom and gloom out there, and it was interesting when I was on TV this morning, I was talking positive about the consumers, but the next presenter from Southwest was talking about some of the headwinds. So, one of the things I think we said before, because we have such great value, we may be a little bit shielded from the consumer. People come anyway and so, that maybe, if you like the rationalization of why our numbers seems to point in a different direction from some others. Paul Carbone, CFO: While coffee is positive, we're seeing commodities overall benefiting upwards of about 50 bps positive because they were offset to coffee, shortening, packaging, things of that nature, flour and wheat.
Dennys Corp
[DENN] Earnings Call 7/29/13 John Miller, CEO: In the second quarter, we achieved positive system-wide same-store sales and grew adjusted net income per share by 21%. In addition, our franchise-focused business model generated $11 million in free cash flow in the quarter. We are pleased to achieve these results despite an ongoing challenging economic environment for our consumers. Miller: No question, the first quarter, with the payroll tax holiday coming to an end that follows, particularl y middle and lower middle working class consumers all year along creates a headwind to the year for those in full service. And so, having a value platform and how that might dial up to retain some consistency of performance, we certainly believe it has a role. We don't believe it's the whole role. We think everyday value plus interesting new news, plus improving the core menu, plus learning how to talk to different consumers, where they live, whether be in their language or social media to millennials and converting folks, the young folks to our brand, 60-year young brand, as we like to call, we think that also plays a role consistently.
Buffalo Wild Wings Inc.

[BWLD] Earnings Call 7/30/13 Sally Smith, CEO: We successfully managed controllable expenses while continuing to invest in labor hours to support our long-term business strategies. We're pleased traditional wing costs have moderated and cost of sales as a percent of sales declined on a year-over-year basis for the first time in eight quarters. Mary Twinem, CFO: We think that from a cost of sales standpoint, we'll be about 30% in the third quarter, and last September, wing prices spiked dramatically. So although we have seen wing prices in July and August are up from what June had as a low, we do have the benefit from the rollout of wings by the portion and a menu price increase. So we're thinking somewhere around 30%. CLICK HERE TO RETURN TO INDEX
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Twinem: We anticipate higher labor cost as a percentage of restaurant sales co mpared to prior year with an increase of 50 basis points to 80 basis points as a result of the implementation of the guest experience business model. We continue to evaluate the right amount of labor investment for the captain position and plan to open new restaurants with this position. By the end of 2014, we expect to transition all companyowned restaurants. Smith: We're very pleased with the strength of our second quarter. Wing costs started moderating and we controlled expenses while working to create a unique and compelling experience for guests. With the first half of the year complete, we remain on plan and believe we're on track to achieve our annual growth goals.
BJs Restaurants Inc.

[BJRI] Earnings Call 7/31/13 Gregory Trojan, CEO: I am very proud of how our team continue to navigate the difficult sales environment we're currently experiencing in the restaurant industry, particularly in the full service casual dining sector. Gregory Levin, CFO: We started the quarter relatively strong primarily due to the Easter holiday flip-flop, in which Easter Sunday fell on the last week of the first quarter of this year. However, after a solid overall April, so April held up relatively well during the quarter, our comparable restaurant sales turned slightly negative in May and continued that trend into June. We continue to see softer comparable restaurant sales during the Monday through Thursday time period as opposed to the weekends. Additionally, lunch in general is softer than dinner. We continue to see strong comparable restaurant sales in both the mid-afternoon and late night part of our business, so in those off-peak business hours. Levin: As the economy has stabilized and has been growing albeit at a very slow rate, we are seeing many more new restaurants coming into our trade areas. In fact, if you have paid attention to the jobs report, restaurants have added about 52,000 new jobs in the last month, so, in the month of June, which was approximately 26% of the growth in employment while at the same time, according to the Commerce Department, food service sales declined 1.2% in June and have been growing at a rate less than traditional retail sales over this last year. What this tells me is there is a greater supply of new restaurants, yet demand is not growing at the same rate that supply is coming on board. In fact, based on some information we put together, we estimate that at a minimum approximately 20 of our restaurants were impacted by new restaurants that have recently opened. Generally, this impact to our sales is transitory. And after the initial honeymoon from the new restaurants, our sales typically come back especially considering the higher quality, more differentiated dining experience, we are providing at a price point that is either generally the same or less than many of our peer restaurants in casual dining. Levine: Geographically in July, California continues to be soft, pretty much consistent with its prior trends, and we have seen some increased volatility in many other locations. Based on the macro data we have seen, the economy and the consumer is still very challenged with sluggish growth and stagnant wages. The consumer appears to be allocating what disposable income they have towards bigger ticket items that they may have deferred over the years, such as cars, trucks, homes and other big-ticket items such as furniture at the expense of eating out. Additionally, we do know that sequestration is now just starting to take place in July, and this may also be having an effect on some of our locations, where we have large numbers of federal government employees in our guest base. What we continue to see is when there is a reason to celebrate, restaurants and in particular BJ's does very well. We saw this in quarter one, with Valentine's Day and in quarter two with Mother's Day and Father's Day. In fact, over the Father's Day week, we had eight new CLICK HERE TO RETURN TO INDEX
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restaurant records and all of those were in California. However, absent a reason to dining out has made it very challenging to drive sales in the restaurant space. Even though we will be going over some eager comparisons in the second half of this year, including lapping the Opening and Closing Ceremonies of the Summer Olympics, the political party conventions, as well as the presidential debate and election day, not to mention the increase in our own marketing spend, we still believe for those of you building your models to err on the side of conservatism and build your models based more on our current comparable restaurant sales trends. Trojan: While the overall operating environment is challenging for restaurants currently, I'm very excited about the future of BJ's. The work we're doing right now is laying down the foundation for driving comp sales and expanding the brand nationally. Our brand research shows that we actually improved our performance gap in most key attributes and that we have a tremendous propensity to convert first-time tryers to loyal fans of BJ's at a significantly higher rate than competitive concepts. Therefore, we're excited to work on the messaging and media mix to tell our consumers about BJ's. At the same time, we continue to make solid strides in our cost structure and are poised to leverage future comp sales increases. Project Q is going really well in the eyes of our team members and guests. And this project will not only enhance our competitive advantage against our peers, it will allow us to improve our speed within our restaurants and therefore increase throughput within our restaurants.
Kona Grill Inc.

[KONA] Earnings Call 8/1/13 Berke Bakay, CEO: Sales were particularly strong during the month of May where we achieved the best sales week in the company's history during the week of Mother's Day, easily surpassing the record we set earlier in the year during Valentine's Day week. We're encouraged with our sales results for the quarter as they continue to demonstrate the strength of our brand in this challenging economic environment. Traffic was up slightly during the quarter, while average check increased approximately 3% and reflects the price increase we took earlier in the year. We were able to leverage the strong sales growth to drive 20.6% four-wall margins for the quarter, which are the highest we have achieved in the past six years. Bakay: May was a very strong month for us and overall the rest of the months, we're still pretty strong and consistent throughout the quarter, but May kind of stuck out as a very strong month for us. Christi Hing, CFO: Obviously with Q2, we gained the benefit of the higher sales volumes, but, for COGS, we don't really see anything that would materially increase COGS in the back half of the year. So with the trends we are seeing, we don't expect any material increases to those.
Ruths Hospitality Group

[RUTH] Earnings Call 8/2/13 Michael O'Donnell, CEO: Comparable restaurant sales at Ruth's Chris Steak House increased 4.6% during the second quarter, marking the 13th consecutive quarter of positive comparable sales for company-owned restaurants and our 14th straight quarter of traffic gains. Additionally, this year's comparable sales growth was on top of a 6% increase last year. This year's second quarter was also negatively affected on a year-over-year basis by the shift of Easter into this year's first quarter. We're pleased to note that thus far in the third quarter, our comparable sales are currently up in the low-to-mid single digits, which is running over 5.9% sales growth than last year's third quarter. CLICK HERE TO RETURN TO INDEX
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Arne Haak, CFO: . During the second quarter, our beef costs decreased roughly 3% year-over-year, but remained up over 15% over a two-year period. While we are pleased with the unexpected moderation in beef costs in the first half of 2013, this has largely been driven by softer demand. With the slowing of the rate of inflation in the first half of the year, we now expect our beef inflation to run in the mid to high single-digits for the full year. ODonnell: We remain very excited about the health of our business and our ability to execute against a well balanced shareholder focused plan anchored by our Ruth's Chris business. A strong team effort on execution has allowed us to make significant progress over the last few years leading to a consistent high-quality awardwinning dining experience that resonates with existing and new customers. Evidence of this is our sales and traffic trends, which have been very encouraging for almost four years running, and of course, our bottom line performance which has resulted in significant earnings growth since 2010. In addition to growing our comp store traffic, our plans include high quality development opportunities for both company and franchise locations. Haak: In terms of operating leverage, there is some seasonality around the revenue. The third quarter in particular gets a little more challenging. So, I think that is the biggest piece, but and also, honestly, we've outperformed our own sales projection this year.
Brinker International
[EAT] Earnings Call 8/2/13 Wyman Roberts, CEO: Brinker delivered solid earnings growth for the fourth quarter and the year despite a challenging consumer environment and we attribute that to culinary innovation that delivered outstanding new menu items, improved operating margins that led to a strengthened business model, and our commitment to plan to win strategy that focuses on consistently improving the guest and team member experience. This quarter we continued to see a fairly lethargic category and some of the macroeconomic elements aren't quite as good as we hoped they'd be at this point in time. While we remain optimistic that the back half of the calendar year will contain improvements in key metrics like consumer confidence and employment, the restaurant industry isn't recovering as fast as we had hoped. Brinker in particular was impacted by increased pressure and deep discounting by our closest competitors during the fourth quarter. We chose not to match that aggressive discounting at our brands, but instead stayed focused on our plan-towin strategy. While we, once again, delivered strong earnings growth, our sales were not where we'd like them to be. Company-owned comp sales were down slightly for the quarter and we finished the year slightly positive, but softer than we'd anticipated through our guidance. Roberts: This quarter we continued to see a fairly lethargic category and some of the macroeconomic elements aren't quite as good as we hoped they'd be at this point in time. While we remain optimistic that the back half of the calendar year will contain improvements in key metrics like consumer confidence and employment, the restaurant industry isn't recovering as fast as we had hoped. Brinker in particular was impacted by increased pressure and deep discounting by our closest competitors during the fourth quarter. We chose not to match that aggressive discounting at our brands, but instead stayed focused on our plan-to-win strategy. While we, once again, delivered strong earnings growth, our sales were not where we'd like them to be. Company-owned comp sales were down slightly for the quarter and we finished the year slightly positive, but softer than we'd anticipated through our guidance. CLICK HERE TO RETURN TO INDEX
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Roberts: In fiscal 2013 we delivered double-digit earnings per share growth and continued to drive share value even in today's competitive environment. For fiscal 2014 there's no shortage of ideas for programs offering significant margin improvement while still delivering a great guest experience that drives sales. Guy Constant, CFO: Labor costs are a little bit higher in the Canadian market but cost of sales is better and our ability to leverage some other lines is a little bit better, so net-net overall margins are pretty similar for the Canadian business. Maybe a shade lower but we do think there's a lot of opportunity in that business to implement some of the changes we made here in the domestic market to even drive that forward. So we feel pretty good about what that business can do in the long-term.
Jack in the Box

[JACK] Earnings Call 8/8/13 Linda Lang, CEO: We attribute our ability to grow market share in this challenging environment to the investments we've made over the past few years to enhance our food, service and restaurant facilities and we believe the foundation and catalysts in place to continue driving same-store sales and traffic growth over the long run. The restaurant industry has seen some softness in sales in June and July, and our fourth quarter guidance reflects the recent broader industry trends. Company Jack in the Box same-store sales were down in July which was our toughest compare of the quarter. Lang: We are holding our own in a challenging environment. We have effectively transformed our Jack in the Box in recent years and believe the investments we've made will help us weather the current consumer slowdown. We believe the steps taken in the third quarter to strengthen Qdoba, coupled with the brand strategy and positioning work currently underway will result in higher future earnings, average unit volumes, restaurant operating margins, cash flow and return on invested capital. Jerry Rebel, CFO: We now expect commodity costs for the full year to increase by approximately 2% and we now expect these costs to be up approximately 2% for the year with expected Q4 inflation to be about 4%.We're expecting same-store sales growth at Jack in the Box company restaurants in the fourth quarter to be slightly positive compared to a 3.1% increase last year. And as Linda mentioned, comparisons eased as we moved throughout the quarter. And same-store sales at Qdoba company restaurants in the fourth quarter are expected to increase approximately 1% versus a 1.1% increase last year with substantially less pricing. Lenny Comma, COO: If you look into 2014, I think everybody is seeing and we're seeing a fairly benign commodity inflation number, thus far. We'll clearly have a better look at that when November rolls around. But as of now, we're pretty happy with what we're seeing. Comma: What we experienced in July is what most of the industry has been talking about. It's been a soft month for us where we saw some negative trends, but we have sequentially, week by week, seen our average unit volume grow throughout the month of July and into August. So it gives us some optimism on the remainder of the month. And what we've done to make adjustments to what we've seen in that trend and to push ourselves to what we think will be slightly positive is we have come off of some of our premium promotions to more bundled value deals to allow us to move forward. So, that's essentially where we are today. Lang: It definitely feels like the economy has stalled. If you look across the restaurant industry and even the retail industry, with the exception of the deep discounters, and there's been lots of ideas and thoughts around what has caused the difficulty for the consumer. I mean, some of it if you look at unemployment numbers, the CLICK HERE TO RETURN TO INDEX
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federal government, there has been sequestration so there have been layoffs. That's been a sector where we've actually lost jobs. The only sectors where we've gained jobs are in hospitality, restaurant, retail, and those are generally lower paying jobs. There's been talk around the lack of growth in disposable incomes, so people just don't have discretionary spending like they used to. They're spending it on, perhaps, housing and automobiles. There's been a slight increase in gas prices. This morning, I think, there was talk about teen unemployment this summer. So, lots of factors that I think all coming together to put more pressure on the consumer. And we are certainly feeling thatat both brands, we're feeling that. And as a result, we are seeing a shift of consumers to the more value-oriented products. So, and we should - that we've made some shifts in our marketing plan and our promotional calendar to just balance it a little bit more on the value side of the equation. Comma: It only takes us about six guests a day, six additional guests a day per location to grow at about 1%. So when we look at value, what we try to do is be responsible with how it's going to impact overall average ticket and margin by doing the bundles. So, this quarter we've seen the slowness and the sluggishness in July but we have seen the improvement week on week, which gets us pretty confident in viewing the rest of the quarter, especially with the change to the value bundles going forward. So, we have continued to use the strategy that's worked pretty effectively for us and we'll continue to sort of take it week by week like the rest of the industry to navigate our way through the sluggish economy.
Papa Johns
[PZZA] Earnings Call 8/7/13 John Schnatter, CEO: We built a nice momentum throughout the first half of this year, including, solid second quarter comp sales in both, North America and international divisions, a strong increase in EPS, and continued momentum in net restaurant openings, including the opening of our 1,000th restaurant outside North America. Schnatter: While the operating and competitive landscape remains challenging all around the world, our operators continue to persevere by focusing on quality and consistently delivering on our Better Ingredients, Better Pizza brand promise each and every day. That focus on quality continues to be a winning strategy for us. Schnatter: Our franchisees throughout the world have fully embraced doing things the Papa John's way in every aspect of the business. And as a result, we're performing very well operationally around the world and are continuing to grow our brand. During the quarter, we opened our 1000th international restaurant. Very few brands in any industry have opened 1000 stores internationally, so we view this as a significant milestone which we will celebrate globally later in this quarter. Tony Thompson, COO: Each week, we face increasing challenges from a variety of areas, including our competitors and a still struggling global economy. But our system consistently remains focused on the fundamentals, running our operations the Papa John's way. As a result, they have risen to meet each and every challenge and have positioned themselves and the company for continued growth. Thompson: Our global product and service scores remained at an all time high through the quarter, which has enabled us to meet the high expectations of our customers. Thompson: We are very, very bullish on the future of our international business. We've spent a lot of time working, building and working on the infrastructure and we're really excited about the work that Steve and his CLICK HERE TO RETURN TO INDEX
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team have done. We have a great team in place, and there's going, there's a tremendous amount of upside offset before that runway is wide, and it's long. And the 1000th store really is a key milestone for us that's going to jettison us into the future.
Red Robin Gourmet

[RRGB] Earnings Call 8/15/13 Stuart Brown, CFO: We expect overall consumer trends in casual dining to remain challenging. However, despite our cautious near-term outlook, we believe our longer-term thesis remains intact due to number of potentially viable initiatives we have on our roadmap. Stephen Carley, CEO: The environment for casual dining sector continues to be a challenge, and as often more than we expected even just a few months ago. This further compounds the challenge of accomplishing our goal of positive guest traffic counts. It's our objective to continue developing a pipeline of products and guest engagement initiatives that we believe will equip us to best weather the continued consumer volatility and the inevitable increase in marketing and promotional effort s of our competitors. Brown: I think our commodity inflation basket is going to be around 2% which was down from our initial 4% which we'd brought down to 3%. And this is as ground beef continues to be favorable through the second quarter. So that inflation if you sort of look at what's going forward, obviously the grain markets where corn prices are, is great. It's just going to take a while for some of that to flow through. So ground beef obviously will take a long time to flow through. Chicken, you should start to see some benefit from the harvest.
Household Goods
Pier 1 Imports
[PIR] Earnings Call 6/20/13 Alexander Smith, CEO: We are pleased with the start to our new fiscal year both in terms of our performance during the first quarter, and especially, especially the progress we are making against our multichannel strategy, which, as many of you know, we call 1 Pier 1. Smith: We delivered our 15th consecutive quarter of sales and profit growth. Throughout the period, customers responded positively to our spring assortments including our Easter, Mother's Day and outdoor merchandise. And this is reflected in both our total sales growth of 9.3% and our comp store sales gain of 5.9%. The effective execution of our robust merchandising and customer engagement strategies, strong full price selling and expense leverage drove higher year-over-year profitability. Smirh: The quarter we're in, Q2, will be the hardest for us to maintain our ratios as we have new headcounts without the sales benefit we will see in the back half.
Bed Bath & Beyond

[BBBY] Earnings Call 6/26/13 Steven Temares, CEO: We are pleased that we've been able to continue our consistent performance in terms of earnings per share growth and overall financial strength as well as with the integrations of both World Market and Linen Holdings. We are grateful for the dedication and talents of all of our associates and their CLICK HERE TO RETURN TO INDEX
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constant focus on improving the overall customer experience while at the same time creating a more productive and efficient company, which are the keys to producing the strong results that we have experienced. Eugene Castagna, CFO: While we are encouraged by our positive fiscal first quarter results, we continue t o be cautiously optimistic about the remainder of the coming year. Castagna: For the third quarter, the comp store sales calendar will compare the 13 weeks ending the week of Thanksgiving in 2013 to the 13 weeks ending the first week after Thanksgiving in 2012. This will result in an unfavorable comparison in the third quarter comp store sales calculation. Castagna: Capital expenditures for fiscal 2013 are planned to be approximately $350 million, which of course remain subject to the timing and composition of the projects. Projected capital expenditures, which include World Market and Linen Holdings for the full year, are primarily for new stores and existing store refurbishments; information technology enhancements such as the re-launching of our buybuy BABY and Bed Bath & Beyond websites, upgrading our mobile sites and apps, enhancing network communications in our stores, implementing point-of-sale improvements, and building, equipping and staffing our new IT data center to support our ongoing technology initiatives.
WD-40
[WDFC] Earnings Call 7/8/13 Garry Ridge, CEO: Homecare and cleaning products continue to generate positive cash flows despite the sales decline with a portion of the decline stemming from our decisions to reduce businesses in low margin products and programs, which require significant trade discounts and promotions. Sales also declined due to the decrease in promotional programs, competitive and category declines as well as the volatility of orders from within the warehouse, club and mass retail channels. Ridge: We sell into Europe through a combination of direct operations in certain countries as well as through exclusive marketing distributors in other countries. Sales in our European direct markets were down 2% in Q3, due primarily to the customer order flow and lower level of promotion activities period versus period, as well as some unfavorable impact from changes in foreign currency exchange rates. Sales in the direct markets are up or were up 11% year-to-date. Ridge: We remain cautiously optimistic about several macro factors, which include stability in the global economy, major input costs and foreign currency exchange rates. As for input costs, we hope that recent stability in petroleum-based materials and aerosol can cost will continue in the near term and that our initiatives will continue to benefit our gross margin. We have updated our guidance in light of our year-to-date results. The following fiscal year 2013 guidance does not include any acquisitions or divestitures and assumes that foreign currency exchange rates will remain close to recent levels. Ridge: The marketing, distributor markets in Europe, it's across the board. We've had development in continuing in the Eastern European blocs, our business in Russia and Poland and other areas, but there's no new news. It's just another step in the build of that business. It does, as you know, as with most of our business, it does bounce around from time to time. But we're happy that it was a good quarter, but we're more than happy that it's a good year.
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Mattel
[MAT] Earnings Call 7/17/13 Bryan Stockton, CEO: Overall, the global toy industry came out of the first half of 2013 in pretty good shape. Industry trends looked consistent with recent history, with toy categories' sales flat to slightly down in the U.S. and in Western Europe and growing in Latin America, Eastern Europe and Asia. For Mattel specifically, important emerging growth markets such as China, Russia and India continue to prove to be fertile ground as all grew by double digits in the second quarter. Stockton: Mattel continues to grow internationally. We saw positive growth in Europe, Latin America and Asia in the quarter and for year to date. In fact, we have consistently delivered revenue growth internationally in 9 of the past 10 quarters. Stockton: Barbie experienced declines both in North America and International. There are two key underlying factors that contributed to Barbie's second quarter results; first, the shifting of North American promotional programs traditionally executed in the first half to the second half; and second, increased competition from our own growing portfolio. Kevin Farr, CFO: Unfortunately, there recently has been volatility in crude oil prices and foreign exchange. That said, we manage a basket of costs, including input costs where there are always puts and takes. And we continue to focus on executing manufacturing efficiency programs to fully or partially offset these puts and takes. And as we began to enter our peak production, so far our overall basket of costs, including foreign exchange, has been fairly consistent with our cost assumptions. Farr: For the quarter, all of our regions grew in both U.S. dollars and local currency. And we continue to see strong results in our emerging markets in China, India, Russia, and Eastern Europe, as well as Mexico, and Brazil grew for the quarter. Stockton: We're I would say slightly pleased that Fisher-Price seems to be making a bit of a turn in the second quarter. We certainly are not declaring victory on Fisher-Price. But I think as you look at the second half, and I think we've been consistent with this, it's really a second half opportunity as the new packaging comes in, as consumers get more experience with the website, as we get our retail programs better executed, as we really get the digital and brand positioning to evolve from just connecting to converting with mom. And there's an awful lot of new product innovation in the Fisher-Price core. So to answer your question, yes, we need to have the core pick up in POS globally, and that's important to us. The other part of Fisher-Price that we also want to think about is the Fisher-Price Friends portfolio. As you know, that's a really important part of Fisher-Price. It's about a third of the overall Fisher-Price portfolio, so we spend a lot of time thinking about it. And since we made the investment in HIT Entertainment, we spend even more time thinking about it. As you'll recall now, about half of our portfolio is our own intellectual property. Stockton: Latin America has 10 years of history with Max and a lot of momentum with Max. So, it doesn't surprise us that we're seeing some positive impact there. And the reason I say that is, as we develop this property, we spent a lot of time with boys in Latin America because that was really the core of the franchise, and the story played well not only in Latin America but in North America and Europe and Asia. Farr: I think our expectations is that due to the rise in oil and the volatility in foreign exchange that that costs are going to go up. And when we look at our overall basket of cost, as I said earlier, they're pretty consistent with our cost assumptions. And we continue day in and day out to work on incremental CLICK HERE TO RETURN TO INDEX
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manufacturing efficiency programs to kind of offset those puts and takes that we always see in those basket of costs.
Hasbro
[HAS] Earnings Call 7/22/13 Brian Goldner, CEO: While we are up against challenging comparisons in the Boys arena this year, we have seen growth in our other categories and believe that these efforts position Hasbro to successfully execute our strategy and leverage our brands and our strategic investments in both the near term and in the years to come. Our second quarter performance reflected the difficult comparisons in the Boys category, while at the same time highlighted areas of growth and opportunity for Hasbro. Second quarter revenues of $766 million declined 6%, while year-to-date revenues declined 2%. Goldner: Geographically, our emerging markets investments continue to pay off. In the second quarter, these markets grew 24% behind gains in many countries including Russia, China and Brazil. Goldner: The Boys business is really where the decline is in POS. That's true both domestically and internationally. And, as we indicate, we're really cycling through some very big numbers in comparatives versus a year ago, and so as we go forward with the raft of entertainment that we have and our partners have in the Boys arena plus the growth in the other three product categories as well as five of our seven Franchise Brands, we feel very comfortable with the current position we have. Goldner: So, we feel, like obviously second quarter was our most considerable comparison versus 2012, but it will remain a more challenging year as we go forward in 2014. Obviously, we line up strength-on-strength both Hasbro's Boysbrand, as well as our partner brands in 2014, 2015 and beyond. Goldner: I think that you have a couple of the Continental European markets there that are more challenging, Australia within Asia has been more challenging, the economic environment there has been more challenging. And, as we get beyond some of these comparisons in Boys, the categories like Girls, Games and Preschool are up there consistent with our overall results. So, as we add new Boys initiatives in the third quarter and fourth quarter this year and then longer-term, new Boys entertainment in the form of TV and film as well as online content, we expect that along with economic turnarounds in those economies we should see better things.
Kimberly-Clark
[KMB] Earnings Call 7/22/13 Thomas Falk, CEO: So starting with the second quarter I'm encouraged by our strong cost savings, by our margin improvement and by our bottom-line growth. Our organic sales growth is the one part of our results that I was not totally satisfied with. Our performance was strong in K-C International with 9% growth overall and excellent progress against our targeted growth initiatives. For example, in our diaper business in K-C International our volumes were up 45% in China and 10% in both Russia and Brazil. And improved net realized revenue brought total organic sales growth to about 20% in Brazil. Elsewhere, in K-C International we delivered double-digit organic sales growth in feminine care, adult care and baby wipes, and organic sales were up 8% in K-C Professional within the K-C International space. So our K-C International team delivered an excellent quarter of broad-based top line growth. They also improved their operating profit margins despite headwinds from currency and the conditions in Venezuela. On the other hand volume was below my expectations for some of our other businesses in developed markets including K-C Professional, Health Care CLICK HERE TO RETURN TO INDEX
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and Huggies diapers in North America. Some of that shortfall was related to fairly sluggish category demand. Falk: As we have all observed the macro environment has become more volatile in the last few months with rapid changes in currency rates, interest rates, financial markets, economic growth rates and most recently the price of oil. Despite this volatility, we will continue to execute our global business plan and that means pursuing targeted growth initiatives, launching innovation, reducing costs and returning capital to shareholders. We've made excellent progress with these strategies over time and I expect that to continue going forward. Falk: Despite the more negative currency environment, we're also reconfirming our full year adjusted earnings target of $5.60 to $5.75 per share. We expect to overcome additional currency headwinds, primarily from higher FORCE cost savings. In terms of selling prices in this environment in K-C International will be opportunistic and improving our net realized revenue wherever we're able to and while we aren't planning any significant new price increases in the near-term, the spot currency rates are maintained. I would expect that some increases would occur in some markets. Falk: Things in China continue to go very well -- is not really slowing down. Strong growth in the Brazil, which despite some of the economic challenges in Brazil, our team there is executing very well and you're seeing good growth there. A lot of innovation coming in the back half on Personal Care, some of that launched in the second quarter in places like Russia, you started to see that pick up. I'd say where we've seen a little bit of maybe slowdown in the quarter was probably the more developed end of the developing markets, so places like Australia and Korea were a little slower in the quarter. Those are also big business for us, so they have a disproportionate impact. If you look at the segment split, I mean you still saw a strong Personal Care growth, but one of the swings in the quarter or maybe it wasn't as obvious, was that, Venezuela did very well on tissue and slowed down on Personal Care, and it was really more of a question on what kinds of things did the Venezuelan government want to support in terms of providing foreign exchange. So, they really wanted to emphasize bringing bathroom tissue in and improving their in-stock position on that. So, we had a very strong bath tissue quarter in Venezuela and not as much on the diaper front. And just to put that in perspective, just that Venezuela swing was about third of the volume growth in the KCI tissue numbers in the quarter. Falk: On the North American front, we've typically have some negative mix built in as more of the categories move to the larger format packs, but beyond that, there wasn't anything else that was going on there that was a big driver. Falk: We were a little heavy last year in the second quarter with the Fem Wellness launched in the U.S. and that obviously exiting some categories in Europe, categories in markets. We didn't spend as much in Europe as we would have last year. So, those are the two big drivers of the change in the quarter. But we've also had quite a bit of innovation coming in the second half and I would expect us to spend more on strategic A&P sequentially than we did in the first half. We will get a little bit of a currency benefit in some markets if you look at it from a dollar standpoint, but we still think for the full year, we'll spend at least as much as a percent of sales and maybe even a bit higher on strategic A&P this year. Falk: I really hate blaming anything on the weather, because it sounds kind of lame. But we did have a cooler weather spring this year and we had a hotter dryer spring last year and I think that's part of it. So, Little Swimmers was a little softer this period of time and we don't I think we're still digging into that to understand what's going on there and when we see that business come back over the summer months. So, that's part of it. I think the diaper category overall, the birth rate was lower than we expected, for longer than we expected. That's kind of piling up a little bit in the child care category. So, that's a little weaker. CLICK HERE TO RETURN TO INDEX
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Falk: I think in K-C Professional, in particular, where you see things, manufacturing was particularly seemed a little bit slower. We have a small scientific business that sells a lot into laboratories that do research and that one segment seems to have been a little bit more affected by the sequester where any government-funded research was more discretionary has been closed down. So that was a little weaker. Things that are related to welding in general where we sell a fair amount of supplies into that space were a bit slower.
Whirlpool
[WHR] Earnings Call 7/19/13 Jeff Fettig, CEO: Our second quarter results reflect strong revenue growth in every region around the world. And we continue to manage all the drivers that impact our margins and once again had significant margin expansion during the quarter. These results marked the sixth consecutive quarter of year-over-year ongoing business operations margin expansion. Fettig: In North America, we're increasing our industry demand assumption to be up 6% to 8% for the year as we continue to see very positive trends in U.S. housing as well as pickup in really all segments of the market from a demand perspective. In Europe, we expect now to see flat to minus 2% industry demand for the full year as weak demand environment continues across the euro zone. And for Brazil and other Latin American countries, we are forecasting a lower, but still positive industry growth for the year. Michael Todman. President: Higher sales and ongoing cost productivity more than offset higher material costs and foreign currency. Marc Bitzer, President: The Mexican market is still down actually surprisingly to a large extent, which obviously impacts us and because we report Mexican and North American regions. Canada as a market is holding up but does not yet show the positive momentum of U.S. Bitzer: Overall, I would say the European market pace is still very challenging. What impacts us in particular is that our exposure is particularly strong in countries which are now impacted the most, and that just hurts us right now. Having said that, we are all convinced that even in the current environment, you can make money in Europe, okay? And that's what we are focused on. When it comes to how we deal with that, it's, I would say, by and large, not too dissimilar with what we've been trying to do in North America the last couple of years. We have to address the fixed cost. If the market demand is not there and probably will not rebound in the short term. We'll address fixed cost. We have announced actions already previously. We announced some additional actions actually late June on fixed cost. And as I said earlier, we continue to evaluate all actions necessary and possible to address the fixed cost. That's just one part. And of course, we will also manage the price/mix equation very carefully and that equation matters. So long story short, despite the market environment, it is our firm expectation to bring Europe back to breakeven as quickly as possible and above breakeven.
Tupperware Brands
[TUP] Earnings Call 7/24/13 Rick Goings, CEO: We have some markets we're not happy with, but the top line when you put it all together looks good. It was strong across our emerging markets and improving trends in a number of our established markets. So you see this mix of up 14% in emerging and established down a point.
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Goings: Emerging markets in Europe, Turkey was up 27%, and I was also there last week and dynamic management team and the business is doing well. The CIS, which is really the former Soviet Union with a core of Russia, Ukraine and Kazakhstan, up mid-single digit. And what's nice there we're starting to see the underlying trends really strengthen. It's good to see Japan up after being down double digit in the first quarter. Goings: The pattern in India for the first half of the year has been a little bit lumpy, particularly with regard to the southern part of the country, but feeling good about how the how the market is doing. Goings: Tupperware North America, the U.S. and Canada up 4%. Frankly, we wish that number would have been higher, and at the same time, we believe we spent too much on promotions in that market, which we're not going to do in the future, but at least it was a plus. Emerging market Mexico, Tupperware's business there was up 12%. That was good news. In South America, Brazil, in spite of what you're reading in the newspapers, strong sales force recruiting and activity. We were up 32% there. Venezuela was up 13%, but if you dig under the you know, we're holding our own there right now because the bulk of this was really the result of very high inflation rate. Units were down modestly. So at any rate, as I said, you know, if you get an 8% increase in this kind of a global environment, and we'll sign up for that. Goings: Tupperware South Africa, after having a decent first quarter they were down 7% in the second quarter. Goings: Importantly, this week the China Daily this week quoted the new Nielsen study on consumer optimism, and their most recent quote this week was, "China's consumer optimism hit a record level in the second quarter of 110." To put that in context to the United States, the U.S. consumer optimism is 93. The global average is 94. So when you read all this about China is slowing, yes, fine, from the 10% plus to you see it in the nines, the eights and the mid-sevens range, but it's still dynamic. I can tell you when I lived in Hong Kong in the mid-1980s, a visit to Shanghai, there were 12 high-rises in Shanghai in 1985 12 and a high-rise means it's over 25 stories. There are now 13,000, and that's just in Shanghai, so here's what we've got going for us. We've got a population of 1 billion very interesting, the land mass, it appears to be the same as the U.S., and it is if you include Alaska. Goings: Japan by consumer spending is the largest direct sales market in the world. Most of the problems i n Japan with regard to Tupperware are problems of our own making. We let it become from a couple things we didn't do. We didn't refresh the distributor organization as aggressively as we should have, and as you know that in Asia, the elderly are highly regarded and respected. We have some distributors who were north of 70 years old there. If I were to take you now to our French business, a re-distributor contract is a one-year contract, and they usually replace the least productive 10%. So it starts firstly with an attitude of our business there that we've got to refresh our distributor organization, but you cannot do that culturally too radically.
Colgate-Palmolive
[CL] Earnings Call 7/25/13 Bina Thompson, Senior Vice President of Investor Relations: In Europe South Pacific, we are pleased with our results in this region given the very challenging macroeconomic environment. GDP growth rates are low to negative and unemployment is high, particularly in countries such as Spain, Portugal, and Greece. Consumer confidence is low and consumers are looking for value. While category growth is slowing, our market shares CLICK HERE TO RETURN TO INDEX
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across Europe are doing well, with increases in toothpaste, toothbrushes, mouthwash, and fabric softener. Thompson: Latin America continues to deliver solid results with another quarter of strong organic sales growth, and as elsewhere, new product activity has been an important driver of our business, and this is across all price points. In addition to the market share gains referenced in the press release, our market share has increased in underarm protection and bar soaps. In Brazil, our toothpaste market share was up 80 basis points on a year-to-date basis to 71.7%, the highest level in 15 years with the most recent read at 71.9%. Thompson: We are very pleased with the continued momentum in our business around the world. Our new product pipeline is as full as it has ever been, and that should help continue to drive sales and market shares in both developed and emerging markets. Our simple financial strategy and sharply focused initiatives are serving us well. In addition, our global growth and efficiency program is on track to provide even greater opportunities for investments. Colgate people around the world are working hard to deliver our results, and we look forward to sharing those results with you as we go through the balance of the year. Ian Cook, CEO: We continue to see Europe grow extremely low single digits. Indeed, some of the categories are flat and some are modestly negative, not new news, and something that we have been factoring into our planning for some time. When you turn to the emerging markets, notwithstanding the macro news that we have been reading about, our data so far shows that those categories continue to maintain high single digit growth rates, which is very pleasing. And of course, we're focused very, very closely on seeing whether any of that macro commentary turns into category pressure for our businesses. Cook: Without being too self-effacing, we believe that the combination of the innovation and the marketing programs that we have in the emerging geographies, Brazil being a very good example, outsizing, outpricing the way we distribute, the visibility we focus on at retail when we distribute, the timing of our promotions, all things that sound extremely fundamental and extremely basic, and they are. But we believe doing them well makes a difference in terms of continuing to reach all of your consumers in the different areas of the country at the different price points that they buy, and making sure you keep that consumer connected to you. And finally, indeed as we speak, in many markets, we have and continue to move with pricing to the degree necessary to offset the transaction impact. Cook: Europe is a very tough environment. And I think it would be fair to say that in that environment, the expectation built into our plan continues to show modestly negative pricing in Europe. I would say that the innovation spread that we have across all price points, which is to say our premium innovation and the value innovations, is not in any way gross margin dilutive.
Ethan Allen Interiors

[ETH] Earnings Call 7/25/13 Farooq Kathwari, CEO: We had excellent earnings results for the fourth quarter and the fiscal year ended June 30. We could have done even better on increase of our top line. Kathwari: Our inventory declined substantially and it declined actually in all areas, both from our raw materials to work in process and also some finished products. I believe that as we move into this new year, they're going to somewhat increase, that's our expectation. From $135 million, maybe $4 million or $5 million is what we are thinking of right now especially with the launch of the accessory programs that we are going to launch this fall.
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Kathwari: Case goods has always -it's been a challenge. And we of course, started a few years back as being a very strong case goods company. That still has shown declines even though the decline has moderated. Our upholstery somewhat didn't grow, but didn't go down. And our accents, to some degree went down too, and I think that that is where the opportunity is where all these new products that we have introduced is going to help us bring that business up. So I would say case goods, then accents and upholstery was stable or slightly up. Kathwari: The traffic was somewhat down for us and that's why we looked at our advertising from base z ero. We're looking at the mediums we are using and we're already starting to see positive trends in July. Of course, it also reflects a change in our prices. But I think our advertising mediums and the message is also being changed to reflect to get more traffic into our design centers. Our traffic was not what we wanted it to be. Kathwari: There are some concerns on the plywood costs. Our hardwood, plywood that we use in our frames and our upholstery, there's having there's a lot of challenges there. So we are looking at it very carefully. We are looking at lot of different resources. And even though for the year our fuel costs were somewhat stable, but recently we have started seeing major increases in fuel costs. And we deliver our products at one cost nationally. So we bear the cost, not the retailer. And approximately 25% to 30% of our fuel costs is represented by surcharges. So fuel is something, and the cost of delivery is an important factor that we are watching carefully and that's a concern.
P&G
[PG] Earnings Call 8/1/13 Alan Lafley, CEO: Many of our strongest business units and total company positions are in the U.S. We need to ensure P&G's home market stays strong and growing. We will focus developing market investments on the categories and countries with the largest size of prize and the highest likelihood of winning. Developing markets, driven by demographics and household income growth, will continue to be a significant growth driver for the company. Jon Moeller, CFO: At current market growth rates, we see high single-digit bottom line growth as the right objective. We believe these targets will allow the company to strike the right balance between long-term investments in growth; flexibility to respond to macro and competitive challenges; and delivery of consistent, dependable results and our value creation goals. Moeller: Fiscal 2014 presents several challenges and opportunities. Headwinds include weaker underlying market growth, a much stronger dollar, higher commodity costs and a highly competitive operating environment. Opportunities include positive market share momentum, a number of promising innovations and savings from productivity improvements. Moeller: We continue to operate in a volatile environment with uncertainty in the foreign exchange and commodity markets, decelerating market growth rates and a rapidly developing policy environment. Our guidance is based on mid-July foreign exchange spot rates. Moeller: We will continue to have relatively high spending and manufacturing start-up costs, but this will largely annualize in the second half of fiscal 2014. We'll annualize the operating impacts of the Venezuelan bolivar devaluation in the second half. Stepped up marketing support levels will also annualize and productivity savings will build throughout the year. Last, the first half comparison includes the one-time gain from the Western European bleach business in the base period. CLICK HERE TO RETURN TO INDEX
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Lafley: Maybe a bad baseball analogy, but we've got to get our batting average and our OPS up, okay? And as we go through this industry-by-industry, business-by-business where the strategies are clearer and more choiceful, where we know who the consumers are that matter most, where the brand promise is crystal clear and we execute it in the communication and where our products are preferred by consumers, we get it done. And in any mix of businesses we in just the past few years, and I'll miss a few, we had the family cares and we have the prestige beauties and we have the oral cares, and I don't want to leave out the home cares and others that have been consistently performing. This is an industry where execution really, really matters. Okay? And like I said, we have a handful of businesses that have done it really well. We now have 15 to 20 business that are focused like a laser on doing it really well, starting July 1, 2013. Lafley: We have a stronger product and brand innovation pipeline this year going in, but it's not huge yet. So a lot of the pipeline is still in development, qualification or early stages of commercialization. So you can't invest in it in development. Lafley: Hey, you don't go through the second biggest financial crisis in recent history and a prolonged global recession without changing some of your habits, practices, attitudes and beliefs; and we, of course, have been digging into that. I think you could make an argument. I'll use, you can make an argument that there may be three critical moments of truth right now for consumers. I call it zero. Other people call it something else. But there's clearly a period driven by the desire to get the best value they can, not only at the best price but the best value and driven by technology, mobile technology, computer technology, the Internet, et cetera. And there's this period of information gathering, education, brand and product comparison, and that includes price comparison. So a lot of shoppers are coming to the purchase decision with having done a lot more preparation. Still, what matters is the first one that really matters is the purchase. We've got to win the preliminary. We've got to get into the consideration set. We've really got to win the purchase or we don't have a chance at winning the usage. So I think that's one thing that's changed. Moeller: Clearly one measure of our success, in presenting propositions with appropriate value equations to consumers, is our share of the market. And right now, we're modestly building market share growth, which would imply that more times than not, not always, but more times than not, we're getting that value equation right. We'll continue to refine that. This is something that requires kind of daily attention, but generally I think we're across the broad portfolio in the right place.
Clorox
[CLX] Earnings Call 8/1/13 Steven Austenfeld, Vice President of Investor Relations: In our fiscal fourth quarter, volume was down 3% and sales were about flat versus the year-ago period, reflecting the factors including unusually cold weather conditions that affected our Charcoal business, as well as the impact of declining foreign currencies. We also saw heightened competitive activity Austenfeld: In the fourth quarter, we saw modest growth of 40 basis points in the U.S., with gain in Laundry, following our concentrated bleach transition, as well as Home Care, Water Filtration, Cat Litter, and Natural Personal Care. The only material declines were in the Bags & Wraps category and that was solely in the nonstrategic Food Storage segment, as well as the Charcoal category, which was impacted by poor weather well into the quarter. In Q4, our multi-outlet market share results in the U.S. were essentially flat, reflecting a decline of 10 basis points, with mixed performance across our categories. Glad's share was up strongly for the fourth consecutive quarter behind our premium OdorShield offering. Burt's Bees in the Natural Personal Care CLICK HERE TO RETURN TO INDEX
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category was also up nicely, as was Charcoal, which rebounded in recent weeks with improving weather. Overall results were impacted most strongly by a share decline in our Laundry additives category, driven by increased private label support for bleach at key retailers, as well as heightened competitive activity in our Cleaning business. Austenfeld: Despite a challenging fourth quarter, the Home Care business did deliver strong results for the full year, including record shipments of Clorox Disinfecting Wipes during the height of the flu season. Looking ahead, we have strong plans in place to address our recent decline, with an emphasis on expanding wipes usage to new occasions, increasing our merchandising support, as we lap last year's flu season, and launching new products in fiscal 2014. Austenfeld: While our market shares have been challenged, we expect these declines to moderate over time behind increased demand-building spending and recent assortment gains on shelf. Austenfeld: We are disappointed with the results in our Charcoal business driven by the unusually cold weather, the unfavorable effect from foreign currencies, as well some of the market share decline seen from recent competitive activity. Looking ahead, we continue to anticipate sales growth for fiscal year 2014 in the range of 2% to 4%, with the first half of the year at the lower end, if not below that range due to the competitive activity foreign currency headwinds and challenges in Venezuela and Argentina. We anticipate stronger top-line performance in the second half as our plans to address the competitive environment take hold and we benefit from innovation. Stephen Robb, CFO: Sales were up a solid 3% in fiscal 2013, with gains in all four segments, reflecting the benefit from price increases, moderated by the weather's impact on our Charcoal business in the second half of the fiscal year, declining foreign currencies and challenging market conditions in Argentina and Venezuela. Robb: We're closely monitoring oil prices since they've rallied significantly over the last month, and remain above our outlook for $90 to $100 per barrel, which in the near-term are driving some commodity costs above our forecast. If energy costs remain elevated, our margins will be pressured and we'll have to take a hard look at pricing. Donald Knauss, CEO: We're facing commodity cost and currency headwinds as we enter fiscal 2014. We've seen a run up in resin costs, which impact us across the business. We continue to anticipate meaningful currency declines in Argentina, and the U.S. dollar has certainly strengthened across many geographies. So we're closely monitoring both. Robb: Basically, we're assuming categories are flat to up about a half a point half a point to a point, so somewhere in that range. We do expect category growth is going to be sluggish. Importantly, we are counting on three points of incremental sales growth from innovation and feel very good about that. And embedded in the outlook is also about a point of foreign exchange headwinds. Robb: Commodity costs, certainly we're going to see a little bit more pressure in the first quarter than we may have originally anticipated. We have built into our outlook one point of gross margin compression from commodity cost increases. What I would say is that in order for us to see greater than that, you'd have to see oil remain elevated for an extended period of time. And if that was to happen, then it will put more downward pressure on the margins. And it's something we're watching carefully, but then we would respond over time by taking pricing to recover it. But beyond that, we need to get farther into the year to really see how this is going to affect both sales and earnings, if at all.
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Avon Products
[AVP] Earnings Call 8/1/13 Sheri McCoy, CEO: As we look at the second quarter, some parts of our business showed continued improvement. In our EMEA region, many of our markets performed well. We are particularly pleased by the strong performance of Avon Russia. McCoy: While I'm pleased with the progress our Latin American team has made, we do have some concerns about external headwinds and potential economic slowdowns in some of our markets. Kimberly will address this in further detail. In both Latin America and EMEA, the teams are working to ensure that growth is sustainable and to drive consistent performance across all markets within the region. Our North American region was down on all measures and the U.S. business continues to decline. While it's clear that there's a lot of work ahead of us, we remain committed to turning around the U.S. McCoy: Our Asia-Pacific region also saw a decline in performance. Some of this was anticipated, as we continue to work on rebuilding our business in China. We have a lot more work ahead to get the business to where it needs to be. However, we also need to improve performance in our other Asian markets, particularly the Philippines. Longer-term, there is good potential for future growth in Asia, but right now, our top priority is stabilizing our key markets. It is clear that we need to have all of our key markets performing well in order to have consistent sustainable growth for Avon. McCoy: Beauty is a highly competitive market and we need to have consistent performance across our four product categories. We remain challenged in Skincare. Kimberly Ross, CFO: I'm particularly pleased with our margin performance. However, we still have a lot of work to do to generate sustainable sales growth across all of our regions, particularly North America and AsiaPacific. For the quarter, our constant dollar revenue rose 2%. On a reported basis, revenue was down 2% negatively impacted by currency. We continue to see positive growth in Latin America and EMEA, partially offset by weakness in North America and Asia-Pacific. Units were unchanged. We continued to experience weakness in Beauty units in all regions, except EMEA, and remain focused on driving a recovery in this area. Ross: We feel good about the progress in Latin America, but there are some potential headwinds in the second half including uncertain economies in Mexico and Brazil, increased competition, and a difficult environment in Venezuela and Argentina. So we are focusing on initiatives to sustain the progress we have made so far. To the end, we will be investing in the second half against our new product initiatives and efforts to sustain momentum in representative growth and retention. Ross: The U.S. remains one of our greatest challenges. It is a large and complex market and it will take time to execute corrective actions in a thoughtful and cohesive way. Asia-Pacific, revenue declined 10% on a constant dollar basis, mainly due to continued weakness in China, as well as weakness in active representatives in other markets. Active representative count declined 11% and units were down 12%. Ross: Looking forward to the second half of the year, we continue to expect modest sales growth driven by EMEA and Latin America. However, North America and Asia-Pacific will remain soft as we work to address their challenges. As a reminder, in the first half we had several one-offs as well as some timing benefits from the adverse items in first half of 2012. We also had high-levels of advertising in LatAm last year. Combined, these items were about half of the 380 basis points of margin expansion in the first half. Ross: We will see higher transportation costs, primarily due to inflation in Latin America and we expect CLICK HERE TO RETURN TO INDEX
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foreign exchange impact to be more negative in the second half given the recent strengthening of the U.S. dollar and we have a difficult comparison against last year's benefit from accruing lower employee incentive compensation.
Revlon
[REV] Earnings Call 7/31/13 Alan Ennis, CEO: Our net sales in the second quarter of 2013 were essentially unchanged year-over-year. We benefited from the inclusion of our 2012 Pure Ice acquisition, which was offset by continued softness in our Almay brand and the negative impact of business conditions in Venezuela. With respect to our recent acquisitions, SinfulColors performed very well during the quarter and we are on track with the integration of our Pure Ice brand. Chris Elshaw, COO: In the United States, net sales were essentially unchanged year-over-year. Higher net sales of SinfulColors, plus the inclusion of Pure Ice were offset by lower net sales of Revlon and Almay color cosmetics. The decrease in Almay net sales was primarily driven by the reallocation of brand support. In Asia Pacific, net sales were essentially flat year-over-year, with higher net sales of Revlon color cosmetics in Japan, SinfulColors in Australia, Revlon ColorSilk hair color in certain distributor territories, which were all offset by Revlon color cosmetics in China and certain distributor territories, as well as lower net sales of other beauty care products in Hong Kong. In Europe, Middle East and Africa, net sales increased $1.6 million or 3.6%. This increase was primarily due to higher net sales of fragrances and SinfulColors in both the U.K. and Italy, partially offset by lower net sales of other beauty care products in France. In France, we are in the process of completing our restructure, and in July, we sold our manufacturing facility there. In the U.K., we continue to be very pleased with the strong performance of the Revlon brand from a marketplace perspective, as well as the successful introduction of SinfulColors. Elshaw: Our consumption is soft in China. You know there are a lot of changes in the marketplace; it's a very mixed picture in that marketplace. So we're really focusing on who are our core customers there, how can we partner with them to drive productivity in-store, because in China, it's really a question of productivity. If you want to expand distribution, that's maybe straightforward. But really the challenge is to raise productivity in the core distribution.
Church & Dwight

[CHD] Earnings Call 8/2/13 James Craigie, CEO: I'm very proud of my company for the second quarter business results that we achieved. Despite headwinds from weak consumer demand and increased competitive pressures, the second quarter results reflect double-digit net sales growth of 13.1%, a triple-digit increase in gross margin versus year ago for the fourth consecutive quarter, a 17% increase in marketing spending versus year ago which supported share growth on seven of our nine power brands, a 15% increase in operating income, and a 20 basis point increase in operating margin versus year ago, a 9% increase in earnings per share versus year ago, and a 17.8% increase in free cash flow versus a year ago. Craigie: I've been a long-term pessimist about the business environment. The latest forecast of weak GDP growth, continuing high unemployment and weak same-store sales by major retailers provide little hope for significant near-term improvement in the U.S. economy. In fact, of the 14 categories that Church & Dwight CLICK HERE TO RETURN TO INDEX
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operates in, five incurred lower category dollar sales in the second quarter versus the prior year, and five more had category growth of less than 2% versus the prior year. Now all consumer packages companies are fighting these headwinds. As I've told you many times before, I believe no other consumer packages company is as well suited as Church & Dwight to deliver exceptional performance in a tough environment. Craigie: Our value brands, representing about 40% of our revenue base, have experienced strong growth in the recessionary economy as consumers are generally making smart choices by switching to and staying with our high-quality but lower-priced brands. A great example of this is our value-based laundry detergent business which consists of two brands, ARM & HAMMER and XTRA. These brands sell for one-half to twothirds less than the premium-priced brands and deliver exceptional cleaning performance. Consumers love our value detergent brands as proven by the fact that more U.S. households buy a value brand than premium or mid-priced laundry detergent brands. Cragie: Headwinds from higher commodity costs stalled our gross margin improvement in 2010 and 2011. But we were able to overcome these headwinds by the middle of 2012 to deliver two consecutive quarters of 100 plus basis point gain in gross margin versus year ago in the third and fourth quarters of 2012. This momentum continued in the first half of 2013 with 110 basis point increases in gross margin versus a year ago in both the first and second quarters. Cragie: 2013 is shaping up to be another challenging year. But when things get tough, you should place your bets on the company with the product portfolio that can thrive in such an environment and the management team that has the track record of knowing how to successfully leverage that portfolio and drive cost savings to deliver consistently strong EPS growth. 2013 will be our 13th consecutive year of double-digit EPS growth, and we believe we can continue to deliver double-digit EPS growth going forward. Cragie: We're taking a very conservative approach for the back half of the year. We feel it's appropriate.
Furniture Brands
[FBN] Earnings Call 8/6/13 Vance Johnston, CFO: We are working aggressively to address our challenges and explore multiple options to improve our liquidity position. We anticipate a reduction in our borrowing base in Q3 in our excess availability under our credit facility. Ralph Scozzafava, CEO: Q2 results, we are clearly not performing as we need to from both a top line but more importantly, from a bottom line perspective. Continued solid top and bottom line performance at our designer brands and improving sales and order trends at our Thomasville company-owned retail stores were once again significantly overshadowed by the challenges we're facing in stabilizing sales and profitability on our wholesale businesses. Overall, total company sales declined 4% in Q2 with our upholstery product business and our designer brands businesses once again the better performers. This has been a consistent trend over the past few years and Q2 was no exception. Scozzafava: Despite the progress we're making on a number of businesses, we continue to face challenges on other businesses and challenges that impact our liquidity. This has precipitated a thorough review that we've undertaken with our Board and outside advisors resulting in three key initiatives. Number one, achieving further cost reductions across our business and company; secondly, pursuing asset sales and specific liquidity initiatives; and third, seeking modifications to our credit facilities.
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Scozzafava: This was a very challenging quarter and we have a tremendous amount of work to do in order to address our liquidity challenges and improve business performance across our brands. We recognize that the speed at which we move needs to accelerate, and the strategic initiatives I've laid out reflect the aggressiveness with which we're moving. Scozafava: Upholstery continues to be where the consumer is today and we've seen that by and large across the price points. The upholstery business that is probably the healthiest in the company is at the higher end. We're seeing a lot of customization at the higher price points, and that business has been pretty healthy.
Elizabeth Arden
[RDEN] Earnings Call 8/8/13 Scott Beattie, CEO: Despite the fact the organization has worked tirelessly to integrate and launch new innovation, including the Elizabeth Arden brand repositioning and many new fragrance launches, the results were inconsistent and below both our budgets and external guidance. Beattie: Our largest mass retail account in the U.S. has experienced negative retail sales trends and even worse replenishment trends. The replenishment trends actually accelerated during the fourth quarter despite improvement in retail trends. This is not a unique situation to us or to our category. This is not a brand issue, it's not a fragrance category issue, as we've actually built market share in this key account. And we expect to, in fact exceed but during 2013, as we've mentioned in previous calls and as of the year-end, we actually had a successful year in the remainder of our mass retail accounts and we continue to expect improvement in the remainder of our mass retail accounts during 2014. Beattie: We were too optimistic in our expectations for the EA brand repositioning. Despite the fact that this time last year and consistently, I emphasized the fact that we are in a transitional year and there were many, many moving parts in terms of the brand repositioning that were difficult to project and difficult to quantify across all of the markets and all of the SKUs within the brand. We, in fact, budgeted the brand growth too aggressively. We had budgeted growth for the EA brand at 4%, and this year, it grew less than 1%. This business is our highest gross margin business and our most significant brand in international. And as a result, this had a disproportionate impact on particularly gross margin and profit in our international affiliate international division. Beattie: Negative performance, both on gross margin and profitability, was the performance of the intensively competitive UK business. It is our largest foreign affiliate and therefore has a disproportional impact on our international business results. The UK is also a very strong market for us, both in fragrance and the EA brand. We actually have our strongest market shares for the EA brand and our strongest fragrance market shares in international in the UK market. It is also a very price competitive market, and has experienced intense competition and based on a weak economy. And as a result, we had protected our market share throughout the year by having heavy promotion and discounting to meet those competitive pressures from other our other large fragrance and beauty counter competitors. This resulted in gross margin and earnings shortfalls for the UK and international. Beattie: Our Western European fragrance initiative for fiscal 2013, we, in fact, grew our fragrance business in Europe by 26%, despite having negative double-digit performance in Italy and France, both very weak economies. Our distributor market business throughout Europe has tremendous momentum and is up 83% for the year and the growth rate is, in fact, accelerating as we move into 2014 and that's been driven by the CLICK HERE TO RETURN TO INDEX
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success of both our fragrance brands and Elizabeth Arden brand in Russia, Poland and Eastern Europe. Second success, despite a weak start to the year on travel retail and the distributor markets, for the year, those businesses grew 14%, Greater China grew 5.5% despite a very weak start for the year and 24% for the fourth quarter, and Asia Pacific grew 7% for the year and 11% for the fourth quarter. Beattie: Europe, in general, was very inconsistent throughout the year. We ended up 6.4% up for the year, but down 18% for the fourth quarter. The weakness was almost all driven by intense price pressure and promotions on the fragrance category, particularly in the UK, many of which we did not meet the competitive price reductions, and as a result, lost sales. Kathleen Widmer, CMO: While revenue growth across global Elizabeth Arden was disappointing and essentially flat for this fiscal year, factors underlying this performance are mixed. We're pleased with performance across the following areas. Our flagship doors, where we fully renovated the brand's presence continue to perform at expectations, delivering 20% growth since launch in North America and 17% growth in international.
Estee Lauder
[EL] Earnings Call 8/15/13 Fabrizio Freda, CEO: We had an encouraging year in Japan where our business continue d to recover as we gained share in our distribution. As we have discussed throughout the year, Korea was challenging and our domestic sales there fell sharply. Our region covering Europe, the Middle East and Africa, grew overall with emerging markets such as the Middle East expanding double-digit. We again demonstrated our ability to achieve growth in strong markets as well as soft ones. In the U.K., prestige beauty outpaced mass and we experienced healthy sales growth and share gains. And in Italy, where prestige beauty declined, we had robust sales due to strong innovation and new door openings. Freda: Travel retail started out more slowly than we had anticipated. But sales growth accelerated throughout the fiscal year. Our retail sales outpaced total beauty sales in the channel, and we are triple the pace of passengers' traffic. Freda: We believe Southern European markets will remain soft. And Korea will continue to decline, but not to the same extent of last year. Starting in our recent four quarters, we have seen lower prestige beauty growth in the U.S. Despite this challenging condition, we still expect to grow at double the rate of global prestige beauty. We are positioned to maximize the potential of the power of our brands and estimate constant currency sales gains of 6% to 8% this year. Freda: China is expected to remain one of our fastest -growing markets. As we continue to expand distribution to smaller cities, we have made progress with our skin care business in China and will raise awareness and educate consumer about our makeup and fragrance offering. Skin care will remain our biggest opportunity since it is used by 94% of Chinese women. Long-term, we see good potential to build up makeup which is only used by 16% of Chinese women regularly today, and also fragrance with 47% of Chinese women use only occasionally. Daniel Rachmanis, President, Latin America: Brazil is the third largest beauty market in the world after the United States and Japan, but is growing much faster. However, we are still playing in a tiny segment since mass represents 98% of the total $12 billion Brazilian beauty market. The country is dominated by very strong local players that offer masstige products and have strong business models. Despite this well-regarded CLICK HERE TO RETURN TO INDEX
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competition, we were encouraged that M-A-C was recently voted the most loved cosmetic company in Brazil and the second most admired brand in all categories by a respected Brazilian trade and retail magazine. And we are seeing an important trend of consumers trading up to more aspirational foreign brands. Although we have had strong growth, distribution in Brazil remains challenging. Department stores are non-existent, perfumeries are fragmented and losing share and the new prestige distribution is still emerging. Going forward, our distribution strategy in Brazil will focus on freestanding stores, specialty-multi and our ecommerce business. Freda: The deceleration of the U.S. business that we have seen started in May. The U.S. business has been growing in prestige as per NPD at about 6.9% in the first part of last fiscal year, and then in quarter four, it's 2.5%, and then June was minus 1%. So it's been clearly a softening in that period. Now, we believe there's just been a reduced traffic for several macroeconomic reasons. And we already see some improvements, and we believe that back-to-school and then later the holiday season should bring the U.S. markets back to solid growth, although we believe will be a growth below what we've seen in fiscal year 2012 and the beginning of fiscal year 2013. In terms of channel mix, we are continuing expanding very strongly in e-commerce. And ecommerce is growing 20% plus, and we believe this will continue. We are also growing in our freestanding stores at double digit and we are continuing expanding in specialty-multi successfully. However, independently from the soft last couple of months of the fiscal year, we grew about 6% in the U.S. in fiscal year 2013, so a pretty solid growth. And we believe that probably this growth will be reduced but will remain solid over the fiscal year 2014. Freda: Korea, the current U.S. trend, Southern Europe are somehow concerning. But on the other side, we expect strong growth in developing areas like China, Middle East, Turkey, Latin Ameri ca.
Hooker Furniture
[HOFT] Earnings Call 8/28/13 Paul Toms, CEO: In early June, we were fairly bullish due to increased demand and sales at both our upholstery and casegoods operations in a significantly improved retail environment. We enjoyed brisk incoming orders in May, but saw demand in retail business progressively slow as we move through the summer. We don't think this was unique to Hooker Furniture. The slowed consumer demand in the second half of the summer seemed prevalent throughout the furniture industry. Because the macroeconomic fundamentals still are generally positive, we expect that the fall selling season that open Labor Day weekend will bring an uptick in business as it usually does. But we're not going into the fall with the same sort of momentum we had coming out of our first quarter. Toms: As is typical for the industry currently, recent sales increases in our casegoods segment have not been as robust as in our upholstery segment. Since our upholstery is generally a lower ticket more needs-based purchase; however, we're pleased to have had consistent sales growth in casegoods beginning in the second half of last year through the first six months of this year. For the first half, our casegoods shipments were up just under 8%, which we believe is higher than average for the casegoods industry as a whole. In the second quarter, wood furniture orders were up and even more promising at 11% over the prior year quarter. We're shipping much better than last year, too. Thanks to a much improved inventory position and some strong products such as Rhapsody whole-home collection and the continuing strength of our Mlange and Sanctuary lines. These improvements were somewhat tempered by the higher discounting as we clear out some slower moving and end of life cycle product lines and by some higher costs reported in the casegoods result. CLICK HERE TO RETURN TO INDEX
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Toms: While we're not as bullish in the short term due to the summer downturn, we are very optimistic about our longer term future. Both with our core businesses and our new ventures with the H Contract brand targeting the healthcare and senior living market and the Homeware online-only brand. Alan Cole, President of Hooker Furniture Corporation: At Sam Moore, we are disappointed that a 28% sales increase only translated to a break-even profit performance this quarter. While we are definitely making progress and improving, it has not been as quickly as we would like. The challenge of ramping up production, expanding capacity and manufacturing productivity has proven greater than expected. Today, our backlog is 75% higher than it was a year ago. Over the last several quarters, we have continued to hire people, but it typically takes at least three months before a sewer or upholsterer makes a direct contribution, and we've had significant training and overtime cost. Toms: We are a little less bullish today than we were coming out of the first quarter due to the decreased demand at retail we experienced as we moved through the summer. The housing market has slowed slightly with rising mortgage rates and rising housing costs. We do believe our industry is tied closer to housing than any other. However, the economic indicators are generally positive. Housing affordability is still favorable from a historical perspective along with the improvements we continue to see in consumer confidence. We believe we're well-positioned to capitalize quickly on any upturn in business for our strong inventory on best sellers, our increased production capacity in domestic upholstery and our salable core product line, as well as new business ventures to expand our market reach. Toms: June was a little bit weaker on a per day average than May. July was weaker than June, and August was not much better than July. So, it definitely as we progress through the summer, it seemed like the demand was less. And I in talking with retailers, it's not that demand is terrible, our orders I think we said for this quarter, casegoods orders were up about 11% over the prior year, but it just was not as strong as what we had seen in that May and even June timeframe.
Hotels/Casinos/Entertainment
Gannett
[GCI] Earnings Call 7/22/13 Gracia Martore, CEO: Publishing revenue is down due to lower advertising revenue, as the relatively slow and mixed pace of the economic recovery and secular challenges continue to impact advertising demand, even as you have seen in some of the numbers of digital-only companies that have reported. However, the decline in advertising revenues was significantly mitigated by a strong increase in circulation revenues, as our all access content subscription model continues to add new subscribers and gain traction in our loca l communities. Martore: I think most of the focus right at the moment is the successful integration of the terrific new acquisition, Belo Corp. That will take some time, and energy, and opportunity to realize the unique synergies that we bring to the table, vis--vis that transaction. But at the same time, as we've said, we have a lot of flexibility in our balance sheet to do some other things, so we'll also focus on other opportunities.
Six Flags Entertainment

[SIX] Earnings Call 7/22/13 Jim Reid-Anderson, CEO: I am extremely proud of our performance both in the quarter and year-to-date, CLICK HERE TO RETURN TO INDEX
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especially given the challenging weather conditions that we faced in May and June. Through the first six months of 2013, we delivered record financial results, with 1% attendance growth, 3% revenue growth, and 15% adjusted EBITDA growth on a comparable basis. Anderson: We achieved a new industry high modified EBITDA margin of 39.6%. Obviously, we would have preferred to deliver an even better Q2 performance. However, we had the timing impact of Easter/spring break attendance shifting into Q1 and we also experienced much cooler temperatures than average and far higher precipitation in May and June than we had last year. This primarily affected our Eastern and Midwestern parks on our busiest weekend days. I can definitely state that for those parks, we saw the worst Q2 weather in over a decade. Anderson: Whilst it was perhaps not the quarter we would all have wished for due to the weather, I am extremely proud of the entire Six Flags team. We have once again demonstrated our ability to generate high recurring cash flow in an adverse environment, reinforcing the company's financial and operational strength. John Duffey, CFO: Attendance declined by 400,000 guests in the quarter. There was a shift in attendance into the first quarter associated with the earlier Easter and related spring breaks. This shift accounted for approximately three-quarters of the decline in the second quarter. We had adverse weather in May and June that impacted our Eastern and Midwestern parks. In fact, this year's second quarter was the worst weather at our parks east of the Mississippi in more than a decade historical data shows that although there may be impacts on a quarterly basis, weather tends to even itself out over the year. In addition, our continued success in increasing season pass sales brings stability to the business and should help contribute to a rebound in attendance as well. Anderson: I am optimistic about our future. Our parks are in excellent condition. Our employees are very positive, and our guests are giving us higher ratings than ever before. We have exciting new marketable capital. We have successfully taken pricing and our strong season pass sales should provide good momentum into the second half of the year.
Wyndham Worldwide
[WYN] Earnings Call 7/24/13 Stephen Holmes, CEO: The Exchange and Rental business is performing very well in a difficult operating environment with improving yields in Europe and revenue increases from new products in the Exchange business. And the Hotel Group continues to execute its plan, achieving solid adjusted EBITDA growt h. Holmes: We continue to increase the value to our affiliates and members through our industry -leading technology, which has improved service delivery and resulted in innovative product offerings. Innovation and technology continues to pay dividends, increasing margins and growing revenues. Holmes: We are encouraged that 2012 marked the first significant increase in timeshare industry sales volume since the low mark in 2009 and the largest increase since 2007. Trends in the industry point to a continued rebound from the lows experienced during the global economic downturn. Holmes: With respect to the interest rate and the impact that it might have on the consumer from having higher interest rates on the rest of their basically portfolio or cost, we haven't seen that to be a factor in the past. We haven't seen the consumer change very much their buying pattern based on what's happening in their world. And evident what happened when we saw the downturn and the credit crunch, timeshares sold
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very well during that period. It wasn't just us; it was everybody in the timeshare industry that had access to capital did well during that period. Holmes: There were pockets in Europe where there was negative comparisons. There were pockets in Europe that were up. Same thing was true in Asia; there were parts of Asia that were up, parts of Asia that were down. So I wouldn't say that there's one area that we could point to. We highlight China because we have so much growth in China. We have the combination of RevPAR impact being maybe a negative comparison, but also we're adding properties that are in the Super 8 zone more quickly than anything else, which has a lower RevPAR. So we've kind of got a mix impact in China, as well as whatever pressure that market happens to see. I think as we said last quarter for the Rental business, there's been pressure in Northern Europe versus Southern Europe this year that we saw last year. There was more pressure in Southern Europe than Northern. But Southern Europe wasn't devoid of challenges as well. Spain, for example, was down. But also Germany was down. But there were also markets that were up. Thomas Conforti, CFO: I think there's always room for improvement on our default trends. We've made a big dent in this fraudulent activity. There's still some of it going on, but we're down considerably from where it was at its peak, which drove our provision in 2012. So I'd give ourselves decent marks there. We have more work to do. And we still have the issue of the larger the loan balance, the higher the default rate, and we need to continue to think about that. So I would expect that we'll continue to make improvement, but we still have some work to do. Holmes: We've seen a shortening of the booking window or compression of the booking window in Europe, which has been relatively dramatic and more pronounced recently. And what that does is it means that basically people are waiting later to book their holidays. So it's a little bit more difficult to predict what that pattern is going to look like. But people are booking. And so we've seen basically an improvement in sentiment in Europe, particularly in the more affluent traveler, which does hit some of our travel dynamics, particularly the longer-distance travel from the U.K. So in general, we're seeing an improvement in the consumer sentiment and travel pattern. That is not necessarily reflected in the overall consumer confidence surveys in Europe, which is why sometimes we don't match up well with that and it's hard to correlate the two. But we are seeing an improvement in the desire to travel in their bookings.
Caesars Entertainment Co
[CZR] Earnings Call 7/29/13 Gary Loveman, CEO: While conditions in the gaming industry remained difficult, during the second quarter with visitation and casino revenues down across much of the network, we're beginning to observe several tangible, positive underlying trends, resulting from the enhancements we've made to our footprint, particularly here in Vegas. Loveman: The implementation of resort fees at the beginning of March is having a positive impact on revenues and has had a minimal impact on occupancy levels at our properties. We anticipate these resort fees will provide incremental boost prospectively. We're optimistic that the positive trends related to Vegas F&B and hotel revenue will gain momentum, particularly in next year, as business disruption from our construction projects on East side of Las Vegas ends and new projects come online and gain traction. We've also seen some encouraging developments in our Groups business. Based on the forward calendar, we expect Group business to strengthen next year, improving from the relatively soft trends we've experienced thus far this year. We anticipate the business will grow by high-single digits year-on-year in 2014. CLICK HERE TO RETURN TO INDEX
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Loveman: According to a recent polling of our customers, optimism about the economy and labor market circumstances has improved since the beginning of the year. Our guests were reporting lower debt and higher savings and their feedback indicates a rebound in discretionary spending. More broadly, the Thomson Reuters/University of Michigan Index of Consumer Sentiment, that many of us follow, rose in July to the highest level in six years. We hope these trends will continue and ultimately translate into increased visitation and spending at our properties. Increases in passenger traffic at McCarran Airport here is Vegas in recent months also bode well. After a slow start in the first quarter of this year, passenger traffic in the second quarter outpaced last year. International passenger traffic is up 5.5% year-on-year. Donald Colvin, CFO: Casino revenue in Vegas declined approximately 15.5% year-over-year, primarily due to unfavorable hold and weaker gaming volumes. Colvin: Overall market volume declines in Atlantic City remain steep, but are returning to pre -Sandy levels. That said, our share has declined slightly there. We are driving marketing efficiencies and focusing on EBITDA, as we align our cost structure with the current, lower visitation levels. Also note that the anniversary of Hurricane Sandy is in the fourth quarter of this year. Colvin: Despite favorable hold, casino revenue was lower across our regional network, driven by lower visitation. We faced increased competition in certain areas of our regional footprint with a notable impact on operations in our Louisiana/Mississippi region, particularly in Tunica. We also implemented a more targeted marketing strategy, focused on eliminating unprofitable marketing activities. Loveman: With housing values rebounding, a relatively strong stock market and a modestly improving labor market, we hope to benefit from improving macro trends and consumer sentiment. We believe sustained improvement in the economy, of course, has the potential to translate into higher cap spending at our properties. While the current environment presents some near-term challenges, we're excited about our prospects next year and beyond, particularly in light of the improving economic conditions, favorable underlying business trends, and the fact that several of our important projects come on online in the coming months and coming year. We also have prospective important changes in our capital structure as we've discussed. Colvin: Our casino revenues in Vegas were weaker in the second quarter. A primary reason was we had bad hold relating to essentially our Asian-facing business. So, that was a major delta we had in our Vegas Casino revenues in the second quarter. Loveman: In Vegas, since the crisis, we've seen a substitution of Southern Californians for people arriving by airplane and a lot of the Southern Californian traffic is younger folks who are coming here for the weekends, driven in part by relatively low hotel room pricing and who enjoy the kind of leisure offerings that this city uniquely provides and of course that's all great; whereas, on a relative basis, you've seen gaming revenues stagnate over the last several quarters or even in the last several years. I do think we're beginning to see stronger trends among VIP players, both domestically and internationally. I think as the economy improves, that will continue, and perhaps we'll see gaming revenues begin to grow a little bit more briskly alongside what we're seeing in hospitality. And of course, we'd like to see them both be healthy.
Wynn Resorts
[WYNN] Earnings Call 7/29/13 Stephen Wynn, CEO: So, we our brand, because of the market segment we cater to, tends to benefit from CLICK HERE TO RETURN TO INDEX
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the international market. And these emerging markets a lot of people are enjoying success outside of the United States and they make their way to Las Vegas. And I think that we're one of the first choices for that kind of visitation and we cater to that business aggressively. It does introduce volatility to our business, but we've got so much of it, we can afford to deal high, because at any given moment, we have a handful of people playing $100,000 or $200,000 a card in games. So, we're benefiting from that. Ian Coughlan, President of Wynn Macau: The mass market's high limit side is hypercompetitive, remains hypercompetitive, and we've just been focusing on taking care of our customers, delivering high-quality service and trying not to get into the heavy discounting promotional battle that's in the marketplace. A number of our competitors have corrected mistakes they've made in the past. They've also built new facilities, and they're ramping up new business. We're maintaining a very nice quality level of business. We opened Encore, and it was a success from the first day we opened. It continues to be the mass market high-limit area in the marketplace. And our customers are very satisfied. People do shop around. People will move for discounting, but players always gravitate back to quality. And service consistency is where it's at for Macau, and that's what we've been focusing on. Wynn: It's very, very difficult for us to sell rooms for straight cash here, because we have such a large component of high rollers and bigger players that justify complementary services. We have only 1,000 rooms here, and they're used all the time. All the time. Wynn: Philadelphia and Boston, well, we're hard at it, five or six applicants in Philadelphia for that remaining license. There'll be shenanigans, I'm sure. Someone told me that the SugarHouse people wanted to say that the state of Pennsylvania doesn't have the right to issue a license that they took back previously. Sort of a ludicrous, preposterous thing. But those guys, if they think that we're going to win, they don't want to see us there, until the last possible minute. And I don't blame them. It's when you see some of these facilities, they're boxes of slots machines. They don't really have any tremendous magnetism to them. They just sort of cater to the locals. Wynn: Now, this idea of Urban Wynn, which is being suggested to the authorities in Pennsylvania and Boston, it's worth repeating, that era of the grand hotel is gone. The day of the Waldorf Astoria, the Plaza Hotel, the place that people go to stay and visit that isn't happening anymore, because of the cost of rooms, the construction, and the Internet, hotels.com kind of pressure on pricing. Coughlan: We opened a newly renovated high limit slots area, we also extended the facility, it's being very, very well received. Clearly, our competitors we all learn from each other. We got ahead of other people, they got slightly ahead of us, we're back ahead of them again. So, we're very happy with how it turned out. Our customers have been very happy with it. Wynn: Our customers stick to us with loyalty, not because of any other reason except that we offer a better environment for them. And at the end of the day, when you're recreating, when you're outplaying at night, when you're going to a nightclub, it's the environment you're in that matters. I think our food and beverage numbers are reflecting the fact that we can withstand a competitive challenge in Las Vegas. And we have, you can compare us to anybody on the Strip. Even my own places, my own older places, practice hotels like Bellagio and Mirage, we hold our own against bigger hotels, even more rooms, like MGM, we hold our own. And they throw plenty of money at the customers, boy. But we bank on other things that are more enduring, I think is a way to say it. Wynn: The amount of money that's been lost in Las Vegas in the last four years, in terms of abandoned CLICK HERE TO RETURN TO INDEX
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projects, and marked down values from the Frontier and the Stardust property to Fontainebleau and Cosmopolitan and CityCenter and places like that has been astronomical. I don't even like to think what that number is, but Las Vegas is perking along, because there's tremendous choices that are available to people of every income level. The infrastructure in Las Vegas is almost impossible to duplicate. And that's the reason why it survives California Indian gaming and all these other jurisdictions. It doesn't get any easier, but Las Vegas is managing to hold its head up. And if we had a real recovery in the United States and I don't think we are having a real recovery in the United States. I think we're having a limp-wristed sort of crawl out of a hole, but a recovery is a more robust word and I don't see it in a country, as clearly as the politicians do, who are trying to sell up to the people. I think most of it is baloney. I think real inflation is way north of 10%. Everybody's dollar is going down. Buying power and living standards are going backwards from the working people of America and that's taking a toll on what you would call a recovery. So, I don't see it myself.
Choice Hotels
[CHH] Earnings Call 7/26/13 Stephen Joyce, CEO: Overall we're pleased with the performance of the quarter. The economy continues to grow at a modest but steady pace and our business continues to grow as well. We're executing on our strategy and it is working. Joyce: Our brands continue to be attractive to franchisees. So far this year, conversion franchise sales have outperformed new construction sales and have consistently outpaced last year's results. David White, CFO: While we were disappointed with the overall pace of RevPAR growth, at the brand level there were a couple of highlights. We are very encouraged with the RevPAR performance of our Sleep Inn system, which continued to generate meaningfully above average RevPAR growth. The Sleep Inn brand RevPAR increased 7% compared to the prior year, reflecting the benefit of our Design to Dream program, which has been very well received by developers and guests. White: We remain optimistic that the new construction environment, while choppy, is continuing to gradually improve. Conversion franchise sales contracts continued to improve and achieved their sixth straight quarter of year-over-year. Joyce: Overall we're pleased with the results of this quarter. It continues to be slow but steady improvement in the economy that is reflected in the consistent growth of our businesses. We believe we are successfully implementing our strategy in our core business and other growth strategies, such as SkyTouch, and feel optimistic about our continued long-term growth and our ability to drive excellent results for shareholders. Joyce: I think in general most people are expecting 2014 to start showing real signs of economic recovery and improved employment. And if you get those, that drives our business significantly. So I think most of us here are a believer that that's the trend that we think is most likely and that therefore that portends well for our performance.
Royal Caribbean
[RCL] Earnings Call 7/25/13 Richard Fain, CEO: everybody knows that in the first half of 2013, the industry suffered under the unrelenting pressure of the deluge of negative publicity. That pressure has clearly hurt our bookings and
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unfortunately to a greater extent than we originally understood. Fain: Bookings for both 2013 and 2014 are ahead of where we were at the same time last year, both in terms of load factor and pricing. And this year during the middle of our WAVE Period, we have to contend with the CNN effect. Fain: While we're frustrated by the hurdles we've had to overcome in recent years, we feel very good about our condition as we emerge from these clouds. We are well positioned to take advantage of even marginally calmer waters and we think our profitability initiatives will be highly impactful to both revenues and expenses. Jason Liberty, CFO: We are generally seeing better spending behaviors out of the North American guests, but we are also enjoying very favorable results from our revitalization project. Gaming, beverage, specialty restaurants and shore excursions all out-performed. Liberty: Fuel and currency, while volatile over the quarter, were on average in line with expectations, did not have a significant influence on the quarter's results. Overall, it was a solid quarter from both a revenue and cost perspective. Brian Rice, Vice Chairman: In the second half of the year, we have lowered our revenue forecast by just under one percentage point due to lower expectations in China and some impact from the pricing environment in the Caribbean. In aggregate, our booked load factors and pricing are both up slightly for the full year. Rice: We have seen stronger year-over-year demand out of North America for European sailings and have increased our sourcing accordingly. Rice: The Caribbean, which represents about a quarter of our deployment in Q3 and almost half in Q4, is holding up pretty well. We are aware there has been a lot of focus in the investment community on the overall health of the Caribbean in light of some of the competitive pressures. And we would be naive to say that this has not affected us to some degree. But at a macro level, consumers seem to be recognizing the value of our brands and our pricing in the region continues to show improvement for the year. Asia is the only product in our portfolio that we are forecasting to have lower yields for the year. And while all of our other products look good, the largest yield improvements are coming from Europe, South America and some of our Caribbean itineraries. Liberty: While there are puts and take on a business perspective, key drivers of the change relate to the ongoing territorial dispute between China and Japan, pricing actions that have modestly weakened our Caribbean business, which I'm sure you have seen in your pricing surveys and the impact relating to our affinity card. While the territorial dispute between China and Japan has impacted our performance, the China market continues to be profitable. Adam Goldstein, CEO of Royal Caribbean International: It is unfortunate that the territorial dispute between China and Japan has not yet reached an amicable resolution and as a result we are still running modified Chinese cruises for the season that do not include port-calls in Japan as intended. While demand in the region is still reasonable and we are reaching our desired occupancy levels, we have produced our ticket revenue expectations for the remainder of the summer season. On the other hand, the modifications we have made to our China ships, especially those that improved the retail stores, has driven strong on-board revenue performance throughout the season to-date. Rice: Despite the current pressures in the Caribbean, we are seeing year -over-year pricing improvement and I CLICK HERE TO RETURN TO INDEX
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think it's important to recognize that. In talking about 2014, I want to emphasize, it is still extremely early in the process. But, based on the current order book that we're seeing in all quarters in the current booking trends that we're taking in for 2014 business, and right now we're taking the lion's share of our business coming in is for 2014. We're feeling good about making a statement and putting it out there that it should be a year for yield improvement.
Starwood Hotels
[HOT] Earnings Call 7/25/13 Frits van Paasschen, CEO: For the third year in a row, the global economy entered the summer with a wobble. This year, fears emanated from all three major markets around the world. China's shadow banking system and local government finances, the deepening recession in Europe and lingering questions about the future of the Euro system, and finally the prospect that the Federal Reserve might be closer to tapering QE3. At the end of July, those fears seem less acute. And our view, in any case is that the global recovery is continuing on its slow if not so steady pace. Paasschen: China, growth in Q2 was slower than we expected. Our sense is that this had little to do with the financial upheaval. Viewed from our business, there were three other headwinds at work. The first was the new government's austerity policy, which started last quarter with the government transition. From what we can see, government policies were likely to continue to affect our business through the end of the year. Our sales teams have responded by redoubling their efforts on small accounts in other incremental business. A second headwind has been a combination of events. Among them, the Sichuan earthquake, flooding, bird flu, and North Korean tension tensions. These events led to REVPAR declines in selected markets. The third headwind was a slowdown in GDP growth, which decelerated from just under 8% in the fourth quarter of last year to an estimated 7.5% for the second quarter. The long-term implications of a slower trajectory are unclear, but as we see it, if China can sustain 7% plus GDP growth on an $8 trillion economy that's the same increase in output as 11% growth was on a $5 trillion economy a few years ago. And in the face of these headwinds, Starwood's business in China appears to have fared much better than the competition. Paasschen: In Europe, the economic picture is still anemic overall. But as before though, our business is holding up pretty well. We attribute this to tight supply and our ability to bring in global suppliers to Europe global travelers to Europe with SPG, and our global sales team. In the U.S. We saw record high occupancies this quarter. Despite this, our industry has yet to realize the rate growth that you might expect. Here are the numbers. REVPAR in the U.S. increased 5.5%, occupancy neared 77%, with rates up 4.5%. So, why are rates lagging? Certainly an uncertain economy hasn't helped. Also, group demand has been slow, which means that the order books are filling later, leaving group-dependent properties either reluctant to push rates or turning to lower year yield channels. Paasschen: Back in 2009, I was asked time and again whether luxury was dead. I didn't think so then, and looking around the world today, there's no question that luxury is not only alive but flourishing. Rising wealth, growing global business demand, and more destination more destinations that fuel demand. In our interconnected world, the scarcest resource is time. For luxury consumers, this puts a premium on experiences. Also, at some point, demand for more high end shoes, cars, and watches is inherently limited by closets, garages and wrists. But there's no such thing as too many experiences. Over the past 5 years, we've doubled our luxury footprint to over 35,000 rooms. We now have 160 luxury hotels in nearly 40 countries. And we're growing where demand is growing as well. About 90% of our pipeline of about 70 hotels is outside CLICK HERE TO RETURN TO INDEX
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mature markets. But luxury is not just growing, it's morphing. The very definition of luxury is no longer in the hands of the patrician elite or the editors of fashion magazines. The age of the acquired taste is over. The new face of luxury consumers is more diverse, by geography, generation, and gender; with tastes, they are equally diverse. And thanks to technology, luxury travelers expect the purveyors of luxury to meet their tastes. Digital connectivity means that anybody can be in the know. Luxury has moved from esoteric to accessible, and most importantly from prescribed to personalized. In simple terms, your definition of luxury today isn't my definition. Luxury for you is exactly what you want it to be. Paasschen: Luxury travel is both originating from more home markets and arriving at more destinations. This is not a story about the West in decline; there are more millionaires in the U.S. than ever. This is a story about global wealth, with more millionaires in Asia than in North America. In a couple of years, half of global luxury demand will come from outside of the mature economies. This underscores the value of having truly global brands led by teams that have the know how to deliver market by market. It also pays to have hotels located in new destinations to meet new travel patterns. Moreover, as the largest luxury hotel company, Starwood benefits from what we call the network effect. Vasant Prabhu, CFO: North America started the year very strong. This continued into April, helped by the holiday shift. Then, the industry hit a soft patch in mid-May all the way through the end of the quarter. In the year, for the year group bookings have been weak this year, tracking in the low single digits, while bookings for future years have been strong. Group pace for 2014 and 2015 is currently tracking in the mid-single digits. We expect group softness will persist through the year. Prabhu: We are gaining significant market share as evidenced by our REVPAR outperformance versus market numbers provided by Smith Travel. The power of Starwood China is delivering for our owners. We think this slowdown makes us stronger in the long run as weak players struggle to survive. You know what Warren Buffett had to say about what happens when the tide goes out. The new leadership in China is determined to continue its austerity focus. As such, we expect that government-related business will remain challenged for the foreseeable future. We are reorienting our efforts to generate new sources of revenue from the private sector and consumer-oriented companies, which should benefit from the shift to consumption that the government seeks to drive. This is easier in the South and the East which have more diversified economies and higher per capita incomes, less so in the North and the West. Prabhu: Europe is steady but sluggish, as it has been for the past couple of years. REVPAR growth was up 2.5% in local currencies, an improvement over the past two quarters. It may surprise you that our strongest markets invest in Europe in Q2, were France, Italy and Spain, reflecting the mix of our business which is global and pan-European in scope rather than local. We expect this 2% to 3% growth rate to continue into Q3 as leisure travel looks good for the summer and we may benefit from Ramadan ending earlier in August. Prabhu: While Greece is recovering well, Turkey could be challenged if riots persist. Recent news on the economic front has been more positive and pro growth policies are likely as austerity fatigue sets in. We're cautiously optimistic that the worst may be behind us in Europe. Africa and the Middle East was our strongest region in Q2, up 7.5% in local currencies. Paasschen: We continue to see a great deal of confidence among real estate investors and developers in Mexico, for Mexican markets and that's been the source of our pipeline for our business there. At the same time, there's been an overall growth in the Latin American business, and when you look at markets like Brazil, for example, you see a massive growth in the middle class, very much along the lines of what we've seen in other parts of the world, including Asia. And then when you look at markets like Panama, which have become CLICK HERE TO RETURN TO INDEX
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distinct financial centers, or the economic rebound and growth of places like Peru and Colombia or the continued growth as commodity exports in Chile, we remain optimistic about the overall region, Argentina, of course, and to an extent, Uruguay, have been a bit less inspiring of late. But overall, when we've introduced, for example, the Westin in Peru, which is the first Westin in South America, to W in Santiago, those have been very successful introductions of our brands into those markets, and they've created interest in other properties throughout the region.
Marriot
[MAR] Earnings Call 8/1/13 Arne Sorenson, CEO: We believe we are still experiencing a lingering impact from the recession as many large groups booked only modestly in 2009 and 2010 for meetings now occurring in 2013. In addition, we've seen increases in meeting space supply in recent years in convention centers, at corporate conference centers and at a few hotels. Since 2009, as the recovery has progressed, we have filled in this recession era group bookings shortfall with shorter-term group and transient business. Fortunately, transient business continues to strengthen but short-term group has not. Corporations are watching their bottom line and, given the economic climate, are cautious about discretionary spending. Not surprisingly, austerity is even more pronounced among government meeting planners. In 2010, government group represented 5% of the Marriott brand group business. In 2013, we anticipate only 2% of our group business will come from Uncle Sam. Sorenson: In international markets, we are encouraged by signs of improvement in Europe. Including all brands during the quarter, occupancy at our company-operated hotels there totaled 78%, with REVPAR up about 1% in the quarter. We saw a particular strength in France and Russia. Comparisons in London by contrast will be difficult in the third quarter due to last year's Olympics, but we are seeing signs of modest improvement for the fourth quarter. Sorenson: REVPAR outlook for 2013 assumes a steady-as-she-goes view of North American and European demand, and a more conservative view of demand trends in Asia and the Middle East. While we have tightened the range of our outlook for worldwide REVPAR growth, we remain very bullish about our long-term prospects. Sorenson: Our timing in Spain in retrospect wasn't spectacular given that Spain has continued to get worse and worse. On the other hand, we've been really pleased with the quality of the hotels and the way the brand fits in, and have probably opened another half dozen or so ACs outside of Spain and Italy, France being the most prominent market in Europe. Sorenson: I think the government has been in decline for the last two to three years. Sequester is obviously the most recent word we used to describe that decline and is a kind of specific cause in 2013. Having said that, you've got a military that's probably pulling back from a couple of wars and you saw the Defense Secretary out yesterday talking about shrinking the size of military forces. Now it's not necessarily soldiers and sailors that are the primary occupants for group business or transient business from the government, but I think that's a piece of a government that is declining. And so I would think whether it's sequester-related or not, but the government weakness is the overwhelming cause for weakness in the greater D.C. market. You see a little bit of a difference between urban D.C. and suburban D.C. because I think when you get to urban D.C., more of that business is independent from the government, so it would be your prototypical lawyers and lobbyists and tourists coming to see D.C. and folks doing business with D.C. companies of which there are a number. But CLICK HERE TO RETURN TO INDEX
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aspects of D.C. which are less reliant on government, which is why there's relatively more strength there than there would be in the suburbs. Sorenson: Chinese economy looks to us to be performing, maybe it's growing a little bit weaker than it did a year or two ago but still, broadly recovering with really powerful trends in domestic travel particularly in China. And so, we see, even within this quarter, we saw Shanghai, for example, I think up about 6% in REVPAR 5%, excuse me; while Beijing, by comparison, which is more dependent on government and had a little bit of that pollution hangover, was down something like 5%. Folks have asked about supply growth in China and clearly there has been some supply growth, it varies a little bit market by market. I suspect we'll continue to see supply growth be fairly high, but we expect we'll continue to see the Chinese economy produce more and more domestic travelers as well as global inbound travel growth and still think it's an extremely exciting market to bet on long-term.
Hyatt Hotels Corp

[H] Earnings Call 7/31/13 Mark Hoplamazian, CEO: Transient room revenue increased 7% with about two-thirds of that increase due to higher rates and a third due to higher demand. Consistent with our comments last quarter, transient demand in the U.S. was derived from sectors in the economy that are performing well such as manufacturing, businesses serving the housing industry and technology. Group revenue increased as well by about 5%. That increase was primarily due to the timing of Easter, partially offset by lower levels of government group business. April was a good group month, with revenues up about 20%. May was fair with revenues about flat and June was weaker with revenues down in the range of 3%. Our in the quarter for the quarter bookings we're up about 1%. In the quarter for the year bookings we're up about 7%, and pace for 2014 is roughly flat at this time. Overall, the short-term sorry, over the short-term and consistent with what we stated last quarter, we expect group demand to continue to be positive but not as strong as transient demand. Hoplamazian: There will be likely be sequential quarter-to-quarter volatility in incentive fees due to the structure of the agreements. In fact, we expect to earn most of the incentive fees in the second and third quarters during the high seasonal months for these hotels. By way of reminder, the incentive fees from these hotels are subject to an annual performance guarantee. Gebhard Rainer, CFO: Government remains weak. We stated that in the first quarter, room nights fell by about half, again consistent with the first quarter, but we stated that in the first quarter as well, government represents less than 5% of our overall mix. And the partial reason for that mix change or for that decrease in government business is a result of our active revenue management as well. Hoplamazian: It's somewhat positive in RevPAR. So what you see is a contraction of business. And I think one of the reasons why Northern China is which includes Beijing, is relatively more impacted negatively impacted, is that is because of the austerity program. And while we've seen RevPAR contract, I'm happy to report that we maintain comp set leadership in our hotels in Beijing. So I would say that while the overall story is somewhat challenging, our relative performance has been encouraging in terms of our maintenance of our number one position in our respective comp sets. Hoplamazian: We've experienced and we have and continue to see an increase in overall occupancies. And as occupancy levels continue to rise and space starts to be taken up, the ability to wait and still end up with dates and space requirements that makes sense for the particular group will start to get constrained, I think. So CLICK HERE TO RETURN TO INDEX
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and I think that will actually start to instigate a lengthening of the booking curve overall. Overall, though, I think we've been I think the rumors of a demise of group are exaggerated. This has been a key element of demand for this industry for many decades and continues to be an important part of our business. And I think that as we look forward and think about the long-term dynamics here, both on the association side and the corporate side, we feel that the long-term dynamics remain good.
Disney
[DIS] Earnings Call 8/6/13 James Rasulo, CFO: Given the number of headwinds we faced in the quarter, we are very pleased with the financial results we delivered. Robert Iger, CEO: Overall, the business for our parks domestically is quite good, good enough for us to take another price increase, but this one was somewhat different in that I think for the first time, we created price differential between the Magic Kingdom and the other parks for the obvious reasons, the Magic Kingdom is the most popular park, the most iconic. And so, we thought there was an opportunity there. And we didn't sense any backlash from the marketplace at all. And, we've had strength not just in terms of attendance growth, but we've had strength in terms of spending, not just ticket prices, but room rates and merchandise and food and beverage. Iger: We've also had increase in international attendance. Year-to-date, it's up domestically 7% both Orlando and in California. And so, we think that bodes well. And we think that we're well positioned in this quarter, particularly coming off the third quarter, Magic Kingdom in Florida had record numbers in the third quarter. By the way, that was also true for our park in Tokyo and our park in Hong Kong is also doing quite well. If we've seen softness in our parks unit, it's in Europe, at Paris. Iger: We're in what I'll call another beta phase that started in August 2, and it is basically designed for us to have a full rollout, the probable full rollout in the early part of fiscal 2014 and that's when you'll start to see an impact from a revenue perspective; but, right now, we're mostly adding cost associated with Magic Plus ahead of what will be we believe some interesting revenue generating opportunities. I can also say that it's working, meaning those that are using it and we've got a number of people that have used it, have reacted very well. This test that we're in right now should will probably be used by over 80,000 people or 80,000 guests based on the reservations that we've written against with this initiative attached to them. Iger: Last year, we were somewhat disappointed by our results. That's not just a function of how teams ultimately perform, but sometimes the quality of the game. I'm not suggesting what I mean by that is how competitive the game is. So, it's just too tough to predict. I like the schedule going in this time around, but I've been there many times before only to find out that I might have been wrong and the opposite is true. We've been pleasantly surprised.
Host Hotels & Resorts

[HST] Earnings Call 8/2/13 Edward Walter, CEO: We are pleased with another solid quarter of operating results, which were driven by strong rate growth and improvement in both transient and group demand. Strong F&B and other revenue growth, combined with improved flow-through, led to earnings results that exceeded consensus estimates.
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We continue to feel good about the fundamentals in the business and our outlook for the remainder of the year. Walter: While our room revenue growth was slightly impacted by weaker short-term bookings as well as some unique circumstances in a couple of markets, this was more than offset by our F&B and ancillary income growth, which was above expectations. This overall strength in revenue growth, combined with very strong margins, resulted in a very good quarter. Walter: The Waikiki market is a high demand leisure market that is experiencing occupancy rates that run north of 85%. Most of the competitive inventory resides on leased land, and there are high barriers to entry for future development. So we are excited to add this hotel in Hawaii to our portfolio. Gregory Larson, CFO: As a result of city-wide weakness and cancellations related to the Boston Marathon bombing, RevPAR for our Boston hotels underperformed our portfolio in the second quarter. Occupancy increased 1.3 percentage points, and ADR 70 basis points, resulting in a 2.2% increase in RevPAR. In-house groups failed to materialize at the pace we had anticipated, but we expect our Boston properties to improve in the third quarter. Having said that, these hotels will likely continue to underperform the rest of our portfolio. It is not a secret to anyone listening on this call that our Washington, D.C. hotels continued to struggle in the second quarter due to weakness in government and government-related travel spending from the sequester. However, we did see a slight increase in RevPAR of 30 basis points resulting from growth in ADR of 40 basis points, offset by an occupancy decrease of 10 basis points. Given the continued weakness in government travel, we expect our hotels in DC to underperform the portfolio in the third quarter. Larson: Despite the civil unrest during the Confederations Cup soccer tournament and uncertainty surrounding government policies negatively affecting Brazil, the JW Marriott Rio's RevPAR only decreased 4.4% on local currency. However, our two properties in Chile declined 13% in local currency due to the unrest in Brazil, coupled with the reduction in trade with China and the slowing demand for copper. In addition to the political and economic issues surrounding our Latin America hotels, JW Marriott Mexico City has been under extensive renovations in nearly all public areas and guestrooms. The renovations are expected to be completed in the third quarter. Larson: Despite the continued overall weakness in the eurozone economies, less city-wide events, and weaker trade fair demand, the pro forma RevPAR for the 19 hotels in our European joint venture, which includes the five hotel portfolio acquired in 2012 increased 3.9% for the quarter in constant euros. Larson: We remain cautiously optimistic about the third quarter for our European hotels. We expect to see some occupancy increasing, while ADR will likely decrease due to the inflated rates during the London Olympics last year. One additional item to note, we successfully refinanced the mortgage loans secured by a portfolio of five properties in European joint venture during the quarter. In the connection with the refinancing, the joint venture reduced the outstanding principal amount of the mortgage loan by 95 million to 242 million. Walter: I think April was stronger in general, but in part because there was probably some better spending as related to some of the group events in golf and spa and things like that. But a lot of the improvement that we saw in the first half of the year in other revenue was probably most affected by the fact that we're getting the benefit of the new retail deal that we have at the Marquis, which, of course, has significantly increased the rent that we are paid relative to the retail there.
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Ricks Cabaret
[RICK] Earnings Call 8/8/13 Eric Langan, CEO: Focusing on shareholder value, we're focused on higher profit customers. I mean, our same store sales will maybe decline a little because we're not just trying to fill seats like we were doing through the recession and now we're looking for customers that we can actually make money off of. So while our same store sales may decrease a little at certain clubs, we're going to see better margins going forward as we do less discounting. Langan: We're running 50/50 liquor. Actually, Ricky Bobby's is running even a little higher than 50/50 liquor so we're really a bar. What I like to look at them as we're a themed sports bar with a restaurant that converts into a live music venue when the sports ends. And so we're basically a destination location and an entertainment place where people come to entertain and hang out and not just come and grab dinner and go home.
Apparel/Footwear/Accessories
Levi Strauss & Co
[8089Z] Earnings Call 7/9/13 Charles Bergh, CEO: We had a good second quarter with top line growth of 5%, and improvements across many aspects of the P&L and balance sheet. Encouragingly, we achieved these results despite ongoing challenges in certain key markets in Asia and Europe. Also we're seeing that some of the strategic choices we made last year are beginning to positively impact the financial health of the company. Harmit Singh, CFO: The competitive environment remained challenging, especially in China, where we continue to refine our strategy. The Denizen phase-out in the region is now nearly complete and this allowed us to focus on the Levi's brand, whose revenues return to growth in India. Bergh: We made progress in Brazil, Russia and India this quarter, but China continues to be a challeng e for our business. Since we spoke with you on last quarter's call, we spent time in China looking at our operations and the competitive landscape. While some of the challenges are due to the macroeconomic conditions, others are clearly within our control. For example, we haven't invested enough marketing behind the brands and we've fallen behind in e-commerce. We're addressing these quickly so that we can build and grow our position in this key market. We're in the process of fixing the business in China. While it would take some time, we recently took a step forward by hiring two new leaders, a new president for the entire Asia-Pacific region and a new vice president and general manager for China, both bring extensive experience leading turnarounds and growing consumer brands in Asia.
Wolverine World Wide

[WWW] Earnings Call 7/9/13 Blake Krueger, CEO: Momentum in our global business continues, as the team delivered another quarter of exceptional financial results. Consumer demand for our brands around the world has never been stronger, which is very encouraging given the fact that we are living through a challenging economic period. CLICK HERE TO RETURN TO INDEX
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Domestically, the consumer market has remained relatively strong, even though the strength of the economic recovery remains uncertain. Outside the U.S., Europe remains challenging and our expectation for a choppy recovery in this important region is becoming a reality. Krueger: While performance to-date for Sperry has been outstanding, there's still a great deal of runway ahead for the brand, especially in countries outside of North America. The team is aggressively pursuing new geographic opportunities and innovative line expansions. Krueger: U.S. sales declined in large part due to decreased sales in the discount channel from lower available inventory and custom programs that were not anniversaried. These factors were partially offset by solid reorders for the M-Connect product and continued great performance from core outdoor programs such as the Moab series. Krueger: Merrell's active lifestyle category has been weaker over the past several quarters. Merrell has restructured the brand's product development team to align with brand goals and growth opportunities. And the team has already been driving noticeable improvements with innovative new collections for men and women, as well as fresh updates to core styles We remain very bullish on Merrell and still plan to deliver a low-single-digit revenue increase for the full year, as well as more robust growth in 2014. Merrell is a doubledigit growth brand, and the steps we're taking now will help the brand achieve this growth level within the next couple of seasons. Our expectations for future growth are supported by the current order backlog position, which is up high-single digits. Krueger: We're very bullish regarding the future of the Keds business, as we capitalize on the momentum generated in the U.S. and expand distribution opportunities worldwide. I believe our second quarter performance is a testament to the strength and breadth of our 16 brands, the consumer appeal and earnings power of our expanded portfolio, and the talent and dedication of our global team. While our first half results have certainly exceeded expectations, I remain even more excited about our future growth opportunities. Strategically, we continue our fanatical focus on delivering innovative, cutting-edge product across our portfolio; capitalizing on our global growth opportunities, especially with our newest four brands; expanding on the lifestyle opportunities for our largest brands, including Merrell, Sperry Top-Sider, and Keds; and expanding our global direct-to-consumer footprint through best-in-class consumer touch points. Donald Grimes, CFO: Challenges in EMEA for Hush Puppies, the UK specifically, are still lingering, but these challenges were mostly offset in the quarter by several bright spots, including sales growth in the U.S. and nice revenue gains in both Latin America and Asia-Pacific. Krueger: I think Q2 was a very good quarter for Sperry stores and Sperry e-commerce, probably the best we've had in some times Sperry stores have been performing clearly above our expectations, are very profitable and, frankly, have benefited from a boost, a shot in the arm, from sunglasses and hosiery, and some of the other product, ancillary product, categories we've been able to put in those stores from our new license programs over the last six months or so. So those programs, which help round out the appearance of that brand at the store level to being a true lifestyle brand, have been very beneficial to the a key, one of the key contributors to the comp store increase. Other than that, the comp store increase has been driven across men's, women's, boat and non-boat categories across the range of the product. Krueger: Obviously, our view is that Europe is going to remain relatively choppy for a year or two. They've really done nothing to address the longer-term fiscal issues that that region is facing. On the other hand, from a 10,000-foot perspective, footwear does relatively well in challenged economic environments. So there either CLICK HERE TO RETURN TO INDEX
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is a quantity of need as well as want that's applicable to our industry. Right now, as we step back, we have a very strong and growing base of business across all of our brands in Latin America. Our brands are very strong in Latin America, so that's a key focus for us. Grimes: In Q3, it was probably the toughest quarter last year from the legacy business. You looked at Europe down 20% last year in Q3. I think Merrell Itself was down mid-to-high-single digits in Q3 last year, so we had some easier comps in Q3. That, plus the PLG deal being accretive in Q3, and we think modestly dilutive in Q4, would kind of support that conclusion. Grimes: Status quo as it relates to the macro environment. As it relates to Wolverine Worldwide, Q3 is our easiest comped quarter for EMEA revenue, again, down 20% in last year's Q3. So we clearly expect to perform better than last year in Q3 and Q4 to kind of get back closer to flattish on a full year.
VF Corp.
[VFC] Earnings Call 7/19/13 Eric Wiseman, CEO: With positive results across both our wholesale and direct-to-consumer channels and low-single-digit increases in our U.S. and European businesses, coupled with greater than 10% growth in both our Asia Pacific and our non-U.S. Americas region, we're pleased with our balanced performance. Wiseman: Looking at the balance of the year, while the economic environment remains a bit uncertain and a bit of a headwind, we're confident that our powerful brands and powerful platforms are among the best positioned in the industry to deliver fantastic products to consumers and strong profits to our shareholders. In fact, based on strong first half results, with margins and EPS exceeding our original plan, we're raising our fullyear adjusted earnings per share guidance by $0.10 per share to $10.85. Karl Heinz Salzburger, Group Presidents: Europe is a very large and well-developed outdoor sports market and The North Face is the best-positioned brand in the market to realize consistent, sustainable growth. Here too our new products are being received very positively. For example, we saw incredible response to our new Summit Series Verto Micro Hoodie, which sold out in both the D2C and wholesale channels. We also continue to see great response from and opportunities to expand European-specific products positioned to best meet the regionally-specific needs and preferences. Salzburger: Our retail experience is improving. Consumers are joining us to explore the outdoors and, most importantly, we continue to deliver the products and experiences the consumer want. We remain confident in the remainder of 2013. Salzburger: In Europe, conditions remained especially tough for Timberland, with the wholesale business down at the mid-teen rate due to challenging economic conditions. We've been particularly encouraged by our DTC results for Timberland in Europe, with positive comps in the first half. And, regardless of top-line, we achieved much stronger profitability which points to underlying operational health so good confidence there. For the balance of the year, we expect to see improving trends. Salzburger: In Asia, as expected, business was challenging in the first half as the wholesale channel continues to work through its denim inventory overhang. While business was still down in the second quarter, it was a sequential improvement and in line with our expectation of the business beginning to normalize in the fourth quarter of this year. And, even with the declining revenues, our profitability was up as it benefited from lower product costs and favorable product mix. So nice offset there.
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Salzburger: The outdoor industry in North America has suffered two much -warmer-than-normal winters. And because of that and there has been inventory overhang at the end of each season. This year we got a little lucky in that spring was cool and we sold a lot of that stuff through. So it's not The North Face. It's for all the brands that play in that space. Retailers are buying much closer to demand. They're going to wait and see how the weather unfolds. However, the orders that we have don't assume a frigid winter. It assumes a modest improvement in the weather patterns for this year. Notice we didn't talk about that for Europe and the reason for that is Europe had a cold winter last year. They had a nice, healthy, cold, wet winter. And so the buying there from our from the retailers who buy our brands, it was just at a much more normal cadence because they didn't have that issue to deal with. Wiseman: In Europe, our footwear collection is stronger and more relevant and that's why we got the bookings we got. And we're not relying on Southern European economies to rebound and get healthy. That's not in our assumptions. What we're doing is focused on economies where there's more active consumer engagement. That's what we're doing to stabilize the business and make up for some of the Southern European economies where it's been so difficult. Wiseman: In general, with the exception of the Jeanswear business in China, the channels are clean. We have an inventory overhang in denim in China that we've had all year, it started late last year. But in North America, for sure, our inventories are clean throughout the channels. In Europe, actually there may be some places in Southern Europe where there's still a little bit of an inventory glut, in those economies where consumers are not as engaged. But on a macro level for VF, is it a material issue? It is not, overall, for VF. Wiseman: We're on track this year and we are on track for this year. The orders are coming in, as we thought . The one the revenue is where we thought it would be, and the cadence of that is as we thought it would be. The only thing we missed in our original plan for the year was our gross margin. We undershot the reality there, but we're not apologizing for that.
Hanesbrands
[HBI] Earnings Call 7/30/13 Richard Noll, CEO: We are pleased to report strong second quarter results that include record operating margins and earnings. When you consider the current soft retail environment, this is a significant accomplishment and one that underscores a very simple message. Our Innovate-to-Elevate strategy is working very well. We had a record 15% operating margin in the quarter and our success is broad-based. We saw all four segments improve versus last year and our three larger segments: Innerwear, Activewear and International produced double-digit operating margins. Gerald Evans, COO: Sell-through at retail was particularly weak in Q1 due to traffic disruptions and weather. It improved somewhat in Q2 but is still choppy overall. This retail softness negatively impacted our shipments in Innerwear basics in Q1 and in intimate apparel mainly in Q2. Retail inventories are now at the right levels and have normalized to where we feel good about retailers' weeks of supply heading into the back-to-school selling period. Evans: In our International segment, sales for the quarter declined 1%, but were up 5% on a constant currency basis. Operating profit increased 7% and our operating margin was back in the low double digits. We continue to execute our regionalization strategy, where we are aligning our International businesses into four key regions in order to leverage both our regional expertise and global supply chain and to more quickly CLICK HERE TO RETURN TO INDEX
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introduce our innovation platforms across geographies. However, currency is shaping up to be a bigger headwind in the second half and is expected to knock 10 full percentage points off sales growth in our International segment, because approximately half of our business is weighted to countries that have rapidly depreciating currencies such as Brazil, Argentina, Japan and Australia. Noll: Operating profit increased 51% from last year to $181 million, representing a record margin of 15.1%. The key driver of this improvement was our gross profit margin, which was 36.3%, an increase of 520 basis points from last year's rate, with about 100 to 150 basis points coming from Innovate-to-Elevate. While you haven't seen it for a few years because of cotton, this year, we expect a more normal seasonal pattern for gross margins with Q2 being the high watermark for the year. Noll: Our long-term organic growth trend is 2% to 4%, my personal goal is 3% or 4%. We're sort of right in and around there with one sort of from an overall standpoint, with the exception that currency, obviously, is weighing in on our business, which I think is a little bit of a surprise given how small International is as a part of our mix. It's unfortunate that a lot of our International businesses is focused on the areas that have rapidly depreciating currencies. And so that's knocking I think a full point of growth off of our top line. And I think the other anomaly is what we saw in the first quarter, right, which is just sort of overall soft retail environment that's sort of working its way through our shipments first in Q1 in basics and then in Q2. So when you correct that out, we feel pretty good about our overall trend given that it's a relatively choppy retail environment. So you're talking about a couple of points of growth, excluding currency, back half probably about 2.5% and that's in our long-term organic growth range. Noll: what's going on with intimate apparel? I think, at the end of the day, we've talked since the Great Recession that that category has never fully recovered, as we've seen some of the men's and other categories and even women's apparel. Intimate apparel has sort of been going through its ebbs and flows since the recession. We don't anticipate that changing. What I do think we'll be able to do is we'll have a broader platform to drive our Innovate-to-Elevate strategy, and that will be a good thing for both consumers and retailers and, obviously, us from a financial perspective.
Coach
[COH] Earnings Call 7/30/13 Lew Frankfort, CEO: This year has obviously been unique and we have recognized that it has not been business as usual. Most importantly, we have taken significant steps to help reposition the company to return to superior growth rates, while maintaining outstanding profitability levels. Frankfort: During the fourth quarter, we approached double-digit growth in constant currency and continued to gain overall traction on our key strategies supporting our transformation. We generated strong international results, leveraged the Men's opportunity globally, strengthened our digital capabilities, and drove excellent results in the relaunch of footwear. While we maintained our outstanding profitability levels, we were not satisfied with our performance in the Women's handbag and accessories category in North America. Victor Luis, COO: Clearly, the Chinese consumer continues to embrace Coach, as repurchase intent has remained high at over 80% among existing consumers. This is also evidenced by the increasing contribution of the Chinese tourist to our global sales. Our other Asia direct businesses outside of Japan and China, Korea, Taiwan, Malaysia and Singapore, also posted strong aggregate growth in the quarter and the year. In total, CLICK HERE TO RETURN TO INDEX
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they benefited from the retail step-up from the prior year for Malaysia and Korea, which were acquired in early FY 2013. It's important to note that their combined POS sales also rose at a high single-digit rate for the quarter and a double-digit rate for the year. For the quarter, we posted a 4% increase in local currency in Japan, despite the tough compare, while dollar sales declined 15%, reflecting the weaker yen. Luis: Europe is a large market for women's and men's luxury accessories, representing about 20% of the global category sales. We believe the region has significant long-term potential for Coach, attracting both domestic shoppers and the international tourist. It's important to note that within bags and accessories, accessible luxury is growing rapidly. And as we have proven with our other directly-operated businesses, we plan to play a leadership role in the development of this market segment. Further, Coach's heritage, linked to New York fashion, is appealing for many Europeans, and creates a differentiated positioning compared to the traditional luxury brands. Moving forward, we expect to swiftly increase our distribution, primarily through wholesale locations and key retail stores. Altogether, we expect to open approximately 70 wholesale and 10 retail locations across the U.K. and Europe in FY 2014. Luis: In China, very young business, we're just about to comp our first year. And there, we're very excited because we're seeing distribution. Whereas today we have doors in 47 cities. We're seeing distribution in, I believe, now over 110 cities. It's giving us very good indication of the opportunities outside of locations where we exist today. We're seeing a consumer that is a little bit more youthful, younger than the traditional consumer in our stores, and even seeing categories such as jewelry, doing better online that we have not seen in our stores. So a lot of learning that we're leveraging in the quarters ahead. Luis: We have seen a little bit of a downshift in the Japanese tourist. This, of course, d riven more by the impact of the yen as the Japanese consumer has decided to shop more at home, and now we're seeing the most recent trends are very promising and pointing to increasing flows of tourists from Indonesia and Thailand, where we are growing our businesses through very good domestic partners and slowly but surely beginning to see our Brazilian tourist business also pick up, especially in the Miami area and here in New York City.
Jones Group
[JNY] Earnings Call 7/31/13 Wesley Card, CEO: The general retail environment in the quarter, spring sales, opened up very slowly due to the unseasonably cold weather at the beginning of the quarter. As a result, second quarter retail sales were even more promotional than usual in the U.S. and Europe impacting many of our brands across segments, especially in the Footwear and Sportswear business. With a shorter window to sell seasonal items, promotions were used to clear merchandise quickly, in general, retailers who were ordering conservatively for the second half of the year to keep inventory balances in line. Card: Domestic Wholesale Footwear and Accessories, showed lower revenues and operating profits in the quarter. Sales slowed, particularly in the better zone, as retailers addressed the higher inventory levels and shorter windows resulting from colder weather early in the quarter. Handbags and Jewelry were strong performance and our Stuart Weitzman business operating at luxury, entry-level luxury, also had a very strong performance in the second quarter. At International Wholesale, we saw a strong increase of shipments to our license partners worldwide grew in the period. However, on the other side of that, the International Retail segment in Europe in particular remained more promotional. The Luxury business in Europe, however, particularly in the U.K. and London, remained resilient and continues in that vein into the second quarter. As CLICK HERE TO RETURN TO INDEX
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we anticipated, Domestic Wholesale Sportswear continued to be our most challenge segment. Initiatives are well underway to improve profitability in this area, as Richard will discuss later in the call. Richard Dickson, CEO Branded Businesses: Like Jones New York, Anne Klein continues to face Sportswear category challenges. But because the brand continues to be a strong valuable intellectual property around the world, we've been able to greatly diversify the brand and lessen the impact of the Sportswear downturn. During the second quarter, brand sales were driven by the continuing strong performance of Dresses, up double digits at wholesale, and Handbags including a destination item hit, the Anne Klein Perfect Tote. We're continuing to mine Anne Klein intellectual property for new opportunities with a focus on developing apparel penetration in the U.S. while growing the brand in the international marketplace. Dickson: This spring, the Domestic Footwear category experienced an unanticipated shift to more casual styles that impacted our brands, particularly, Nine West, where assortments emphasized previously strong dress styles at retail. In addition, a lingering winter and a bad weather slowed sell-through industry wide during the important sandal season. Nine West outlets fared a little better with second quarter comps up slightly driven by sandals and casual styles. We've made immediate corrections to the assortments for fall and are also taking significant strategic steps to mitigate the risk of unanticipated trend and seasonal challenges in the future. We can't control the weather or predict every cultural shift, but we're determined to learn and act decisively on every challenge we face with the objective being the most strategic and best-prepared portfolio in the industry. Despite the convergence of negative factors in the second quarter, strong positives in other aspects of the business point to the fundamental strength and resilience of our Footwear business overall and, particularly, the intellectual property power of the Nine West brand. Dickson: In the context of our performance in relation to the weather, we know just based on our constant communication with retailers that, overall, Footwear was a challenging business particularly in the department store channel. We saw weather really impact traffic as well as just the decision-making process in terms of getting into the sandal business at a time when just the weather wasn't necessarily aligned with the style. So when that happens, you get backed up fairly quickly in the context of the daily business. And so it's hard to say internally or externally which was more affected other than saying the industry had a tough season. It was absolutely related to weather and we were part of that trend. On the flipside, and arguably possibly because of the weather as well, we saw boots and booties perform exceptionally well at times that it doesn't necessarily really register. And so we anticipate that that trend will move forward and we're pretty well set up for that for fall.
Steven Madden
[SHOO] Earnings Call 8/1/13 Edward Rosenfeld, CEO: Given the late spring and softness in overall traffic trends, we are pleased to have delivered second quarter profitability in line with our expectations and to remain on track to meet our sales and earnings goals for 2013. Rosenfeld: In wholesale footwear the cold and wet weather that we experienced in Q1 and the first half of Q2 negatively impacted sandal sales early in the season, which in turn had an adverse effect on second quarter reorders. However, as the weather warmed up our sandals performed well, and the better sellthrough and reduced close-outs in that category compared to last year was a key driver of the gross margin CLICK HERE TO RETURN TO INDEX
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increase we recorded in wholesale footwear. We also had success in the dress shoe category, where we believe we are outperforming the competition, and with wedges. June boot shipments, however, were down compared to the prior year. Whereas last year our wholesale customers looked to pull forward boot deliveries from July into late June, this year the late start to spring meant that in many cases our customers elected to wait until July to take in boot product. Nevertheless we were pleased with the solid performance in a choppy environment, particularly the gross margin improvement. Rosenfeld: July has continued to be a little choppy but we feel pretty good going into fall. We're very pleased with the results we've gotten out of the Nordstrom Anniversary Sale. That tends to be our first good look at how the customer responds to our new fall product, and we have improved sell-through in that sale this year versus last year. And frankly last year was a pretty good result as well. So we feel good about our fall product. Rosenfeld: another positive trend is what we're seeing in the dress category. As you know that was a tough category for the industry and for us last year, and we've really seen that pick up. And again here it's really anything with ankle interest is performing very well. Rosenfeld: the impact of weather in the first part of the year and some of the negative traffic trends that people were seeing. We did see a nice improvement in the trend in May and June. That doesn't mean it was positive year-over-year, but it means it was considerably better than what we saw in the first four months. But July traffic has been choppy. Going forward we have not assumed any material improvement in the overall environment. So we believe we can make our guidance if things stay the way they are. If they get a lot better that would be potential upside. Rosenfeld: So our international sales overall were up about 12.5% in the quarter. Now that's a little bit slower than we've been growing and I think that we've talked about a 25% target for the year. We still believe that's achievable. There was some -- just a change in timing of shipments to a couple of our big distributors which that caused that number to be a little bit lower than how we've been running.
Ralph Lauren Corp

[RL] Earnings Call 8/7/13 Roger Farah, COO: The first quarter results continue to demonstrate the resilience of our diversified operating model. Despite an uneven global operating environment, we planned the business prudently and continue to make significant investments in our long-term growth objectives and in the infrastructure to support them. Christopher Peterson, CFO: The first quarter sales and profits are slightly better than we expected. Consolidated sales grew 4% in the first quarter. Excluding the impact of discontinued businesses and unfavorable foreign currency translations, revenues were 6% higher than the prior-year period. This was slightly better than the low-single digit growth we anticipated due to better-than-expected wholesale revenues in North America and Europe. The cold and late start to spring resulted in sales trends that were somewhat choppy throughout the period, with business strengthening when weather conditions were more seasonally appropriate. Peterson: While traffic to brick-and-mortar stores was challenging, growth in e-commerce continued to be very strong for both our retail and wholesale segments. Gross profit for the first quarter of fiscal 2014 increased 1% to $1 billion. Gross profit margin of 60.7% was 160 basis points below the prior year period due to the integration of the Chaps men's sportswear operation and unfavorable foreign currency dynamics. CLICK HERE TO RETURN TO INDEX
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Jackwyn Nemerov, Executive Vice President: Our first quarter results demonstrate that despite the formidable challenge of a cold and late start to spring around the world, we had a good spring-summer season and were able to exceed our sales and profit plans for the quarter. The balance and diversity of our merchandise assortment as well as the lifestyle positioning of our brand, which tends to emphasize the total sensibility over a single item, allowed us to offset softness in certain seasonal classifications such as knits and sandals with strong performance in another categories such as dresses and denim. In addition to strong performance for the Ralph Lauren brand, the Chaps brand also had a fantastic quarter across a wide range of merchandise categories. As Chris mentioned, the integration of the Chaps men's sportswear business into our organization went smoothly and is in fact one of the fastest transition s we've ever executed. Farah: We've got a long way to go in the international markets whether that's emerging markets like Brazil or other parts of Europe or really the more-scalable opportunities in China. So, we will continue to look at the distribution strategies, the brand strategies, the marketing strategies that will drive an acceleration in the international growth rates. Within product categories, which is the other focus for us, Jacki touched on several of them; they are the luxury businesses, they are the accessory businesses and we feel very bullish about the size and opportunity of Polo for women's as well as the denim business.
Fifth & Pacific Co Inc.

[FNP] Earnings Call 8/8/13 Willam McComb, CEO: The quarter came in a bit softer in adjusted EBITDA than we'd anticipated, stemming largely from Lucky Brand posting a plus 2% comp, versus our high to mid-single digit target, as the brand was impacted by challenging traffic patterns in April and May that were apparently evident industry-wide. Overall we're pleased with the first half results and we have no change to our annual company-wide guidance for 2013. In general second quarter repeats many of the performance themes that we saw in the first quarter. Kate Spade continue to experience strong growth rates with the core Kate Spade New York brand posting very strong double-digit growth. The brand also reported its first full quarter of selling under the Kate Spade Saturday name. McComb: We still haven't gotten it right at Juicy accessories, as evidenced by a second quarter sales decline, which hit us even harder in gross margin dollars. We continue to see strong sales growth in the newlyrenovated outlet concept. And we're rolling along with our plan to have an additional 16 remodeled what we call re-coutured outlets and two new outlets open by the end of third quarter. We are very bullish about this concept as well as the product initiatives that are going to feed it. George Carrara, COO: Kate Spade Japan was adversely impacted by the depreciation of the yen. In any event we expect to see offsetting operating leverage in the third quarter and in the fourth quarter resulting in full year Kate dilution to land a couple hundred basis points below LY as expected. McComb: Denim was strong for the quarter in both men's and women's. So I wouldn't say that we have softness there. I would attribute the softness in comp, the plus 2% relative to what we had called mid to high single digits was really coming from the traffic metric. And we saw that competitively. The malls were very promotional. Lucky held out. They really did. They've been running a very strong full price business. This is a choice that we've made. We frankly didn't have the inventory to support markdowns, especially in denim.
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Brown Shoe
[BWS] Earnings Call 8/27/13 Diane Sullivan, CEO: Weather remained unpredictable in the quarter and we saw a related decline in traffic. However, all of our other key indicators were positive, especially our conversion rate, which was up 6.3%. We believe our improved conversion rate is due to solid performance in key categories during the quarter. Women's and kid's sandals were both up 10% and we also saw good overall athletic sales, up 7% in total, with men's, women's and kid's all contributing to this growth. Canvas outperformed in the quarter as well, up 26%. Sullivan: We did continue to see some weakness at Via Spiga and we've been continuing to work quickly to adapt to consumer demand for much more casual footwear. Sullivan: Clearly, our performance exceeded expectations in the second quarter, with Famous Footwear firing on all cylinders and our Wholesale operations up double-digits. Russell Hammer, CFO: We're pleased with how we delivered in the first half in a challenging environment. Richard Ausick, President, Famous Footwear: The canvas business really is surprisingly strong and I think that will continue next year for sure. We've gotten with the addition of other brands and stronger brand presence with new partners, or additional business with new partners, we haven't hurt our core business. So that's the thing that's been surprising to me. So I think as long as we start seeing that, we think it's still time to investment.
Guess?
[GES] Earnings Call 8/28/13 Paul Marciano, CEO: We are very pleased with our second quarter performance as we delivered adjusted earnings per share of $0.52, which exceeded our earning expectation. All the business segments contributed to our performance with every business delivering earnings above what we have anticipated. This performance was encouraging considering that we continue to face challenging environment in all parts of the world. Our biggest priority this year has been to improve sales trends in North America retail. We are encouraged with our accomplishment over the past three months. We saw a sharp improvement in the comp trends compared to the first quarter. Our comp sales were down 2% compar ed to minus 10% in Q1. Marciano: Traffic trend's still challenging, improved significantly in the second quarter; the retail environment to be very promotional and we responded to remain competitive and ensure a clean inventory position heading into the fall. So far, we have seen about one month of selling for our fall product. Denim is performing very well and the customer is responding positively to our [ph] street priced (3:45) denim. As we are also seeing with dresses and men's, the customer is clearly responding to product category in which we are making the strong statement with our windows, ad campaigns and visual. Our goal for the second half of this year is beyond it and to better capitalize on these strengths with deeper, more confident buy and c lear product message. Marciano: In Europe, despite continued challenging economic condition in Southern Europe, we delivered a strong quarter, increasing operating earning by 60% to $39 million. We achieved this in good part with tight expense management. In the second quarter, we continued to have great momentum in key new market like Russia and Germany, and grew our business in these countries significantly. We're seeing positive response to CLICK HERE TO RETURN TO INDEX
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our product in these underpenetrated market and this gives us confidence in the continued expansion in the coming years. The growth for the new market was offset however by the continued weakness in Southern Europe, specifically Italy and France. Traffic continued to be down in the second quarter in these two countries as consumer remained cautious with their spending because of uncertain microeconomic (sic) [macroeconomic] condition. Negative weather condition that delayed also the start of the summer also impacted the quarter. We expect this difficult operating environment to continue for most of the year in Europe, which will also impact our spring, summer wholesale order to a degree. Marciano: The Korean business continued to be strong as revenue grew in the high single digits in local currency during the quarter. This was offset with the weakness from China, where we are seeing clear evidence of a pullback in consumer spending behavior because of the slowdown in the economy. During the quarter, we also took some steps to stabilize the business of our licensees partner in China, which will have some impact in the short term. These steps reflect the prudent approach we are taking with our partners to continue to build a strong foundation for the future of our brand in these important countries. Sandeep Reddy, CFO: In North America retail, second quarter revenues increased 1% to $254 million, driven by a slight increase in square footage and solid performance in our e-commerce business. This was offset by the 2% decline in local currency cost of sales in the U.S. an d Canada. Reddy: Italy and France continued to be our most challenging markets where shipments into the wholesale channel continued to decline partially offset by growth in newer markets such as Germany and Russia. In addition, comp store sales were down in the mid single digits but were more than offset by favorable currency conversion and new store openings. Russell Bowers, Chief Financial Officer of North America Retail: In North America retail, so far in the third quarter, comp store sales have been down in the mid single digits and we are planning the third quarter assuming comps decline in the low to mid single digits. This would translate into a revenue decrease in the low single digits. For the full year, we are now expecting comp store sales to decrease in the low to mid single digits and for revenues to decrease in the low single digits. So far in the third quarter, comp store sales in Europe have improved and are up in the middle single digits fueled by the sales period. For the full third quarter, we expect the comps to decline in the low single digits as we expect the second half of the quarter to be more challenging, as we enter the full price selling period. Bowers: In Asia, we continue to be pleased with the momentum of our brand in South Korea and we expect the revenue growth trend to continue in the second half. We expect this to be offset by further weakness in Greater China as we move to stabilize that business and protect the health of our licensee partners there. In the short term, we expect that these actions, combined with softness in consumer spending, will result in a revenue decline in Greater China in the second half. For the third quarter, we expect revenues for Asia to decline in the mid to high single digits. For the full year, we now expect revenues to decline in the low single digits. In our North American wholesale business, we expect revenues to decrease in the high single digits for the third quarter and decline in the mid single digits for the full year. Marciano: Handbags have been encouraging now. We are not in a negative comp anymore. The watches also have been flat for the quarter. The shoes, Q2 has been challenging but August, the current month, which is almost over, this month has been much better. So we see the accessories playing now finally a better role than it has been in the last four, five, six quarters, past six quarters. So we are pretty happy about that.
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Retail
Rite Aid
[RAD] Earnings Call 6/20/13 Frank Vitrano, CFO: First quarter record results reflect solid progress in our turnaround and continued benefit from our various initiatives. John Standley, CEO: Obviously, we can see we have some margin pressure in the back half, but we're very focused on customer service and it's continuing to try and build our top line. Vitrano: The benefits we expect to get from the wellness remodels and loyalty program and various other initiatives that we had in places was clearly pieces to it. And with regard to AMP, right now we're anticipating it's going to kick in in the second half of the year. Standley: I'm not sure the environment is changing dramatically from kind of the run rate. It's just continued pressure, I guess, is the best way to describe it. Standley: Most of the providers that we work with most of the payers that we work with have and have had limited networks. They continue to engage with us about joining limited networks. So it's not so much them coming and signing us up with the limited networks. It's really, can they get traction with those in the marketplace. I think that's almost the bigger issue here at this point Standley: On the Affordable Care Act. It's still a fairly murky picture from our perspective in terms of how this will roll out over the next couple of years. What the addressable population is going to actually turn out to be. So I think there's still a few pretty big questions sort of rolling around in this thing and I think there's some timing issues that appear to be potentially out there of how this thing will impact us, I think. Having said that, I think if you were trying to estimate down the road when things are fully implemented, what it might look like if you had a sense for the addressable population that you thought was going to come to market and you sort of looked at our market share
Family Dollar Stores

[FDO] Earnings Call 7/10/13 Howard Levine, CEO: Market share is a key metric that we monitor, as it tells us whether or not we are gaining share of wallet. It's tough out there right now for our customers and their spending remains constrained. From our most recent Nielsen Homescan panel data, we know that our customers' spend in the total market has declined over the past year. However, at Family Dollar, we continued to gain share of her wallet. This positive trend tells us that our value proposition continues to resonate with our customers. While our consumable sales remain strong, our discretionary categories remained under pressure. In this difficult environment, we are positioning the company appropriately for both the short and long term. We are focused on controlling expenses, improving inventory productivity, stabilizing gross margin and driving operational efficiencies. Mary Winston, CFO: Consumable sales remained strong and discretionary sales remained soft, resulting in continued gross margin pressure. Despite top-line headwinds, we had nice SG&A leverage in the quarter as our teams did a good job managing expenses and driving efficiencies.
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Winston: Sales in the quarter were strongest in the consumables category. Higher average ticket and increased traffic drove the comp during the quarter. For the quarter, gross margin declined 114 basis points as compared with the third quarter of fiscal 2012. Winston: We continue to expect sales growth to be driven by consumables and for discretionary sales to remain pressured. Reflecting our June results, we now expect comp store sales in the fourth quarter will be around 2%. We also expect that gross margin pressure and SG&A leverage in the fourth quarter will be minimal. Michael Bloom, COO: Consistent with our recent quarters, food and health and beauty aid sales were very strong. We are driving trips and we continue to gain market share. Today, our customers are focused on their basic needs. They love our new assortment and are voting with their wallets as we provide them with fantastic values and a much broader selection to meet their needs. Consumable comps increased nearly double-digits, with the best growth coming in refrigerated and frozen food, tobacco and healthcare. Bloom: As expected, our apparel, home and seasonal sales were challenged in the quarter. While no retailer likes to talk about it, it's hard to talk about our third quarter performance without mentioning weather. As everyone knows, last year we had great weather early in the quarter, in fact some of the warmest on record. It was our best apparel and seasonal sales performance of the year. This year, conversely, we cycled that great weather with much cooler temperatures and rain. Our seasonally sensitive areas were hit particularly hard earlier in the quarter. It was good to see trends in these categories improve as we moved into April and May. Bloom: Although weather played a big factor this quarter, the economic backdrop remains very challenging for our customer. She's stretching her budget and forced to make choices. She's coming to us for her basic needs and we are gaining share in those businesses. We continue to plan our discretionary categories conservatively. We are managing our receipts and optimizing space. We have identified assortment and execution opportunities, and we have made the appropriate changes to fix them. Bloom: While the current sales environment remains challenging, I believe that our future is bright and that we are making the right tactical and strategic decisions to move the business forward. We are focused on promotional efficiencies to drive higher awareness of consumable additions and we are executing our plan to turn around discretionary. Levine: When we look at the Nielsen data, one thing that's pretty clear is that our customer is spending less in the overall marketplace. Fortunately, she's spending more with us, not as much as we'd like, but we are improving market share and growing that. The biggest factor for the additional weakness, in my opinion, is the consumer is just more challenged than we had anticipated. She's making choices. Things are very tough right now. Comps in consumables were up about mid-single digits. What we also saw was the beginning of what I will say some stabilization in our discretionary businesses. While comps are still not positive, one of things that was our major focus over the remainder of this year was to drive gross margin accretion. While it's a little early to call out a trend in that, I think the month of June did begin to see some strong stabilization there. We're looking to continue that and that's just a result of some of the work that the team's done on managing expenses, controlling inventory and improving the assortment where we have. So we're starting to see some signs there and that's a very nice trend for us despite some of the challenges that the consumer is facing today. Bloom: We made a couple of mistakes. We took a big segment like comforters out of our stores. We thought we could manage it on a seasonal basis, and we were wrong, and we own that, and we fixed it, and we're CLICK HERE TO RETURN TO INDEX
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seeing some really nice stabilization in that business. And as I said earlier, that business, believe it or not, leads to purchases in other businesses. So it's about understanding the consumer. We do a lot of consumer work here.
Safeway
[SWY] Earnings Call 7/18/13 Peter Bocian, CFO: Total sales for the quarter declined slightly, 1.6%, due to lower gasoline sales in 2013, and the disposition of Genuardi stores in 2012. This decline was offset in part by an ID sales increase excluding fuel of 1.2%. As a note, the shift to generic drugs in our Pharmacy business impacted U.S. ID sales by about 0.8%. Without this generic drug impact, U.S. ID sales would be about 2%. We continue to see some softer trends at the end of the month when many consumer budgets are stretched and we have two holidays this quarter that occurred at the end of the month, Easter and Memorial Day. During the second quarter, cost increases were largely passed along by both us and our competition. This is in contrast to the first quarter when there was a lag in passing these cost increases along. Bocain: We expect Q3 to be somewhat softer than prior year given the ramp of our investment in the key sales initiative and, in 2012, some gains on sale. Robert Edwards, CEO: U.S. operations, earnings are improving. And as you as Pete mentioned, the operating margin for the quarter for continuing operations ex-fuel was up 18 basis points. And I spent quite a bit of time, Scott, going through the various sales initiatives. They had really kind of a minor impact in the second quarter because we're really ramping up, and I think you'll see increasingly the benefit from the center store project, the premium stores we're doing, and other initiatives in the third quarter and the fourth quarter. So we're quite optimistic about the continuing operations in the United States. And from time to time we'll think about various things, but no announcements today. Edwards: The macro environment, although that you read lots of somewhat positive reports, it's still a bifurcated and slower-than-anticipated recovery. And for many consumers, and this is not particular just to Safeway, toward the end of the month as you know, people change their buying habits. And the increase in the payroll tax change clearly was not helpful. And with high fuel prices, most consumers are stretched at the end of the month. And so, the macro environment has not been particularly helpful relative to our initial plans for the year. Edwards: Our ability to generate free cash flow going forward on a relative basis, I think, is actually even better than our competitors because we've invested more on a relative basis than our competitors have. Therefore, our ability in the future to generate free cash flow, I think, is actually a competitive advantage. Edwards: I think our real estate expertise and the people that we have is in real estate, is a competitive advantage. And pleased with how PDC is doing. We are batting a very high average in PDC right now, and I think creating shareholder value. And so, it'll just depend on the opportunities going forward. But we're very pleased with what PDC is doing for us. And again, we're leveraging an existing asset which is part of if you look at the various strategies that we execute, the first rule or guiding principle is that it has to leverage an existing strength of the company, and PDC does that. And it's similar to one of the reasons Blackhawk was has been, and is so successful is, we're just leveraging one of the existing strength of the business. In Blackhawk's case, it was the millions of existing customers we have in our stores already. CLICK HERE TO RETURN TO INDEX
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Edwards: We're very bullish about the company's ability to generate cash going forward. I think it's one of the strengths of the company, and we expect it will continue to be. Generation of cash is a very important objective for the management team because it's important to our shareholders, and we expect to do well going forward here.
RadioShack
[RSH] Earnings Call 7/23/13 Joseph Magnacca, CEO: We have made solid progress, repositioning our brand, revamping our product assortment and reinvigorating our stores. Importantly, we drove comp store sales growth in the second quarter, first time since the fourth quarter of 2010. And this was driven in part by increased sales for the sixth consecutive quarter in our high margin signature line of products. At the same time, our profitability is not where we would have liked. Our strategy this quarter was designed to move through unproductive inventory and test new promotional vehicles. These strategies were part of our effort to revamp our product assortment and reposition our brand. We knew this would have an impact on our gross margin rate. While the effort was important and we made progress, we expected additional sales volume which would have led to a better yearover-year comparison on our profitability this quarter. Magnacca: In our e-commerce platform, we are making investments today that will provide a continuous opportunity to engage with our customers and drive sales. All of these initiatives will extend to our growing dealer franchise network. Many of these changes will become more visible as we move through the balance of the year. Magnacca: The great news from a vendor perspective is that our relationships have changed really from transactional to strategic. And I don't say that lightly because I would say that the outreach from this business to our vendor community has been certainly not what it had been in the past. And certainly my view is that the strength in our relationship which will carry over to other elements, including the one you're referring to, is all based on confidence in our business model. So we were very clear and very purposeful in sharing our strategy with the vendor community in the middle of May of this year so they fully understand where we're taking the business and the brand so they can place their bets on us, which I believe they are.
Tractor Supply Co
[TSCO] Earnings Call 7/24/13 Gregory Sandfort, CEO: Despite a late start to spring with cooler weather early in the quarter, our team made the necessary adjustments to address those shifts, while delivering improvement in sales and operating profitability. Our performance in the first half of 2013 demonstrates the continued strength and stability of our core business model. Anthony Crudele, CFO: The animal and pet categories continued to be the main drivers of our business with strong comps that were above the chain average. Seasonal categories such as live goods, certain gardening categories, outdoor recreation, and rubber footwear all performed well above company average for the quarter and the season. Crudele: Despite the slow start to the quarter, sales were consistent with our expectations, adjusting for the $38 million pull forward of sales into the first quarter from the second quarter last year. Comparable sales to this year would be very consistent for each quarter in the first half with a year-to-date comp of 4.2%. CLICK HERE TO RETURN TO INDEX
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On a regional basis, our warmer regions performed the best as they were the least impacted by the delayed spring weather and all regions generated positive comp sales. As we had anticipated, April was the softest month of the quarter, with May delivering the strongest comp store sales gain. All three months achieved solid positive comp sales. Big ticket delivered a solid comp sales increase but was below the chain average. For the quarter, we did have a comp sales increase in the riding lawnmower category, which resulted principally from the weather-related sales shifts between quarters compared to last year. For the overall season, the riding lawnmower industry continues to be sluggish, which was reflective of our first-half performance in that category. Crudele: We again executed very well in the second quarter despite a slower start to the quarter than we would have liked. The core business is very strong and we saw seasonal sales accelerate as the weather warmed, producing solid financial results for the first half overall and positioning Tractor Supply for a healthy summer selling season. Sandfort: Our direct margin is actually increasing at a very nice rate and that's the positive side of gross margin, we're still fighting some headwinds with freight, we're still fighting some headwinds with overall mix. We believe we'll start to normalize more of that as we get into third and fourth quarter as we cycle through. And I believe we have a better handle on what's happening now as we go forward. But the steep incline that we've seen maybe in the past three to four years may not be the same as we go forward. We still are confident that we can still get the 20 basis points or so as we said each year. And remember our new operating margin goal is still targeted at 10.5%. Crudele: The first half grew a little bit slower than we had originally anticipated. Some of it has to do with the wet weather and pushing back some of the stores. Some of it has to do with obviously some lease negotiations that pushed out some of our deals. We do anticipate easily hitting our number of the 100 to 105. And they will be a little bit more back loaded into the October and even potentially November timeframe. From an expense standpoint, when it comes to the pre-opening, those costs have been relatively flat with last year, so you again from model standpoint can predict those. Sandfort: The number of trips that the consumer seems to be making to our store is growing; it's more consistent than it was in the past. And I think it ties itself around the C.U.E. strategy. These are consumable, usable, edible, necessary items and as long as we can keep the customer engaged there and I also will tell you I think it's a gain of market share across many of those categories, we become the most dependable supplier of, that's what's driving it. So, we've got some statistics. We do track at our best customers at the very high end of the scale and what I'd call are probably are more moderate customer usage and we're seeing more footsteps clearly. Crudele: We believe that this year there has been more moisture. We believe that also when it comes to drought, it is much more isolated and it's isolated more in sort of the Southwest area of the country. And last year, it extended much more into the Midwest. So we believe that the weather conditions do provide for a little bit more extended springs last summer selling season. So we think that bodes well, obviously, for the June performance as well as into some of the July performance. Now, also as an editorial, I would say that any type of spring performance does start to moderate significantly as we move into July and the August timeframe. So it becomes a much lesser portion of our sales.
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Whole Foods Market

[WFM] Earnings Call 7/31/13 Walter Robb, Co-Chief Executive Officer: Our sales momentum and operating disciplines, along with moderating inflation, helped generate another quarter of record gross margin performance. We remain committed to expanding our value offerings across the store, increasing our promotional activity, and improving our relative price positioning. We continue to be very competitive in non-perishables with more opportunities to narrow the gap in the perishables, which reflect our higher quality standards. John Mackey, Co-Chief Executive Officer: Our new store performance is so much better today than it was just a few years ago, and it seems to be getting better all the time.
CVS
[CVS] Earnings Call 8/6/13 Larry Merlo, CEO: clients have been focused on this selling season and one area of both employer and health plan client concern is managing their specialty spend across the pharmacy and medical benefits. As a result, we are seeing interest across our entire suite of specialty capabilities, including utilization management programs, specialty guideline management, formulary strategies, as well as our site of care and medical claims editing products. And we believe our differentiated approach to specialty is driving lower overall costs, while improving health and providing value for both payers and patients. Merlo: We had another very solid quarter. Total same store sales increased 0.4%. Revenue growth was muted by the impact from new generics, which had a 670 basis point negative impact on pharmacy comps in the quarter. Merlo: Despite the slight decrease in front store comps, our front store margins expanded nicely in the quarter and we continue to focus on driving more profitable sales through the targeted promotions we offer to ExtraCare card holders and we are focused on increased personalization to accomplish this. And to gain a bigger share of wallet, we have identified customer specific opportunities for increasing frequency of both the shop and the basket size. And to drive this conversion, we continue to dramatically expand our personalized offers that are delivered at the point of sale. In the second quarter alone, we issued more than 3 billion such offers and we've also significantly expanded our personalized offers that we deliver via email. Merlo: Our latest data shows that we continue to gain market share. Our front store market share growth in the second quarter versus a year ago was 71 basis points and 8 basis points, and that's when compared to drug and multi-outlet competitors respectively. David Denton, CFO: Inventory has seen the greatest amount of improvement, bu t all areas have benefited from our focus on extracting value from our balance sheet and we remain committed to further improvements as we look further into the future. Merlo: I think that, we are continuing to see, a cautious consumer. I think as you lo ok across some of the external data available in the second quarter, whether it's IMS or some of the other data, it did show some consumer spending slowdown in the quarter. You know, so, I think, it has to do as much about that as anything else. Jonathan Roberts President of PBM: So when you think of the drug trend you think of, there's inflation, there's utilization and then there is mix changes because of new drug introductions. So we are actually seeing CLICK HERE TO RETURN TO INDEX
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trends today around 20%. So it clearly is becoming a very, very high priority for our clients. So and we're going to we have solutions that can help them manage it. It's utilization solutions, it's formulary solutions, it's consolidating where they purchase their specialty products through our channels that provides them better economics. So we believe there are a lot of solutions that take a higher level of sophistication than what we see in the commercial space, but we have made significant investments and we believe we have best in class capabilities to enable our clients to more effectively manage this spend. So we're very bullish in this space, and believe that not only will it continue to grow, but that our tools will distinguish us in the marketplace and allow us to grow disproportionately. Denton: I think as we continue to work from a retail perspective, we continue to, you know, see very solid volume growth, both -- particularly within the pharmacy segment, as you think about where we started this year, and our expectation for script retention within the pharmacy business, that continues to hold steady, and we continue to drive performance there. Also, from a front store perspective, we have been very diligent on managing, I will say, volume and margin. So our front store margin continues to progress nicely. We continue to balance, if you will, the top line front store growth outlook with our expectations for margins. So we continue to be, more efficient across our across most of our outlets around the country. I would say that one thing that is important to think about our business, and we've talked about this in the past is, we can continue to progress from a financial perspective, very nicely with a fairly modest, I will say, 1% comp growth in the front of our business. You know, that consistency is probably more important than driving now, out-ofmarket growth, if you will.
Wal-Mart
[WMT] Earnings Call 8/15/13 Michael Duke, President and CEO of Wal-Mart Stores: Sales for the quarter were below expectations, but improved from the first quarter. We are executing plans to strengthen our top line performance for the rest of the year and expect sequential improvement in the back half. We're pleased that Walmart U.S. and Sam's Club leveraged expenses for the first half of the year. But, we didn't leverage expenses in the second quarter as a company. While it will be difficult, we believe the steps we're taking to control costs, especially in International, will bring us closer to our full-year leverage goal. We will continue to invest in leverage initiatives, compliance, and eCommerce as we focus on future growth. Duke: Consolidated net sales and our Walmart U.S. comp were below expectations for the quarter. While the retail environment was challenging across all of our markets, the Walmart U.S. and Sam's Club businesses improved comp sales from the first quarter and reported sales in International remained consistent. We expect to see improvement in all of our segments in the back half of the year. Walmart U.S. comp sales declined 0.3% in the 13-week period ended July 26. Traffic improved from the first quarter and we gained market share in key categories. We continue to invest in price and we are focused on delivering positive comps during the next two quarters. William Simon, CEO of Walmart U.S.: I'm proud of the great work the team did, leading us to a solid quarter in profit in a disappointing sales environment. Net sales grew 2.1% to $68.7 billion, with about $1.4 billion added in sales year-over-year. For the quarter we delivered a negative 0.3% sales comp. Traffic decreased 0.5% and ticket increased 0.2%. The lack of meaningful inflation and the 2% increase in payroll taxes impacted our results. However our performance reflects more than 100 basis point improvement over Q1. Nevertheless I was encouraged by the improvement we saw, as traffic and comp sales increased throughout the quarter. CLICK HERE TO RETURN TO INDEX
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We also saw some slight increases in inflation towards the end of the quarter. In addition there were some key parts of the business, like produce, home and apparel, that were very successful. We also continued to gain market share across several categories. Simon: We delivered a slightly negative comp for the retail period. Our results were influenced by lower than anticipated inflation, even deflation in some areas, including dry grocery, frozen and snacks and beverages. Softer performance among these larger categories impacted our overall comp by more than 50 basis points. Adult beverages continued a solid trend of results, delivering a high single-digit comp. Our produce business also continued to gain momentum, delivering a strong mid-single-digit comp. We're getting more efficient at transporting the product from farm to shelf. We're executing weekly store audits and equipping associates with additional skills and tools to ensure quality and freshness. We're also letting our customers know about it through our fresh over marketing campaign and our new 100% money back guarantee. What's even more encouraging was that we saw consistently improving comps in produce throughout the quarter, with a high single-digit comp in July. We also gained market share across our consumables business; however, similar to last quarter, our overall performance was somewhat soft, as customers traded down, particularly in the categories where product loyalty is not the primary factor in a purchase decision. As the quarter progressed, our seasonal categories improved, but not enough to offset the early declines. Simon: Given the current economic environment, we expect our comps to be relatively flat in the coming quarter. We remain confident about the back half of the year, as we continue to execute on initiatives to drive our business and, in particular, our top line. The customer remains challenged, but I'm confident in our position and in the ability of our teams to execute. Our strategy is sound. Our pricing position is solid and our ability to leverage is strong, all of which bodes well as our comps continue to improve. Doug McMillon, CEO of Walmart International: Across our International markets, growth in consumer spending is under pressure. During the first half of the year, we saw consumers, in both mature and emerging markets, curb their spending and we believe these trends will persist through the remainder of the year. While this creates a challenging sales environment, we are the best equipped retailer to address the needs of our customers and help them save money. We clearly have plenty of opportunities to drive further improvement going forward, though we have made improvements in some markets. McMillon: The softer than expected sales growth and wage inflation in some markets masked the improvements we've made operationally, but I'm thankful we made them, or our expense position would be more difficult. We need to continue down this path and improve sales to show the benefits more clearly. As Mike mentioned earlier, our leadership teams in International are collaborating with our global business process team to improve productivity through a focus on process. McMillon: We had strong comp sales in food, consumables and apparel, but continued to see softer sales in entertainment, as industry-specific challenges persist. The colder weather negatively impacted sales in hardlines. On the positive side we drove market share gains by investing in price on the items that matter most. McMillon: We expect the third and fourth quarters to be better than our results in the first half and we're working hard to deliver operating expense leverage for Walmart International. Rosalind Brewer, CEO of Sam's Club: Small business owners report through our monthly Small Business Owner study, that they are more optimistic about the upcoming months and perceive that the current economic climate is gradually improving. We believe their businesses are beginning to show signs of recovery, CLICK HERE TO RETURN TO INDEX
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as evidenced by the improved traffic trends. Charles Holley, CFO: Economic conditions in many of our markets around the world remain difficult. The U.S. retail environment remains challenging, with virtually no inflation in food and the higher payroll tax instituted earlier in the year. High fuel prices can impact spending as well. Our expectations for the back half of the year are through a lens of cautious consumer spending.
Macys Inc.
[M] Earnings Call 8/14/13 Karen Hoguet, CFO: We believe that much of our weakness is due to the health of the consumer and the fact that consumers seem to be choosing to make purchases in non-department store categories such as cars, housing and home improvement. Since we're the first to report sales and earnings, it is frankly hard to judge how much of a role the economic conditions played, but we think it was significant. We also believe, however, that we could have produced a better sales performance and we are discussing what we could have done differently, both so that we can improve the trend in the third quarter and also so that we can have a great second quarter next year. I'll address this more as we go through the call, but the good news is that we believe we have reacted appropriately and our fall plans now reflect increased marketing, as well as greater recognition that in today's environment value matters a great deal. So we are turning up the volume on that message for the remainder of 2013. Hoguet: Sales at Macy's were disappointing in the quarter across the country, although less so in the southern parts of the country and Hawaii where weather was less of a factor. Macys.com continued to be strong relative to last year. Bloomingdale's had a very strong second quarter both in stores and online. This performance was much improved in comparison to the first quarter which is very encouraging. Hoguet: If we look at the performance by family of business trends softened relative to the first quarter pretty much across the board with businesses that had been strong remaining so on a relative basis. Business and Center Core especially handbags continued very strong, as did key home categories, including furniture and mattresses. We also saw strength in key back-to-school categories including kids and active although juniors continued to be weak. Impulse which is geared to our older Millennial female customer is beginning to gain traction as we continue to add more new brands. Our two most recent launches, Maison Jules, a private brand and QMack an exclusive brand by Jones have both started off very strong. What was most encouraging in the second quarter however was the strengthening in feminine apparel. Sales of career and modern wearto-work merchandise were strong and this bodes very well for the fall. We also did very well in opening price points in the women's apparel area. In addition to juniors we had a tough quarter in shoes driven by a weak sandal season. We are hoping for a strong boot season which would improve our overall shoe trend this fall. Cosmetics, fragrances, jewelry and watches all softened in the second quarter relative to the first but we do feel better when we look at the overall trend in the first half of the year in those categories. Hoguet: Average unit retail was flat in the second quarter with transactions down approximately 1.6% and units per transaction up just short of 1%. This is a very different picture than what we had experienced earlier this year. The average unit retail was hurt by the promotions needed to clear through the warm weather inventory as well as mix. For example, the opening price point apparel being strong with jewelry being weak. What was more concerning though was the drop in the number of transactions which is a proxy for traffic. This is in part why we decided to add to our marketing for the back half of the year.
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Hoguet: In the quarter, we benefited from continued good results from our Credit business, which generated $31 million more income this year than last year in the quarter. The credit profitability continues to be driven by low losses and the strength of the portfolio, but we do continue to be challenged by credit penetration, which fell versus last year by 70 basis points in the second quarter. As we look to the fall, we are not anticipating big increases versus last year in credit income.
J.C. Penney
[JCP] Earnings Call 8/20/13 Myron Ullman, CEO: While the business climate today is very different and more competitive than it's ever been, the values and principles of our business have not changed. Our business is built around having strong private brand merchandise of high-quality, relevant style at compelling prices. Ullman: For the quarter, we aren't where we need to be yet. This is however a journey. There are no quick fixes to crack the errors of the past and it's going to take time to get fully back on the right track across the company. Our top priority in the second quarter has been to improve traffic and purchase conversion by reconnecting with our customer who frankly had lost faith in us. Bringing back promotions was a critical first step. It has taken time to find the right messaging of promotional cadence, but the response to our back-toschool marketing messaging which we launched late in the period has been promising. And while it's still early in the season, we have seen encouraging signs, especially during the tax-free weekends and promotional weekend periods. We also started to get our merchandise assortments and stocks back to where they need to be, beyond just for back-to-school. As I told you in May, coming into the second quarter, we're going to be out of stock in key basic items for our customers which they trusted us to have when they came to jcpenney. We spent the last three months getting back in-stock and what the customers need and we fully expect to be in great shape by the fourth quarter. Ullman: Our store traffic was down when compared to the first quarter and down year -over-year, which isn't surprising in light of the challenging mall traffic trends across the industry. Purchase conversion was down slightly, but it did improve throughout the quarter as we improved our pricing and signing changes and started to take hold. Ullman: Traffic remains a bit challenging in August, but this is not surprising to us, since l ast year our only promotion during this time was free haircuts for kids. Last year, we gave away 1.6 million free haircuts in August, averaging 53,000 per day. While the customer was in the store, they also shopped, which we're up against those numbers this season. We're far from we're ready we've been listening to our customer and ready to take what we've learned and put it to good use for the holiday season.
Home Depot
[HD] Earnings Call 8/20/13 Francis Blake, CEO: We expected the second quarter to be our strongest comping quarter of the year. The results exceeded our expectations. We grew sales by almost $2 billion in the quarter, posted the first doubledigit positive comp in our business since 1999, and had the highest quarterly transaction count in the company's history. From a geographic perspective, sales were strong across the U.S. Two-thirds of our regions posted double-digit comps, all of our top 40 markets posted positive comps, and 98% of all of our markets were positive. So the strength in the business was broad-based geographically. This was also true across our CLICK HERE TO RETURN TO INDEX
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merchandising categories. Every one of our merchandising departments exceeded plan for the quarter. Craig Menear, Executive Vice President, Merchandising: As we look forward to the back half of the year, we're projecting solid sales growth, but we do have several factors to overcome. First, we will face tough sales comparisons resulting from impacts of consecutive years of autumn storms. Second, commodity inflation is on track to no longer be a tailwind, as lumber and copper prices have begun to moderate. Third, we begin to lap excellent response to our rollout of our expanded appliance business. And as we get to the fourth quarter, the holiday shopping season will be a week shorter due to the date on which Thanksgiving falls this year. Carol Tom, CFO: 30-year mortgage rates are up. They're at the highest rate that they've been since October of 2011, at about 4.4%. The affordability index is still at a historical high, so if rates were to move up, it would impede that affordability index, but we've got a long way to go before it should have a dramatic impact, we believe, on mortgage availability or the attractiveness to a consumer or a homeowner to take out a mortgage. All that being said, however, we're watching it.
Kohls
[KSS] Earnings Call 8/15/13 Kevin Mansell, CEO: The West region is starting to get momentum on the sales line after we improved our store operations there over the last few years. The region has led the company in sales for the last three quarters in a row. We're also extremely encouraged by our early back-to-school business. Kids, juniors, young men's and footwear are all off to a good start. We're especially happy, though, with the improvement in our national brands performance. We expect this trend to continue and accelerate as we increase our marketing emphasis in the fall. Wesley McDonald, CFO: Very good May obviously as there was pent-up demand from the weak weather in the first quarter. June was a little tougher and then July was better in terms of back-to-school and into August. We're very pleased with our start to back-to-school especially in the back-to-school categories which are key for us like kids and juniors, the young men's and then athletic and kids' footwear.
Urban Outfitters
[URBN] Earnings Call 8/19/13 Tedford Marlow, CEO of Urban Outfitters: We feel like there are a number of categories that are differentiated versus where the business performed last year. Obviously, the strength of the denim business in last year's mix and we have a lot of concern about denim coming into the back-to-school time period. Our other bottoms category in the women's side had a very good job of offsetting that volume that we were up against. We were bullish on categories other than denim. But the good news to me as we've got into the first part of August is that although the denim assortment has been pared back some this year, its performance is exceeding plan. And we actually have seen nice performance specifically in the direct side of the business versus what we thought we would see out of denim for this time period. Frank Conforti, CFO: There's nothing structurally in our business that leads us to believe we can't get back to where we have historically been. And our plans for the year with a 50 basis point improvement over the back half of the year certainly still leave us with opportunity for continued margin improvement next year and going forward.
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David Hayne, COO Free People: It was not unusual back in the day, in the late '90s, for Anthropologie to experience women coming into the Anthropologie store with certain pages turned down of product that they wanted and say, I want this. Do you have this in my size? So we have seen that happen consistently and the same exact thing is happening with the website. So, I think there's much more of a flow the other way where they're going into stores and then going to web as opposed to the other way around. D.Hayne: I think that we have a reasonable amount of opportunity to reduce our inventory, and I don't think it will negatively affect sales. I actually think it will positively affect sales. So our goal is to bring our inventories in terms of weeks of supply down and we are working very hard. So we will continue to do that, and we will by the end of this year accomplish our goal of reducing weeks of supply. Richard Hayne, CEO: I think that in the case of Urban, the average selling price probably came down just a tad greater than we wanted it to. And I think that, that is in the process of being corrected. So I don't think that there's any change of philosophy or any change of strategy around average selling price. R. Hayne: The supply chain is becoming more efficient. Now, there are challenges to it, and those challenges are the increase, in the breadth of the product that we're adding to the direct channel. But we believe that it will continue to be more efficient. Our goal, is to reduce the time from design to delivery, and we think that that allows us to be to reduce inventories and to have more efficiency. So we're working hard to do this.
Nordstrom
[JWN] Earnings Call 8/15/13 Blake Nordstrom, President: Sale event generated a low single-digit same-store sales increase, which was below expectations, but consistent with trends. B. Nordstrom: We are encouraged with the momentum in our women's apparel business, driven by improved execution as well as strategic changes that we are making to help attract new customers. It was a notable achievement that women's apparel led all merchandise divisions in our Anniversary Sale performance. Michael Koppel, CFO: The shift of our Anniversary event resulted in a favorable comparison to last year and is expected to be offset by an unfavorable comparison in the third quarter. In the second quarter, the impact of the event shift resulted in an increase to same-store sales of approximately 250 basis points and an increase to earnings per diluted share of approximately $0.06. Though sales were less than anticipated, the second quarter showed moderate improvement from early in the year. We maintained our focus on managing inventory and expenses, while benefiting from the variable nature of our financial model. Peter Nordstrom, President of Merchandising: The place where we're probably most challenged related to women's apparel is in the juniors segment women's across the board actually did fairly well. Individuals has been strong. Our coat business has been strong. We've had good studio and narrative business kind of through this year so far. And that's been carried through with the event. For sure our efforts around Savvy and Topshop in particular helped drive new customers into women's. If you look at the total lift that we're getting in women's, a big part of that is how we just kind of shifted our center of gravity and put more energy and investment into the inventory in those classifications. That's worked out pretty darn well.
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Best Buy
[BBY] Earnings Call 8/20/13 Hubert Joly, CEO: From a financial perspective, we delivered better-than-expected results on both the top and bottom lines during this last quarter. On total company revenue from continuing operations of $9.3 billion, we delivered non-GAAP diluted earnings per share of $0.32. As expected, Domestic comparable store sales were down 0.4%. But this was driven by short-term disruptions, caused by the retail deployments of the Samsung Experience Shops, Windows Stores, and floor space optimization, as well as our continued rationalization of non-core businesses. Excluding these impacts, Domestic comparable store sales were flat to slightly positive for the quarter. Sharon McCollam, CFO: From a merchandising perspective, strong growth in mobile phones and appliances was partially offset by declines in other category, including gaming and digital imaging. Joly: We believe that having a strong balance sheet is a very important factor for our success. And in fact, when we look at a lot of our competitors and other players that do have very strong balance sheet, and so do a lot of our vendors, having a strong balance sheet is very helpful to us as we negotiate with our vendors. You always want to be negotiating from a position of strength. So we have this as a governing thought to have a very strong balance sheet as we operate the business.
Bon-ton Stores
[BONT] Earnings Call 8/22/13 Brendan Hoffman, CEO: We believe the adverse impact of inclement weather, higher gas prices and higher taxes coupled with an unfavorable shift in consumer spending patterns contributed to the overall sales weakness. In addition, in the second quarter last year, we added some new aggressive promotional events that lifted the top line but at a reduced margin rate. We anniversaried the events this year but tweaked them to make them more profitable but without the same incremental lift. We believe these factors mask some of the progress we have made in our key initiatives. Hoffman: We had particular strength in dresses, women's apparel and casual, casual being driven by both denim and active. We did well with the better brands that we have introduced or expanded throughout the store including Michael Kors, Ralph Lauren and Calvin Klein. Growth in shoes outpaced the store despite a huge drop off in the sandal business. We were pleased that our private brand business is getting healthier, as we significantly increased our gross margin rate. Hoffman: Our cosmetic business is one of the weaker categories, which typically correlates to weakness in traffic. Overall, this remains a franchise category for us and we expect to see this business pickup as traffic begins to improve. Hoffman: Based on general market level traffic data from ShopperTrak, our analysis showed most of our markets lagging national traffic trends by high single digits throughout the second quarter. Despite this, we were able to make significant progress in media optimization analytics, and we are continuing to improve our core promotional events with enhanced offers and more clearly delineated focus and targeting for each
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ANN Inc.
[ANN] Earnings Call 8/23/13 Katherine Krill, CEO: We are very pleased with a strong performance for the quarter including record earnings per share, a double-digit increase in net income and significantly stronger sales versus the year-ago period. Krill: Ann Taylor's performance has been strong and more profitable. We have entered the third quarter with a compelling assortment and significant opportunities to drive top line growth and profitability over the balance of the year. Krill: e-commerce continues to be a major contributor to our growth. Online sales continue to increase at a double-digit rate again this quarter, with traffic and convergence up at both brands. Krill: August is off to a strong start for us. Both brands are comping positive month -to-date and in fact, we comp positive in both brands every month of Q2. So far in Q3 at Ann Taylor, we're getting a great response to our fall offering with sweaters, blouses, pants, skirts and jackets performing particularly well. And as I said on the call, our new shoe and jewelry collections are off to an unbelievable start. At LOFT, the fall assortment is also performing extremely well. She's loving our new pant offering, LOFT lounge, denim, dresses, fall tops and statement necklaces. So I'm also very pleased that our inventory carryover was minimal at both brands with 90% of our products representing fresh fall goods. So we are well positioned to support continued momentum at LOFT and Ann for the back part of the year. Overall, we're on track to deliver positive comp performance at both brands and another year of record performance.
Ross Stores
[ROST] Earnings Call 8/22/13 Michael Balmuth, CEO: While we are pleased with our better-than-expected year-to-date results, we believe it is prudent to maintain a somewhat cautious outlook for the remainder of the year for a number of reasons. These include the ongoing uncertainty in the macroeconomic environment, our own challenging multi-year comparisons and the potential for a more promotional and competitive retail climate. This is especially true for the fourth quarter, which has a compressed holiday selling period due to six fewer shopping days between Thanksgiving and Christmas this year. Balmuth: I think coming out of the second quarter, where all the major department stores and discounters struggled in the second quarter, they have plenty of time to be preparing and ramping up for a more promotional fourth quarter than they did than they were able to for the second quarter, which kind of, I think, caught a lot of people off guard. Balmuth: We're better positioned than a year ago in packaway based on last year's performance globally. And this year's situation in closeouts, it's premature. Nobody's closing out outerwear this early. So, it's a waitand-see. And actually, the seasonal business has happened later and later every year. It makes it more difficult to secure closeouts in season. More is done in packaway. So, we'll just have to wait and see. Balmuth: We've always thought that the best marketing for us is sort of unpaid marketing, word of mouth. And that really comes from making sure we have great values in the stores. The customer buys the goods. They go and tell their friends, et cetera. So, that really remains our focus from a marketing point of view. Our CLICK HERE TO RETURN TO INDEX
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paid marketing really hasn't changed in the last few years, so nothing new or radical in terms of marketing campaign.
New York & Co Inc.

[NWY] Earnings Call 8/22/13 Gregory Scott, CEO: We are pleased to continue our positive momentum in the second quarter and report positive comps for sales, expansion in gross margin, and a significant improvement in operating loss as compared to the prior year, all of which were well within our expectations. Scott: We are excited about the future. Our customers are responding positively to our merchandise initiatives. We are expanding our fast-growing outlet and eCommerce channels and we have exciting new marketing and product initiatives under way, including the launch of Eva Mendes...
Buckle Inc.
[BKE] Earnings Call 8/22/13 Dennis Nelson, CEO: The young customer shopping our store I think is brand focused and always looking for new colors, new ideas, new fabrics, and we're able to show them quite a wide selection of product. We're not narrow and deep; we show a lot of SKUs in all the categories and give them a lot of options to work with and I think that seems to be hitting well with our guests. Nelson: I think our cost going forward should be pretty consistent where we've been either slightly off or up slightly. I mean, that seems to be under control. The margins, we have outstanding teams working with our product and they're continually looking to improve not only the product, the quality and the selection, and when opportunity arises, to be able to add to the margin. So, but we want to keep a focus on new product for the guest and items that they're looking for.
Claires Stores
[CLE] Earnings Call 8/27/13 James Fielding, CEO: The retail environment was challenging during the second quarter and we saw significant decreases in North American mall traffic and global store traffic. Fortunately, we were able to mitigate these headwinds to improve conversion rates, largely driven by an increased focus on in-store execution, storefront messaging and customer engagement. Fielding: We continue to grow our business in China. We opened four new stores in the Shanghai region during the second quarter and currently have 11 stores open. We remain on track to have 20 stores opened by the end of this fiscal year. We are also testing a store-in-store concept in a few additional locations, and additional feedback has been encouraging in terms of growing revenue and increasing brand recognition. Fielding: While the second quarter provided its share of challenges, we continue to make progress on our overall business strategy. Our underlying principles and priorities remain intact, and we continue to be confident in our ability to execute on our goals. We believe our focus on the key drivers for our business will enable us to continue to generate positive future results. J. Per Brodin, CFO: I think the way that we've, at least, we think about it from a North America standpoint, is that we could reach probably at least 800 stores over the long term. And that, as we think about Europe, that CLICK HERE TO RETURN TO INDEX
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we could have a significant presence there. We certainly haven't tested it yet, but we think that there are many markets within the European division that we Icing division will translate well. And we also believe that, at some point, it's a concept that we would take to China. And we have franchise partners that are interested in taking it to their markets as well. So, a sizable opportunity. Brodin: I think what we've seen is it's been a challenging environment over the past two -plus years. We think that in many of the quarters over the past couple of years, we've been able to buck the trend and outperform the market. We don't believe we were as successful in doing that in the current quarter, having comps at negative 2%. That said, we think we're still performing relatively well compared to the underlying strength of the economies in those markets. So, I think it's there's still continued headwinds in Europe. The reports are, there may be some green shoots in from an economy standpoint that we hope will translate to the consumer. But they also had some pretty severe weather during the quarter, which gave us some issues at various points of time during the quarter. We hope that that will normalize as we move forward and that some of these green shoots will also help us. Fielding: For Icing, because of the target customer being older and she's able to complete the transactions and has her own credit card, we think that the Icing e-commerce strategy is more straightforward and probably more akin to what's going on in the rest of retail. Also, because Icing has fewer store footprints throughout the U.S., we actually are able to market the Icing brand in new markets or underpenetrated markets. In Claire's, because of the target customer age, and frankly the categories we're in, we do see it as more of an engagement and marketing tool, linking it to our social media strategy, but both of them will contribute, will still contribute to top line and bottom line ultimately. And we're frankly not that far away from that. Fielding: We were not isolated from the challenges facing our industry, but our business strategy and model are solid. And we are encouraged by the progress we continue to make in line with our key growth initiative. Within that context, we are planning sales, inventory and expenses conservatively for the remainder of the year.
Bebe Stores
[BEBE] Earnings Call 8/29/13 Steve Birkhold, CEO: Our merchandise offering reflects contemporary fashion designs for the confident, sexy, modern woman. Our customers looking for fashion and quality, while she is willing to invest in her look, she also appreciates value. Based on early reads, the team is encouraged by the positive response to the new merchandise and the new direction the company is headed in. We're also encouraged by the new merchandise acceptance level for our July and August catalogs and mailers. We have greater conviction on selecting outfits and key item buys to support the catalogs and mailers, with great sell-throughs and better margins than the rest of the fleet. Birkhold: While the macroeconomic environment remains uncertain, and the missteps from the past are n ot fully behind us, we are very optimistic about our turnaround in the near future. My team and I have been working on our turnaround and longer-term strategic vision. Birkhold: The competitive landscape continues to be a challenge, and I think I don't have to tell the marketplace what some of the announcements have been out there, so a combination of good results and difficult results. I would say that we're seeing improvements in traffic for our consumer and we're seeing really CLICK HERE TO RETURN TO INDEX
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strong positive reaction to the new products that are in our mix. Obviously, from a markdown cadence perspective, we continue to see promotions to drive clearance products, but we have seen some decent upticks in the new products that are hitting the floor. So all in all, like I said earlier in the call, I'm pretty satisfied with the pace of the consumer reaction to our new products. Birkhold: We are still challenged when it comes to traffic in our store locations as the rest o f our competitors are. What I will say is that we have seen an improvement in the traffic and intuitively, our store teams are feeling like with our new marketing campaigns, we're getting a slightly different customer in the store, and some customers that hadn't that bebe hadn't been on their consideration for a while. So I think that with our event strategy, social media strategy, and again, if you go to our website, you will be able to see content user generating content from our key customers and that's all the stuff that they sent us in our #be9to5 campaign. So I think we're starting to feel and see positive results there.
Tiffany & Co.

[TIF] Earnings Call 8/27/13 Mark Aaron, Vice President of Investor Relations: Looking at the big picture, the second -quarter results were better than our expectations. Three months ago we had forecasted second-quarter net earnings would be about equal to last year on mid-single-digit sales growth and some lingering margin pressure. So what changed? The 4% total sales growth in the second quarter was in line with our expectations, and I should add that the increase was a stronger 8% on a constant exchange rate basis with solid growth in comparable store sales in all regions outside the Americas. On the upside, however, we were pleased to see a greater than expected improvement in gross margin, reflecting both diminishing product cost pressures and the price increases we've taken this year, and SG&A expenses were well controlled. So adding it up, the better margin performance helped produce 16% net earnings growth in the quarter. Aaron: Sales were soft in Canada but we had reasonably good increases in Mexico and Brazil. Internet and catalog sales in the Americas mirrored store sales performance, and we finished the quarter with 116 stores in the Americas, which included the opening of our 10th store in Mexico in Villahermosa. Aaron: So the good news is that sales in Japan are performing quite well, but the picture on paper looks different when considering that the yen year-over-year has weakened more than 20% versus the U.S. dollar. As a result, the 7% sales growth in yen, translated into a 14% sales decline to $136 million. Our internal sales and earnings forecast for the second half of the year incorporates the yen rate roughly in line with recent levels. Aaron: Sales to local European customers were up in the quarter. Sales to tourists have also become a meaningful factor, estimated to represent more than a quarter of our European sales, but there were no discernible local versus tourist sales patterns from country-to-country from which to draw any conclusions. Patrick McGuiness, CFO: We were very satisfied with sales results in all regions, except the Americas where sales remained quite soft. In addition, we saw a favorable gross margin movement and we were pleased with our management of expenses.
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Chicos FAS
[CHS] Earnings Call 8/28/13 David Dyer, CEO: I've always said that fashion is not for the faint of h eart and luckily I have a strong heart. And even the best of companies can sometimes experience disappointing results. Well clearly our second quarter performance fell short of our goals. Traffic was our issue in the first quarter due to unseasonably cool weather; traffic was also our issue in the second quarter. We were just not able to drive sufficient traffic to cycle against the record results from the second quarter of last year. Therefore, total sales for the quarter were up 1.2% to $650 million with comparable sales a negative 2.6% versus comparable sales up 5.6% last year. Dyer: The Chico's brand faced a significant challenge up against a strong second quarter comparable sales in 2012. In the end, Chico's was not able to overcome the record spring 2012 results driven by color, print and pattern. Also with the benefit of hindsight in the second quarter, White House | Black Market flowed too much color too frequently for the season. I'd like to point out that we have returned to a more normal color cadence and color palette in our fall assortment, which by the way, we're very excited about and we believe our customers will be excited about this, too. Pamela Knous, CFO: Traffic was our issue in quarter two. In a highly promotional and challenging environment, comparable sales result was a negative 2.6% on top of a positive 5.6% last year and a positive 12.8% in 2011. Knous: For the second half we face challenging comparisons. We are up against a 9.9% comparable sales increase in the third quarter last year, our strongest result in 2012, which represented one of our best transitions from spring to fall in many years. Dyer: Buzzword or not there's no question in my mind that omni-channel will be a crucial component to retail success over the coming years. Piecing together the omni-channel puzzle will be essential for brands to forge lasting connections with their customers. Personally I need no convincing. No omni-channel for dummies manual here to appreciate the importance of linking merchandising, messaging and marketing across all channels, be they front line, online, off-line or what other lines that technology will throw our way. Dyer: Let me just say that all boats seem to be rising and lowering with the tide. We haven't noticed any difference geographically or in off mall or on mall. It's all very consistent across and I think it's also consistent across brand when we look at traffic. So I think that there is a traffic issue but obviously there are going to be winners and losers in this scenario. We just want to win. And that's what we're working hard to do. I will tell you that normally when the market has performed as well as it is, and certainly for our customer, you may expect more. But I could tell you personally I owned auto dealers and we were selling more autos than we have ever sold in years. So perhaps as I have read, she is spending more money on larger purchases at this time, and so what our job really is when it comes down to apparel is just to get our unfair share of apparel sales, and that's what we're working hard to do.
Express Inc.
[EXPR] Earnings Call 8/28/13 Michael Weiss, CEO: Our second quarter was a strong one characterized by continued progress across multiple initiatives. Growth was nicely balanced with women's showing marked improvement over last year and the men's business continuing to deliver higher sales. From a financial perspective, sales were up, comps CLICK HERE TO RETURN TO INDEX
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were strong and we once again grew our EPS by a double-digit percentage. Weiss: Taking a big picture view of our fashion, I continue to believe that we are firmly on target with our key [ph] looks and big ideas (2:58) and while traffic continues to be a challenge, I am encouraged by the fact that we have continued to see a very healthy uptick in our conversion rate. This forward-looking indicator as well as current trends, both in our business and in the overall marketplace, were taken into account as we developed our third quarter guidance. Weiss: Our product is resonating with our customers, our marketing message is clear, and we intently focused and we are intently focused on the operational metrics that drive our top and bottom lines. We are following our test-and-react strategy and managing our open-to-buy carefully to maximize flexibility. What remains to be seen now is how promotional the mall becomes, which of course is the wildcard we can't control. We are however prepared for a highly promotional environment and under any set of circumstances, we remain focused on delivering the high-quality, fashion-right products that is the essence of the Express brand. David Kornberg, President: We had another good quarter with Dresses, especially our Fit & Flare styles across casual and dressy. We're adapting them for fall as we expect this shape to remain important for a while. In terms of bottoms, demand for Women's Denim outstripped supply during the first quarter, which led up to leave a little money on the table during the second quarter. We continued to build our Denim inventory and are back in a solid position. It's also worth noting that the response to our 40% off Denim promotion exceeded our expectations. Kornberg: So last quarter was extremely productive and we expect no less in the third quarter. August has gotten off to a strong start and of course additional fall and holiday merchandise will be flown into the stores over the coming weeks. The reads we get from those receipts will provide us with critical information that will be taken into account as we place early spring orders, much of which will consist of goods that are tested and proven. Paul Dascoli, CFO: In terms of the second quarter, we're very pleased with our performance. We navigated through a highly promotional season to deliver results in line with our guidance and saw continued progress across a variety of metrics. Kornberg: Last quarter was extremely productive and we expect no less in the third quarter. August has gotten off to a strong start and of course additional fall and holiday merchandise will be flown into the stores over the coming weeks. The reads we get from those receipts will provide us with critical information that will be taken into account as we place early spring orders, much of which will consist of goods that are tested and proven. Dascoli: We feel good about the inventory position, coming into the third quarter, even though it's a slight bit higher than our sales rate, we've taken the opportunity to invest in some very key categories like I mentioned. We've invested in Dressy woven tops, we've invested in Denim, we've invested in pants, particularly on the women's side of the business. We're investing in accessories, which continue to be very, very strong for us, including watches, and we've invested in men's suiting.
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William-Sonoma
[WSM] Earnings Call 8/28/13 Laura Alber, CEO: Our second quarter results demonstrate the continuing strong demand for our brands and the profitability of our multi-channel, multi-brand platform. We generated a 12% increase in revenue and a 14% increase in diluted earnings per share over last year. Our home furnishings brands generated a 14% increase in revenue with each delivering double-digit revenue growth We achieved sales and profit levels that exceeded our expectations while continuing to invest in infrastructure, talent and other areas to fuel our growth. Alber: We continue to see a significant variance in performance between the direct and retail channels. The relative strength in the direct channel has been driven by increased traffic in conjunction with strategic promotions. We also increased new customer acquisition, a key metric that indicates future strength. The retail channel, however, has underperformed. Julie Whalen, CFO: The retail environment, it seems to indicate there's still a lot of uncertainty out there, that the promotional environment has not gone away and that the retail environment in general continues to be choppy, especially with the recent earnings releases and this global unrest, and we just don't want to get ahead of ourselves. Alber: People love to buy on sale, even luxury goods, be it exclusive family and friends or member-only flash sales; I think the retailers that are going to win are the ones who are going to embrace this. I was very pleased that we were able to grow our new customers this quarter and gain market share. We had, revenues of 12.3% up compared to the NICF data of 3.6%, and if you take out Williams-Sonoma it's 11.3% versus 3.6%, so it's clear that we are gaining market share. And I actually think we may be getting wallet share because people are spending money on their home. When you buy a new home and you have to furnish the whole new thing, if the price is right and the product is right, you're going to buy from us. And you may not buy the next sweater that you bought last year. And so the promotional environment is one that we've embraced for a long time. When we are able to deliver record operating margins because of our unique operating model that we've gone over, and we can offer these promotions highly targeted to our customer, particularly more targeted to even direct-to-consumer than we can now at retail. And so, we actually believe that our promotional strategy is a key strength of ours in bringing the customer in and getting them to buy more from us than from anyone else with a cash register.
Zale Corp
[ZLC] Earnings Call 8/28/13 Theo Killion, CEO: I'm pleased with the performance of the business in the fourth quarter, our comp store sales were up 5.6%. This follows an 8.3% increase in the fourth quarter last year. Importantly, our Zales branded stores were up 8.1% in the quarter, following a 12.3% increase for the same period a year ago. Killion: I firmly believe that when the product is wrong, nothing else matters, and when the product is right, everything else matters. The work that we've done over the last three years to build our core assortment has allowed us to grow proprietary and exclusive brands, grow sales, and expand margins. Thomas Haubenstricker, CFO: Overall, we continue to take a conservative view of market conditions in both the U.S. and in Canada. That being said, we do expect to continue to achieve positive top line growth, driven by the performance of our two national Fine Jewelry brands, Zales and Peoples, and by further penetration of CLICK HERE TO RETURN TO INDEX
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exclusive branded products. We expect store closures will impact our overall revenue growth for the year by about 250 basis points. It represents net closures of approximately 50 to 55 retail locations.
DSW Inc.
[DSW] Earnings Call 8/27/13 Douglas Probst, CFO: For the spring season or the first and second quarter combined, our merchandise margin rate increased 70 basis points over last year to 46.4%. Importantly, this seasonal rate was achieved on 1% comp sales growth in a very choppy environment and equaled our 2011 rate that was achieved on a nearly 12% comp. We believe this performance reflects our agility and the impact of systems improvements. Michael MacDonald, CEO: We delivered solid performance during a volatile spring season. We believe the DSW model is increasingly relevant to customers, who are concerned with fashion, value, and shopping efficiency. We also believe our strategic initiatives will continue to provide strong operational improvements as well as good financial returns. MacDonald: I think one of the things that happened to us in Q2 that was very dramatic was the performance of our reg price business versus our clearance. And we consistently I can remember a year ago, we were fretting to ourselves that we were not selling through clearance at sell-through rates that were satisfactory to us. This year, particularly in Q2, we had consistently lower levels of clearance. And on that lower level of clearance unit ownership, we were selling through at rates that were faster than the prior year. So there are two ways that can happen. One is by buying it better by location, by size and all of that, that's the systems piece. And we know that we bought it better because we've looked at selling by size, and we see spikes in our selling of fringe sizes at either end of the size spectrum, which is exactly what we were expecting would happen out of size optimization. Probst: While second quarter was outstanding from an expectation standpoint, we did have a 1% comp in the spring and our margin rates were better and our SG&A was significantly better. But we have to look at the spring season in total. So as we look outward, we have to consider the spring season and not just the second quarter. I hope it does turn out that it looks very conservative when we're all done with this year, but we do have to look at the spring season as we look at our outlook. SG&A, we have some investments that we're going to do. We're going to continue to spend toward our omni and open stores the best we can. And obviously, the metrics look a little difficult because of the 53rd week and the extra leverage we got in SG&A last year because of that. MacDonald: We did have a traffic decline in Q2, sort of similar to what just about every other retailer in America has reported. And we've looked at it and I think it falls into several buckets. Some things relate to what we've done. So one thing, for example, is we know that we have cannibalized some business in existing markets where we opened up new stores, particularly the ones th at opened up in the back half of last year some changes we made to our marketing programs, specifically related to TV, we think that that may have hurt us a little *too+. Deborah Ferre, CMO: So there are some new trends that actually just started to ta ke hold at the end of Q2 and are going to be getting stronger in Q3, and I see continuing in Q4. And that's all the up-the-front looks. So I think we're just at the beginning of the lifecycle and up-the-front could be in dress shoes, it could be in sandals. So it's anything from gladiators to more foot covering and I see that just as I see that as an evolution of the trend. And I think that the market kept that fresh enough to where I was pretty excited about what I CLICK HERE TO RETURN TO INDEX
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saw looking at for spring 2014. Ferre: We have low single-digit cost increases. Everybody has margin pressure, manufacturers are trying to figure out on the wholesale side how they remain profitable, and so are we. So I think it really comes down to the negotiation and the partnership that we have with our brands and really trying to hit the right price points for our customers and working back in the cost. We haven't seen any significantly big cost pressures really in any category. Ferre: What we need to get better at is making our full 20,000-plus assortment available to all of our customers regardless of whether they're shopping in a Manhattan store or in a store in North Dakota. So that's what I call proactive omni-channel, and that's the direction we're going in. I don't mean to underplay the charge-send initiative. It's an important one and I think it will be a meaningful one to our financial performance. But it's just one step in a multi-year journey.
Shoe Carnival
[SCVL] Earnings Call 8/29/13 Clifton Sifford, CEO: Even though sales were just under our expectations, our profit margin of 28.9% was higher than the second quarter last year. Sifford: We experienced double-digit comparable store growth for the second quarter in categories such as molded footwear, canvas casuals and sports sandals. These categories drove comparable store sales increases in both the women's non-athletic department as well as the children's department. Sifford: We are in the process of finalizing the entry into several new markets for 2014 and we expec t to see growth approaching 40 new stores. We believe our strong un-leveraged financial position leaves us well positioned for additional square footage growth averaging in the high single digits over the next decade. As of today, a little over 90% of our markets have gone back-to-school. Also, as of today, we're experiencing a comparable store sales increase of approximately 1% for the month of August. This increase in sales comes on top of the high single digit comp we generated last August. We believe there has been a shift in product demand in our women's business into canvas casuals from brands such as SKECHERS, Keds, Vans, BOBS, Sperry and Roxy. This classification is performing very well but at lower price points in the more traditional women's nautical and athletics styles that would normally drive sales during the back-to-school season. Kerry Jackson, CFO: The back-to-school selling period is highly athletic driven and is a promotional period. The shift to this high volume back-to-school selling week into the second quarter diluted the merchandise margin. The leverage of buying, distribution and occupancy costs was primarily result of significant increase in sales most noticeably in occupancy costs. Sifford: We went into the first quarter after last year, 2012, a little worried about our athletic business, because we had such a great first quarter and we had a nice increase in athletic first quarter this year against first quarter last year. So to answer your question, we after March, April, May and June of showing nice increases in athletic footwear, we did not expect to see a slowdown in July and in August in athletic. And let me be real clear. The slowdown is primarily in women's athletic, not in the other genders. And what's happened there is that in women's athletic the customer has migrated more to the canvas casuals. And you got to be careful in the way that you judge our athletic business against anyone else's, because when you you don't know how they
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classify certain products. That's the reason I broke the rule today and talked about brands so that you could try to help you understand that where we classify some things as non-athletic and women's brown business, other retailers classify them as athletic. So I caution you not to judge too much on the women's athletic side, although we based on the way we judge athletic, our business has weakened in women's athletic. Jackson: What we want to do is look at how the consumer responds to our fall product. There's a lot of question about how strong the consumer is right now. Is it just they're a little tired of athletic and we have some very difficult comps and we see it turnaround nicely. As we expect, we build that into the high end of our guidance. If we can come out there with some strong comp increases because of people responding to the fall product, we're expecting relatively flat margins along with some leverage of the SG&A.
Aeropostale
[ARO] Earnings Call 8/22/13 Thomas Johnson, CEO: Our business trends in the second quarter did not change materially from earlier in the year, which was disappointing given the level of change we registered with the brand. This performance in the third quarter outlook is being influenced by a challenging retail environment, with weak traffic trends and high levels of promotional activity. We believe we've made substantive changes to Aropostale's product and brand projection, however, the level of customer adoption has been slower than we had expected. Johnson: Connecting with our customer in increasing traffic to our stores and online are important areas of focus for us moving forward. We believe we've made progress to date with our key initiatives and we've injected more change into the business in recent periods. Customer adoption has not materialized at that same rate. We are disappointed that our financial recovery is taking longer than we expected. However, we are committed to turning our business around and focusing on changing brand perception and recapturing market share. Emilia Fabricant, EVP: We operated in a challenging and highly promotional environment during the second quarter, which we are continuing to experience in the initial back-to-school period. In the second quarter, we increased the penetration of fashion in our stores while reducing the dependency on the down-trending logo businesses such as graphics and fleece. We were encouraged with the positive trends we experienced in key areas where we added newness, such as wovens, sweaters and footwear. The team did a nice job updating washes and fabrics and truly making the product feel fresh and authentic. Our men's and women's teams worked together closely to make sure we had a cohesive collection on the floor. Despite very weak traffic trends, we are encouraged by the higher AURs and healthy sell-throughs we have realized on certain fashion style while maintaining our value proposition on our core. As planned, we launched our new label, Live Love Dream, during the second quarter. Fabricant: While I am pleased with the strategic changes we've made to our merchandise assortment and the look and feel of our stores, we still have a lot of work ahead of us. The volume of our fashion merchandise is not enough to offset the declines in our core business and we look to continue to refine our merchandise mix moving forward. However, our main focus is on traffic generating initiatives to communicate the changes we've made to our assortments to the consumer. Marc Miller, CFO: Our miss for the quarter resulted from a double digit decline in store traffic and continued weakness in some of our core categories. Total net sales for the quarter were down 6% versus last year, reflecting a negative 15% comp which includes our e-commerce channel, partially offset by an average square CLICK HERE TO RETURN TO INDEX
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footage increase of 3%. Miller: Our business quarter to date continues to experience pressure and we expect the macroeconomic landscape, weak consumer spending and heavily promotional environment in the teen retail sector to affect our financial performance.
Lowes
[LOW] Earnings Call 8/21/13 Robert Niblock, CEO: As expected, we recovered most of the outdoor sales we missed in the first quarter from unfavorable weather conditions and we also capitalized, as planned, on consumers' natural mindset shift during the second quarter from lawn maintenance early on to outdoor enjoyment in the mid to latter part of the quarter. Our Time to Shine campaign resonated with customers looking forward to spending time outdoors and celebrating summer with family and friends. Niblock: Looking at the landscape in the second half of the year; the stronger than expected pace of home improvement industry growth so far this year was fed by modestly stronger gains in housing turnover and job growth than originally forecast, further offsetting the negative effects of higher taxes. The industry outlook for the second half hinges on the impact of steep increases in mortgage rates experienced over the last few months. The rate increases will likely take some steam out of the recent housing market rebound, but shouldn't derail it as long as job gains persist, homes continue to appreciate, and rates rise more gradually going forward. The macroeconomic transition from recovery to sustainable expansion together with our initiatives and improving operational collaboration give us confidence in our business outlook for 2013. Rick Damron, COO: Our performance in the second quarter was not only balanced across categories, but across regions as well with all regions achieving mid-single-digit comps or above. Those regions that struggled from cooler and wetter weather in the first quarter, including most of the East Coast and Midwest, recouped most of those sales in the second quarter. In our North division, we achieved our strongest performance in the upper Midwest, which suffered from droughts last year and experienced a delayed spring this year. Additionally, we estimate that the stores most affected by Superstorm Sandy contributed approximately 30 basis points to our total comps. Housing recovery markets on the West Coast and Florida and healthy markets along the Texas Gulf Coast continue to show high single to double-digit comp improvement. We expect to see continued strength in these markets and further improvement along the Southeast Coast and in the Midwest where the recovery is now taking root. Robert Hull, CFO: With regard to external factors, we estimate that the recovery of lost Q1 sales from the delayed spring aided second quarter comps by approximately 120 basis points. Also lumber inflation and sales related to Superstorm Sandy recovery efforts added roughly 60 basis points and 30 basis points to comps, respectively. Niblock: Certainly, if you look at any of the numbers out there with regard to refinancing or new home sales, housing turnover, those type of things, certainly you're seeing the impact of interest rates starting to show up in some of those numbers. I think, however, the biggest impact that we have seen so far positive impact we think on the business to-date, has been the fact that overall from a macro environment, home prices starting to move up and the strong housing turnover job gains that we've seen to-date, we think that that's contributed to what we've seen in the business. Interest rates, I think over the past since May or something, are up about 110 basis points or so. So, it is starting to have an impact on refinancings, those type of things. CLICK HERE TO RETURN TO INDEX
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Dollar Tree Inc.

[DLTR] Earnings Call 8/22/13 Bob Sasser, CEO: In our current economy with customers facing stubbornly high une mployment, unpredictable fuel prices and higher taxes people continue to look to Dollar Tree as a destination for a balanced mix of high value consumer products and a terrific assortment of fun, high value and high margin variety merchandise. Sales increases in the second quarter came from growth in both basic and variety categories with our discretionary categories growing at a faster pace. Performance in the second quarter was relatively consistent across the country and all zones achieved positive comp store sales. The highest comps were in the Midwest followed closely by the Southeast. Our comps were positive every month with our strongest performance in June. Sasser: back-to-school season... The comps were consistent throughout the quarter. June was the highest comp in the quarter. I believe our variety business comped consistently higher than the consumer business throughout the quarter, that's a result of plans. Stephen, we are a variety store, we've always been a variety store. We serve a slightly higher demographic than others in our sector, $40,000 and up versus $40,000 and down. So we've always had a discretionary portion to our mix that we aspire to that one of the reasons we're amongst the highest in margins in our sector is because of our variety mix. Sasser: We run a very high level of service, all the way up until the time we bring on a new distribution center. We don't sacrifice service to our stores or in-stock in our stores or any of that, in anticipation of bringing a new DC online. So what that does is, we have DCs running, servicing our stores at a high level and then we bring a new DC online, we bring the costs up on that, but we haven't really brought down the some of the costs in the existing DCs where we're realigning now. So, it's not just bring a new DC out of the ground, it's been the realignment of the entire network, as it now shakes out with different service areas for different DCs. Sasser: We certainly are, in third quarter, against our easiest comparison I hesitate when I say, "Easy," in this environment, but our easiest comparison to last year is in the third quarter. So our expectation is that we're going to continue to grow our top line. We're going to continue to grow our comps. I haven't really looked at I don't have those stacks in front of me right this minute for the rest of the year. But we are excited about our third quarter business and the comparisons are much easier than they've been in some time.
Food & Beverages

McCormick & Co.
[MKC] Earnings Call 6/6/13 Alan Wilson, CEO: Sales performance in the U.S., U.K., France, China and Russia were particularly strong driven by innovation, marketing support for our leading brands and distribution gains. Industrial business sales were about even with the year-ago period. As anticipated, we had lower demand from quick service restaurant customers in several geographic areas. The most notable was China where certain quick service restaurants have reported high double-digit declines in same-store sales. These declines are a result of consumers in China who were avoiding poultry in their diet due to bird flu concerns. We remain cautious and expect this pressure to extend into the third quarter but improve in the fourth quarter. CLICK HERE TO RETURN TO INDEX
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Wilson: We are experiencing lower demand from quick service restaurants. Although we've maintained growth with quick service restaurants in our EMEA region, customer demand has been challenging in the Americas and Asia-Pacific regions. Wilson: Based on our customers' outlook, we expect the situation in China to improve in the fourth quarter of 2013. We're also encouraged by progress in India with a significant new product win with a large restaurant chain. Wilson: While sales of branded food service products had a slow start to the year, we saw improvement in the second quarter. In the Americas, we've expanded our product offerings, which now include new Zatarain's brown rice which reduced sodium. This product line meets nutritional standards in schools and other institutions. Our digital market is expanding as well allowing us to communicate directly with our end users, the chefs. Gordon Stetz, CFO: China was the largest contributor to higher sales this quarter with 11% growth in local currency driven in part by revitalized packaging and expanded advertising. Australia also grew sales largely through new product innovation. Sales in India declined 2%, which was the net effect of significant pricing actions and lower volume and product mix. Wilson: Consumer business has pretty good momentum. Our Industrial business is a little more challenged, and we'd certainly like to be a little better there. But the underlying profit growth is pretty good. Obviously, we'd like to be offsetting these things, but we think about our business for the long term. We're not necessarily managing year-to-year or quarter-to-quarter, and so part of the reason that we're continuing to make investments in our marketing spending is to make sure we maintain that healthy business. We view the challenges in Industrial to be temporary, and so what we don't want to do is overreact to something that we think that is going to turn around. So that's philosophically how we think about it, and what we're trying to do with the updated guidance is just be transparent with the best look that we have at this point. Wilson: The Wuhan business is stronger in the central parts of China. Our core business has been stronger in the coastal region. So what we plan to do is introduce more McCormick products through the central region but also take some of the Wuhan products into the coast.
ConAgra
[CAG] Earnings Call 6/27/13 Gary Rodkin, CEO: We're pleased with the results of our fiscal 2013 fourth quarter, capping off a transformational and successful year for ConAgra Foods. Rodkin: Sales for the Consumer Foods segment were up 7% driven by acquisitions and good organic volume performance. Rodkin: These conversations are really encouraging because it's clear that customers understand the advantages that ConAgra Food scan bring to them. John Gehring, CFO: For the fiscal fourth quarter, we reported net sales of $4.6 billion, up 34%, driven by the addition of Ralcorp, improved volumes in acquisitions in our Consumer Foods segment, and pricing and mix improvements in our Commercial Foods segment. The impact of higher year-over-year wheat prices in our flour milling operations also contributed to sales growth this quarter. Gehring: For fiscal 2014, we expect cost savings of about $230 million in our Consumer Foods business. And CLICK HERE TO RETURN TO INDEX
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we expect a modest increase in our advertising and promotion cost to support our consumer brands and new production introductions. As a reminder, fiscal 2013 was a period of significant reinvestment supported by our margin expansion. So that while we expect the increase in fiscal 2014 to be more modest, our marketing spend in 2014 will reflect continued support of our brands. Gehring: impacting our 2014 Commercial Foods operating profit relates to our Lamb Weston business where we expect about $0.06 to $0.07 per share of headwinds related to the loss of business with a significant foodservice customer. And while we are already shifting that capacity to other customers, we do expect there to be a negative volume and margin impact in fiscal 2014. We do however remain very confident in the longterm top and bottom line prospects for this business. Gehring: I think 2014, we're going to work to stabilize the business, and I think we'll start to see some improvement in the back half of FY 2014. As I commented earlier, I think that 2015 will be a year where we start to see some organic growth in that Ralcorp business. And then from there out to 2018 I would just expect us to see gradual improvement as we will then start to approach that higher growth rate over time. So a kind of stabilized, improve in 2015 and gradual, sequential improvement after that.
Constellation Brands
[STZ] Earnings Call 7/2/13 Robert Sands, CEO: Our beer supplying chain is operating efficiently, as we continue to make and move beer. And we are fully engaged and working collaboratively with all brewery employees, including the operations team in Mexico. Overall, we're off to a good start for the year on all fronts, with results that were generally in line with all of our expectations. During the first quarter, our U.S. wine and spirits business continued to gain marketplace momentum, posting strong consumer takeaway growth of 9% versus category growth of 3% in IRI channels. In terms of consumer takeaway by market channel, Constellation's wine portfolio outperformed the category overall, due to solid growth across every channel. Sands: From an operational perspective, we are off to a positive start for the year, gaining market share across our beer, wine, and spirits businesses in IRI channels. I am particularly pleased that we have closed the beer deal and that a smooth transition is underway at our new brewery in Mexico. Robert Ryder, CFO: Our results on the East Coast and in the Midwest were not very good, because the weather for the spring has actually been very wet and very cold and that's overlapping the previous year where the weather was actually beyond ideal. So the whole beer industry had a very good first quarter last year. This year, we're all kind of suffering. We're not unique in that, but in general we're doing better than most. And we're hoping for better weather as we come in to the peak summer season, which is right now.
Coca-Cola
[KO] Earnings Call 7/16/13 Ahmet Muhtar Kent, CEO: Our second quarter volume performance came in below our expectations. There was a confluence of factors that effectively led to unusually weak second quarter volume results. We continued to see [ph] growing elasticity (2:30) in Europe, slowing economic conditions across markets, like Asia and Latin America, and social unrest in Southeast Europe, Middle East, and Brazil. On top of this, we were faced with unusually widespread wet and cold weather conditions across multiple regions, including North America, across Northern Europe and India, all of which impacted the entire industry. Consequently, we grew CLICK HERE TO RETURN TO INDEX
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global volume 1% in the second quarter, leading to year-to-date volume growth of 3%. Kent: The fact that we have outperformed the industry in this most recent quarter reinforces our belief that we are navigating these circumstances in a way that further strengthens our position of leadership within this extremely vibrant and resilient beverage industry. Kent: In Mexico, weaker job creation and higher inflation impacted disposable incomes resulting in reduced retail sales. These macro factors led to low single-digit volume growth in Mexico, while volume results in Brazil were even. Given slower growth rates in personal consumption across the region we estimate that year-todate, beverage industry growth rates are currently 1.5 percentage points to 2 percentage points lower than the average of the last four years in Latin America. In the second quarter, we gained volume share in Latin America in nonalcoholic ready-to-drink beverages including both volume share gains in both sparkling and still beverages. Kent: Coca-Cola International, starting with Europe, the weak economy continues to be a key factor affecting our performance in Europe, especially in the southern regions, where unemployment remains high, while consumer confidence and expenditures remain low. We're seeing this continue to play out across most fast moving consumer goods categories, with several of those slowing between the first and second quarters. Additionally, historically wet and cold conditions across Europe, including the coldest spring for Germany in 40 years, further dampened already weak consumer sentiment and industry trends, and contributed to volume declining 3% in Germany in the quarter. Kent: Our current European outlook remains cautious for the time being, given ongoing macroeconomic conditions. However, we believe with our commitment to our brands and execution, we should continue to gain share through the remainder of the year. Gary Fayard, CFO: From an operating segment standpoint, our operating income growth this quarter reflected strong profit growth in Latin America and Eurasia & Africa, as well as the continued solid financial performance of the Bottling Investments Group. Operating income in North America and Pacific was even, while Europe experienced a slight decline in profit. Kent: I think overall both from in Europe, United States, India, some other parts, we did have a pretty significant impact from weather. Unusual weather, monsoon coming very early in India as you probably all read. Many thousands missing in flooding, worst flooding since the tsunami back 10 years ago; so, and then Europe, also Central Europe, Germany, all the issues around the riverbeds rising and flooding and very heavy, wet conditions. So, we did,, have impact both from a consumer sentiment, both from a mobility sentiment in the United States also and both also from just a pure, in some cases distribution issues that hindered our performance. Kent: Macro conditions, we all have felt it in social issues in the Southeast Europe, the demonstrations across the Middle East and then more recently in Brazil. But we feel confident both in terms of looking at our plans in place, looking at current dynamics that both Brazil will have a better second half, China will have a better second half, Russia will have a better second half and certainly better quarters than this last quarter, where we grew volumes 3% overall, Mexico as well as India. So, while we continue to invest in our brands, our brands are stronger than ever before. We've taken market share, our system is stronger and so all these key markets we believe will perform better in the second half. Steve Cahillane, Executive Vice President: We saw things in Brazil that we hadn't seen before, the economy slowed, there was social unrest. It didn't last very long. Things are slowly getting back to normal and we expect CLICK HERE TO RETURN TO INDEX
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a better performance sequentially as we progress through the year in Brazil and in Mexico. In Latin Center and in South Latin, we've seen very good results high single-digit results continue, so there's a lot still going very well that continue to go well in Latin America, and Brazil and Mexico getting back to what we would expect to see on a normal basis This year, in North America, we had some of the worst weather and you've all seen it. It's been very wet, it's been very cold, it's been historically wet and cold, which obviously impacts our business. On top of that we had the payroll tax effect which started at the beginning of the year, which affects lower income households obviously much more, affects their disposable income, their ability to spend. We saw late payroll tax late payroll or tax refunds coming into the marketplace. Kent: In this time, you have the issues around in Latin America, the two key markets Brazil and Mexico on slowing down and also consumer spending being impacted because of the Brazilian crunch in consumer credit that was taken away from the consumers and generally the consumer spending went away. And then you also had China, the issues in China that was consumer spending is actually much below GDP levels. And that's documented across the macro numbers in China and as well as the weather issues related to India. And also other issues coming together in North America, where it went for the first time in 12 quarters from a plus to a negative, which we don't expect.
PepsiCo
[PEP] Earnings Call 7/24/13 Indra Nooyi, CEO: In Q2, we had our sixth consecutive quarter of mid-single digit organic revenue growth. We generated double-digit core EPS growth and drove significant improvement in cash flow. Our organic revenue growth in the quarter was 4.2%, in line with our mid-single digit long-term target. With particularly strong growth in international beverages, at Frito-Lay North America, Latin American snacks, and snacks and beverages throughout Asia, Middle East, and Africa. We're encouraged by the continued strength in the top line, with our marketplace investments playing an important role in driving solid growth, brand equity, and market share results. Nooyi: Results are especially pleasing in the context of some very difficult market conditions worldwide, particularly tough macro challenging the consumer in developed markets, especially in Western Europe, slowing food and beverage growth in United States; political unrest in several important markets, most notably, Egypt and Turkey, and adverse weather in the U.S. and Western Europe. We are able to continue to deliver in these trying conditions largely due to the strength of our portfolio, both the geographic diversity and product diversity. We have a wonderful balance of developed and emerging markets with the developed markets providing strong cash flow generation and scale-enabled capabilities that we leverage, globally. And our emerging markets provide tremendous potential for top line growth and margin expansion. Nooyi: In other developed markets, despite the tough macros, we saw good performance in some of our larger markets. France grew organic revenue 9% and the U.K. and Germany each posted 3% organic revenue growth. Innovation played a large part of our success with the launch of a naturally sweetened Pepsi NEXT in France and Trop50 in the U.K. We saw very good growth in our developing and emerging markets in Q2, with organic revenue growth of 11%, made up of 11% in snacks and 10% in beverages and this was driven by execution of our strategies to increase household penetration and frequency of consumption. Nooyi: Against this challenging backdrop, we are pleased with the progress we have made with our beverage business. We have stayed focused on re-positioning our business for long-term, sustainable growth. We have made solid progress on brand building and innovation, we've improved marketplace execution, we've stepped CLICK HERE TO RETURN TO INDEX
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up productivity, which coupled with disciplined pricing, drove solid bottom line performance. We are leveraging the strength of the portfolio which is well-balanced between CSDs and non-carbs, and within CSDs, we possess the fastest growing mainstream brand, Mountain Dew. Hugh Johnston, CFO: Overall, we're pleased with how the second quarter and first half came in. For the full year, we are maintaining our constant currency guidance. The world remains a volatile place and we may also choose to incrementally invest in additional, long-term value-building initiatives such as advertising, innovation, and in emerging markets, growth capacity. As you model out the third quarter, we expect foreign exchange translation to have up to a negative 0.5 point impact on third quarter revenue and 1 point impact on EPS based on current market consensus rates. We expect revenue in the third quarter will have an estimated 0.5 percentage point negative impact from structural changes due to the Vietnam refranchising. Division operating profit will be impacted by commodity cost inflation sequentially higher than in the first half, as we expected, incremental investments funded by the Vietnam gain, increased A&M expense and negative forex.
Hershey
[HSY] Earnings Call 7/25/13 John Bilbrey, CEO: We have momentum in the U.S. and key international markets where our net sales growth and retail takeaway is exceeding category growth. In the U.S., with the exception of gum, the chocolate, nonchocolate and mint segments increased at the high end of the historical category growth rate. This is driven by the rational investments we continue to see by most major manufacturers in the form of advertising, innovation, and brand building initiatives. Bilbrey: The U.S. is a growth market for the confectionery category, and we would expect that to be the case going forward. We believe retailers and consumers will continue to value the category given its impulsivity and affordable price points. Bilbrey: Similar to the last few years, the chewing gum category continues to struggle and declined to minus 6.4% in the C-store channel in Q2. Total Hershey C-store performance was strong with Q2 retail takeaway up 10.6%, resulting in a market share gain of 1.9 points.
Kellogg
[K] Earnings Call 8/1/13 John Bryant, CEO: Results met our expectations for both operating profit and earnings in the quarter. Underlying reported operating profit increased by 11% and underlying internal operating profit increased by 3.4%. However, sales growth was slower than we expected. As you've seen in recent public consumption data, some of the larger categories in which we compete, particularly in the U.S. saw lower rates of growth in the quarter. We continue to expect good rates of long-term growth from our categories. But we recognize the short-term weakness that we've seen and have taken a pragmatic approach with guidance. John Bryant: Our sales and marketing execution has been good and the sales growth we've seen has exceeded our expectations. We saw more accretion than we originally anticipated in the first half and we're tracking for the higher end of our synergy range for the full year. This is great brand with untapped potential. We are increasing innovation and investing in capacity and we have visibility into improving margins over time.
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Ronald Dissinger, CFO: We saw some weakness in several segments in the U.S., and trade inventory declined in several regions around the world. But we had solid results in Latin America, Asia Pacific, and in Frozen Foods and Specialty in the U.S. Dissinger: While we expect that our innovation will contribute to results in the second half of the year, we do expect that sales growth will continue to be a bit slower for the balance of the year than we originally anticipated. Dissinger: Due to the slower sales growth we saw in the second quarter, expectations for the remainder of the year and increased currency headwinds, we now expect that reported sales growth will be approximately 5%, 2 points lower than our original guidance. The decline in sales growth is split evenly 1 point from currency and 1 point from internal growth expectations. Bryant: We always knew the second quarter would be a difficult one for the Snacks business. We've got innovations that just launched and more coming. This, in combination with additional support and Pringles now being included in internal sales growth, should help results in the second half. Of course, it will continue to be a difficult environment, and we continue to expect that improvement will take some time. Bryant: The economic environment in Mexico remains difficult as cereal consumption growth remains good. We've had some recent gains in distribution, and we've got some innovation that's working well. And we've got more plans for introduction before the end of the year. We also saw growth in Brazil, the Andean region, Venezuela and Chile. And Pringles also did well in the quarter exceeding our expectations. Bryant: If you look at where some of our weakness has been on the volume side, it's really been back in cereal. So, as we think about cereal and this is true in the U.S. and some of the other large developed markets we have around the world. The good news for cereal is that the breakfast occasion is, in general, growing, particularly here in the U.S. And within breakfast, cereal has the single largest share. And there's reasons to believe that there's long-term growth potential in the cereal category, whether it be aging population, health and wellness or desire for value. However, there has been some short-term pressure over the last couple of years on the cereal category from alternatives at the breakfast occasion. So, how are we addressing that as a company, because this will help us get back to volume growth long term. One is to win with cereal at breakfast. If we take adults, which is the biggest source of opportunity, we're trying we're driving increased adult consumption around cereal really with four levers: innovation, advertising, food and packaging. On innovation, as you can see here in the middle of this year, we have Special K Multi-Grain, Kashi Chia, Raisin Bran Omega-3 coming out.
Kraft Foods Group Inc.

[KRFT] Earnings Call 8/1/13 William Vernon, CEO: Cold cuts remains a pitched battle and the category honestly is soft. The better Deli Fresh segment, you're seeing some consumers trading down to good, and some consumers are trading back to the deli counter as deli suppliers are bringing product news and new flavors and aggressively sampling after a few years of decline. Vernon: If you look back several years, we, the Hillshire's and the Oscar's and the others stole share from the deli counter for years, and the balance of share went 4, 5 points the other way. They are now coming back with some great innovations dealing some of it back. I do think we know a lot about this consumer, and frankly they buy both products, deli and the processed. We see our trends improving, in fact, I've got to give credit to CLICK HERE TO RETURN TO INDEX
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my Oscar Mayer team. You know, for five years, they grew Cold Cuts' share until the middle of last year, five years, and they lost 14% in consumption in fourth quarter versus year ago, on the strength of a very good launch from a formidable foe. We cut that in half in first quarter and we cut that decline in half again in second quarter. So we see trends improving. Vernon: I feel pretty good about our share trends. In fact if you look at t he last 13 weeks and the trends on the year-to-date, we're growing in more than half of our categories for the first time in a long time. It's all about the categories, Andrew, we've got to grow these categories, we are the category. We have to grow volume in them and, when you see what we do in Cheese and Meals and Lunchables, I believe that playbook can work in our other big categories. Vernon: Year-to-date vol mix is up and volume is up and second quarter was down, but year-to-date it's positive, and by the way, I think that's somewhat unique in our business, but something we all have to achieve for our customers in our business in the long-term, growing volume is critical in improving vol mix. Now it's not up at the levels that I'm going to need to deliver growth faster than my markets and key competitors, but it is positive trend up versus other years. Timothy McLevish, CFO: I'm focusing on what we call pricing net of cost. And I think we did a pre tty effective job in the first half of the second quarter on managing on PNOC. Actually, I think first half, we were a little bit underwater, but you don't get that phasing in pacing just precise, but we're a little bit underwater there. I mean, what we saw and I'm not going to forecast the future, we're much better as a said in managing the impact of our volume costs than we are on forecasting them. But you saw in the second quarter, you saw a lot of the meat prices go up, and that's kind of the residual effect from some of the grain runs up in late last year, you saw Barrel Cheese going up a little bit, you saw some of the Grains, the Wheats, and Flours go up, you saw Coffee come down. And in Nuts generally we're on a down trend, and energy was a bit mixed, natural gas on its way down and diesel on its way up. So that's what we saw in the second quarter, but I think the most important thing is, with the exception of a, perhaps being modestly underwater for the quarter. I think we did a pretty good job of managing the pricing net of cost.
Boston Beer
[SAM] Earnings Call 8/1/13 James Koch, Chairman: We believe that our depletions growth is attributable to strong sales execution and support from our wholesalers and retailers as well as our great quality beers and strong brands. William Urich, our CFO: I think again we saw a pickup in trends in the off-premise starting late March. I think it's visible in the IRI data. And it doesn't seem to us to be pricing driven, and sort of feature ad driven based on the data that we see. Of course it could be I think it's reflective of the brand being healthy. And just what we're doing across all of our efforts both our sales force, our marketing and media efforts, our wholesalers' efforts and good execution. And it just seems that we're currently back in a rising tide and floating with it. The craft brewers reported their numbers, and I think we're pleased to have Sam Adams trending closer to those numbers than they have in the past. Urich: I think the biggest impact from us for us is just the sheer variety of what's available to a retailer to put on the shelf or put on tap. And that's very challenging whereas 10 years ago, we may be had, I don't know, maybe a 10% share of SKUs in the craft space. I am going to guess we are down on to 1% or 2% share of SKUs in the craft space now given all this new activity and then you've obviously got the big brewers who appear to CLICK HERE TO RETURN TO INDEX
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be making big pushes to expand their high end. So the biggest impacts for us I think is the fight for shelf space and it tap handles. And that sort of mirror's our belief in our sales force and the quality of that will team and also the number of people we have, and we are committed to that sort of addressing that by having people in the street and supporting accounts, and supporting wholesales as best as we can and hopefully the best in the industry. With regards to the pricing, you are seeing some of those introductions get introduced straight down to craft, which is obviously a concern particularly if the retailers choose to or are advised to place those brands next to ours in order to support them on that price trade down. So you are seeing some of that. Some of that has been successful, some of it hasn't been.
Pilgrims Pride
[PPC] Earnings Call 8/1/13 William Lovette, CEO: We continue to perform better than the average company in Agri Stats, and we continue to be relentless in pursuit of the top third performance. Lovette: In the U.S. market, we saw strengthening in breast meat pricing, with May's average [ph] earner bearing (5:46) above the $2 mark. While wings eased off their historic highs, the average for the quarter remained at $1.42 and contributed to the whole-bird equivalent prices that created historic milestones in profitability. July has seen some increase in cost inputs as well as some easing of the pricing environment for the spot market. Lovette: Our business in Mexico once again delivered outstanding profits despite the region's issues with breeder flock health from avian influenza. We are currently seeing some pricing and economic softening in Mexico consistent with seasonal patterns. We believe we have a sustainable competitive advantage of having significant market share scale in both the U.S. and Mexico, which has enabled Pilgrim's to benefit from growing demand for wholesome chicken by Mexican consumers. As producers in Mexico rebuild production, we are starting to see pricing come back in line. Lovette: Corn and soy production outlook is relatively good due to crop conditions and acres planted. While harvest has just now started, indications are strong that this will be a great crop, and the weather forecast is supportive for trend yields. There has also been an abundant crop production coming out of South America, leading us to believe that we can expect plentiful crops and reduced price volatility in the coming year. There's been reluctance among farmers to sell the old crop, which has created a premium on the market compared to the board. In fact, we're still continuing to source South American corn for our most southern feed mills. We don't see a significant reduction in the feed ingredient prices coming through our cost of goods sold in Q3, but we believe we'll see the full benefit of the potential record crop in fourth quarter feed prices, giving the back half of 2013 the potential to be even better than the first. While industry fundamentals are currently strong, we don't want to overlook the impact of our strategy in making strides that should continue to be reflected in our performance even as market conditions change. Fbio Sandri, CFO: We continue to deliver solid results even facing increasing feed ingredient cost. In Q2, feed ingredients were $75 million higher than the same quarter 2012. The prospects for the new crop are outstanding, and we will bridge the gap between the old crop and the new crop during Q3. Sandri: Mexico had outstanding results for the quarter, despite the challenge posed by the slightly low er volume of production due to the health environment. We continue to support the operations in Mexico with hatching eggs from our operation to help offset the breeder loss. As the Mexican industry resumes its normal CLICK HERE TO RETURN TO INDEX
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production and as the consequence of the record high prices, we believe that the supply/demand balance in the region will return to more moderate levels. During the quarter, the strengthening in dollar, when compared to the peso, resulted in a $9.7 million exchange rate loss. Lovette: Demand for chicken in Mexico continues to be very robust and very strong. Now there are seasonal patterns in Mexico, just like there is here in the U.S., and typically, during this time of year, we do see prices decline, which we have seen. We believe that when the school-age kids get back into school in Mexico, those seasonal patterns will remain, and we'll see demand go up again and prices go up again in Mexico. So we're encouraged about what's happening in Mexico despite the disease challenges, our biosecurity measures have absolutely worked, and our business model provides us a real advantage of being a large player in that country. Lovette: I think one should be very cautious about taking a large and long position in an inverse market. With that said, we're going to recognize that and take opportunities to cover when we can, but we're staying fairly short now as we enter the end of the harvest, and I think we'll be able to take advantage of falling prices as we get further into harvest. Lovette: I think demand will stay very strong into 2014. With beef and pork supplies being constrained at the same time, and beef and pork prices being historically high, that again gives chicken an advantage in terms of price value. At the same time, we continue to see strong demand coming from export markets as developing economies add consumers into the middle class, Mexico is a great example of that, where chicken demand continues to grow. And if you look at chicken production around the globe, it's going to be long term North and South America that supply that protein for the rest of the globe, and the growth is going to be outside of, particularly, North America. So I think it's both strong U.S. demand and I think that's going to continue into next year on the heels of constrained supply, as well as export demand. We saw a record, last year at 7.3 billion pounds exported. I believe we'll see another record at something 7.5 billion to more than that this year in export sales pounds. And I think all of that adds up to a strong pricing environment going through 2014. Lovette: We're seeing stronger demand building in foodservice. We've shifted our portfolio more to broad line foodservice distributor business and not as much in the chain account business, and we'll continue to do that. But I believe that we'll continue to see a stronger pricing environment coming in in foodservice. And our strategy is going to remain the same, that we're going to share the pricing risk in that business. And I look for our demand to grow in the markets that we participate in foodservice.
Tyson Foods
[TSN] Earnings Call 8/5/13 Donald Smith, CEO: Q3 was a great quarter for us with earnings of $0.69 a share. It was our second -best ever quarter for EPS, along with record sales of $8.7 billion. The Chicken segment had record earnings, and both Chicken and Beef segments had their highest sales of any quarter. Prepared Foods had its highest Q3 sales. We continue to see macroeconomic indicators pointing to a steady but modest recovery. We aren't relying on a better economy to grow our business, but I think Tyson Foods is uniquely positioned to capitalize on those opportunities as they occur. Smith: In foodservice, restaurant traffic has being rebounding in recent months after a slow start to the year. Chains are holding their own, while independent operators continue to struggle. For 2014, we're expecting foodservice growth to be flat to up maybe 1%, which means innovation and service will continue to be key to our growth. QSR is expected to lead foodservice growth again next year, and we have a very strong share of CLICK HERE TO RETURN TO INDEX
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the QSR category and expect good volume around promotional activity. Smith: Sales of high-carb foods are declining, which may be part of consumers' move towards healthier food products that we're seeing. Tyson has been out front in the health and wellness trend for several years by providing nutritionally responsible choices for consumers. We've been working towards cleaner labels and sodium reduction, sometimes by as much as 30%, while still making food that tastes great. This is evidenced by a double-digit growth in our retail grilled and ready line and solid growth with other better-for-you innovations as well. Foodservice customers are coming to us to help them improve the nutritionals on their products. This is especially true of the products made for schools as new dietary guidelines with calorie and sodium limits have gone into effect. As we enter this back-to-school season, practically our entire product line has been reformulated to meet the new standards, which I think is a testament to the strength of our R&D team and the innovation resources of the Discovery Center. Smith: Strong results by Tyson de Mexico and Tyson do Brasil more than compensated for the losses in our China operations exacerbated by the avian influenza outbreak. Demand has begun improving since the AI outbreak slowed, and experience tells us that it will return to previous levels within about three months after the end of the event. James Lochner, COO: Consumer demand for chicken is expected to remain strong, driven by foodservice promotions along with the value of chicken relative to beef. Meanwhile, analysts predict chicken production to be up 2% to 3% next year. We plan to continue our buy versus grow strategy for chicken, meaning we won't over producer our demand and we'll buy meat on the open market when it's cheaper than we can produce it. We'll then turn that meat into higher-margin, value-added products for our retail and foodservice customers. Lochner: Our Pork results were down slightly as we adjusted our volumes to our supply and positioned our sales accordingly. Domestic availability of pork was up, predominantly from an estimated 6% decline in exports year-over-year. We focused our attention on mix, yields and position in the marketplace for pricing. Looking into 2014, we assumed the industry hog supplies will be flat to this year and sufficient for our needs. And we expect another solid performance from our Pork segment next year Beef demand was good despite higher pricing. Although the first half of third quarter was more difficult, our performance began to rebound in May due to our improved execution, which included product mix and yield. Smith: By segment, Chicken's having a good year this year. We've got some tailwinds from the environment we're operating in. But we will continue to grow our value-added there. And as that and as our sales increase there, that will improve our earnings with a what I'd call a relatively modest supply growth, particularly in the first half of FY 2014. Solid demand and Chicken's relative low pricing compared to the other proteins should be a very, very good year for Chicken. By the way, probably layer on top of that international improvements as well. So if you look at Beef and Pork, the current supplies we set up next year to be as good as this year, and maybe even a little bit better. Dennis Leatherby, CFO: In terms of where the sales growth was coming from, it's coming principally from two areas, and that's Chicken and Prepared Foods, and that's a function of the value-added sales growth kicking in and international sales growth kicking in. Smith: I think it's important to bear in mind that as Beef prices, and to some extent Pork, continue to stay high, that really provides a bit of a halo effect around poultry pricing and poultry consumption really. And so we think that next year will be a year that you'll continue to see good, robust demand for chicken. So if we just look at our ability just Tyson's ability -to get our pullet orders filled, really the only way that we can see a CLICK HERE TO RETURN TO INDEX
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meaningful increase in supply is to hold our hens longer. And frankly, we just don't have enough housing to hold our hens much longer than 69 weeks. So we see that for a few more months out in front of us, I don't see that the industry you know, if I don't see that we would have the ability to push it, and that's kind of how we view the outlook. Smith: So not doubt that with the AI issue in Mexico that there was a lot of hatching eggs that went down to Mexico. What we see today is the supply on the Mexican market, particularly in the live markets, but also in the New York dressed, is back up to a level now that would indicate that that supply is maybe not has been, but is well along in being restored. And so the price of a dozen hatching eggs has gone down in the U.S, and then here in the last, I don't know, four to six weeks, you've seen industry sets be up a little bit. But I think their ability to increase is limited. I know our ability to increase is limited to the our inability to hold a hen past 65 weeks because we simply just don't have the housing. Smith: We do expect chicken revenues to increase. And we will be doing that by driving value -added Chicken and our international Chicken business. And so we have every expectation of growing that business and leading it with 6% to 8% growth in our value-added and 12% of 16% growth in our international business. So those are the key drivers. We remain focused on that and that's going to be what drives revenue growth .
Archer-Daniels-Midland
[ADM] Earnings Call 8/6/13 Patricia Woertz, CEO: The team managed well through this period as tight U.S. crop supplies reduced overall volumes. Also our corn results improved significantly amid a volatile ethanol industry condit ion. Juan Luciano, COO: European crushing results improved significantly year-over-year as delays in the arrival of South American meal contributed to stronger margins. In North America tighter crop supplies resulted in weaker soy and softseed crush margins. South American operations recovered from the first quarter and generated strong overall results equivalent to the year-ago quarter. The team in South America continued to manage through logistical challenges, and we saw improved export volumes and margins. In Paraguay, our new soybean processing plant ran at full capacity for the quarter. Luciano: Looking ahead, the impact of last summer's U.S. drought continues as U.S. crop supplies remain tight. At the same time the crops in the field seem to be developing well with 64% of the corn crop rated good to excellent compared to 23% a year ago. With high prices for last year's crop and lower prices for the crops coming this fall, the market is inverted. We have to manage this inverse carefully, so we don't carry on carry high-cost inventory into a low-cost environment. In terms of timing this spring's rain delayed plantings and the recent cool weather will lead to late harvests this fall. Woertz: Ag Services, down on tight U.S. supplies. Oilseeds had strong crush and originati on but weak cocoa results. Corn was up with volatile ethanol conditions. And we have to carefully manage the inverse as we look toward a later harvest. And very good ahead-of-schedule progress on the 3Cs. Craig Huss, CRO: the *corn+ crop is going to be a little delayed, and I think that the main reason for that is this crop is so healthy. And it's 64% good to excellent. I think we'll have we will have bigger crops. They may be a couple weeks later. But we are recharging the process. Our storage should be full, and it should help us going forward. As far as the farmer selling, he probably will be a reluctant seller at some point, but for example with a 14 billion bushels, ballpark, corn crop, there's going to be there will be plenty to move.
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Luciano: Listen the market today provides an incentive for people to blend ethanol. And I would argue that E85, for those people that are pricing it correctly because we have seen some of the volumes for these distributors if you will tripled. So there is an opportunity there. There is elasticity and with demand will come if this ethanol is properly priced and that passed to the consumer. But it's also E15 available in several countries, in several states. And we have counted already 10 states in which all the regulations have been are in place for this to be implemented. So we believe that people have options to blend more. And so we believe that the RIN prices is a reaction to their behavior. If they could price ethanol more effectively that will increase demand, and they don't need to resort to RIN. So that's my position. Luciano: we are very optimistic about the ethanol future for 2014 and 2015. Woertz: Given that the U.S. is likely to produce a record crop we think conditions are definitely unfolding in a way that would produce some very good conditions for us. But I would add even more importantly it's the work that we've undertaken as well with the progress on cash and costs and capital as well as acquisitions and/or investments in a higher-return area that position us for thinking very well about the opportunities in 2014 of potentially a very, very good environment. And very good work that when that environment hits can position us for higher returns. Luciano: I think that we are optimistic about ethanol margins for 2014 and 2015. And certainly a larger corn crop will or crops in general will provide Ag Services an opportunity to utilize all their asset footprint that we have in North America more fully. So I think the opportunity is there for potentially big results. Luciano: We think that potentially the U.S. could go a little bit lower in terms of exports in the future, because there are other people that are growing their corn acreage. But we look at this in the sense of through the value chain. There are so many ways in which we can make money. And we look at this from an Ag Services perspective providing different services through the chain and we feel very comfortable about that. Demand continues to be very strong around the world. If you look at, for example, the imports of China, how they are rising through the different commodities. So we do believe that our role in moving crops and handling crops around the world will benefit significantly with the largest crop around the world. Even our international merchandisers would profit from that as we have invested, as you know, in many, many units around the world. So we feel very good about the potential impact of large crops everywhere in our business. Luciano: Europe margins were very good when compared to last year. Obviously some of the delays in South American export, it had provided some opportunity for better margins in soybean in Europe. And biodiesel with less imports and tighter oil inventories was also provided some good margin environment for rapeseed in Europe. North America so obviously some pressure. And they will see pressure in the next quarter as we're dealing with a tight crop situation and the inverse that we mentione d before. Luciano: We've seen liquid sweeteners volumes that were in line with our expectations, probably slightly lower than last year. But the volumes to Mexico continue strong for us. So all-in-all we reported a very solid quarter and we saw solid demand. Luciano: Going forward in Q3 I see we expect volumes probably in line with last year and some down seasonality on Mexico. But normal year-to-year seasonality. Luciano: Q3 presents a lot of challenges for us. Think about we're still dealing with a big inverse that we need to deal through. Yes we're going to have a big crop. But in the places where we are located, which is in the Corn Belt, the harvest will probably happen late September, beginning of October, so which is more Q4tilted. CLICK HERE TO RETURN TO INDEX
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Luciano: On sweeteners, you know sweeteners have been consumption has been declining in the U.S. So we've been doing, I think, a good job of balancing capacity and demand with the exports. And we think the situation will be stable going into next year. A lot depends on this relationship between corn and sugar. And we believe that with lower corn prices, we will have opportunities, to increase exports and increase conversions and increase inclusion of corn products in all these applications. So we feel good about it. Luciano: So the consumer is very hungry for a reduction in gasoline prices. And when they see the opportunity, they take advantage of that. And with the cheaper corn going forward or a more competitivepriced corn going forward, this will present to me a huge opportunity for people to introduce either E85 or E15 more into the usage of the day-to-day American. So we see it with optimism.
Molson Coors
[TAP] Earnings Call 8/6/13 Peter Swinburn, CEO: In the second quarter, Molson Coors delivered double-digit underlying earnings growth and more than 165% growth on the U.S. GAAP basis. This underlying income growth was driven by earnings accretion from the Central European acquisition that we completed during June last year along with improved financial performance in our Europe and International businesses and lower quarterly tax rate. Swinburn: Regionally; in the U.S., we reported solid pricing and strong above-premium sales growth at MillerCoors in the second quarter, despite difficult trading conditions. Our strategy to evolve our portfolio to the fast-growing and higher-margin areas of the business is working, as shown by the successful launch of Redd's Apple Ale and the nationwide expansion of Leinenkugel's Summer Shandy. Due to these initiatives, as well as the introduction of Third Shift Amber Lager and continued growth of Blue Moon Belgian White, we have grown our above-premium brand volumes to more than 9% of our portfolio. While we continued to gain share in Premium Lights in the quarter according to Nielsen data, we are working to restore volume growth. Swinburn: In Canada, volumes in the quarter were impacted by unfavorable weather conditions across key regions this year, along with cycling the national launch of Coors Light Iced T a year ago, these challenges were partially offset by the introductions of Molson Canadian Wheat, Rickard's Shandy and Molson Canadian Cider. In Europe, against a backdrop of weak demand and poor weather, we grew share led by strong performances in the UK, Bulgaria, and Croatia. Encouragingly, our share performance in Romania also turned positive in the quarter. In addition, we maintained our share in the Czech Republic. Swinburn: Although consumer demand continues to be soft, we continue to see opportunities for ongoing cost reductions and we are generating cash, paying down debt and focusing the business on profit after capital charge. Swinburn: In the U.S., our net revenue per hectoliter growth remains solid, but volume has b een challenged. We will continue to put emphasis on growing the above-premium part of our portfolio, while addressing the premium light volume declines. In respect to above-premium, we are pleased with the contribution from Redd's Apple Ale on top of that achieved by Leinenkugel's Summer Shandy and Blue Moon. We plan to introduce Redd's Strawberry Ale in the fall. In Canada, the second quarter results benefited from lower marketing and sales spending, which we expect to reverse in the second half. Molson Canadian has performed well on the back of the very well received "Canadian Passport" creative, and we have some work to do on Coors Light. Meanwhile in above-premium, we are expanding the reach of Six Pints and continue to see growth from the Rickard's brand family. In Europe, despite expected industry softness, we will be increasing CLICK HERE TO RETURN TO INDEX
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our MG&A spending against a strong brand and innovation program. Carling Cider in the UK is now benefiting from heavy rate marketing support, Carling Zest is growing strongly, and Carling Coolers are being tested via an exclusive launch in Asda-Walmart, building on the success of beer mixes in Central Europe. Dave Dunnewald, Molson Coors VP of Investor Relations: The U.S. is still by far the largest market for Coors Light. It's the second largest beer and the second largest beer market in the world. It's the largest beer in Canada, but that's a much smaller market in total volume. Population of Canada is only about one-tenth of the U.S. So Coors Light, while a very big brand in Canada, is not as the total volume there is not as big as in the U.S. And then in the UK, I would say or in Europe, more broadly, but specifically primarily in the UK, Coors Light is growing very quickly off of a very small base.
Beam Inc.
[BEAM] Earnings Call 8/8/13 Matthew Shattock, CEO: We're pleased that in the second quarter, Beam continues to deliver in line with our targets. At the top-line in the quarter, we sustained our momentum and continue to achieve our goals to outperform our global market. Comparable net sales grew 5% in Q2, which reflects strong continued underlying performance versus the market. Shattock: our strong growth in bourbon has helped us more than offset challenges to b rands in certain other categories, including softness in the U.S. ready-to-serve segment, and more moderate growth in emerging markets. Shattock: So far this year, we've gained market share in somewhat softer emerging markets like Russia and Brazil, as well as in Mexico where our enhanced partnership with La Madrilea has brought sharper focus to our brands, and substantially improved performance. We also continue to develop our presence in China, and reposition our business in India, both very attractive long-term growth opportunities. Shattock: In the U.S., the market growth rate appeared to be temporarily dipped in the quarter due to largely soft conditions in the ready-to-serve cocktails category, which is exacerbated by unseasonable weather. And as others have reported, we continue to see economies in emerging markets grow at more moderate rates, particularly impacting the cognac and scotch categories. Even so these factors don't change our outlook going forward, and we see stable market growth for the balance of the year. For the second half, we expect our global market will grow approximately 3% with the U.S. in the range of 3% to 4%, both consistent with our long-term view. Our view of the market is underpinned by continued strong industry fundamentals, which includes sustained U.S. share gains for spirits versus beer, continued premiumization, increasing global appeal of bourbon, strong consumer interest in innovation and the resilience of spirits in uneven economic conditions. Entering the back half of 2013, we expect to continue outperforming our global market at the topline to grow profits faster than sales and to deliver full year growth and EPS before charges and gains in line with both our 2013 target and our long-term goal. Robert Probst, CFO: Gross margins for the quarter were slightly higher as our savings initiatives delivered ahead of our expectations and muted the impact of inflation more than anticipated. Probst: Amidst our compliance review in India, we're encouraged by the progress we've made to put our local business in a position to capitalize on the long-term promise offered by the market. We've made changes in protocols, procedures and personnel. We've largely restored our distribution in the market, and will be ramping up marketing activity in the coming months. CLICK HERE TO RETURN TO INDEX
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Probst: comparable net sales for our Power Brands are up 4% through the first half of the year, in line with our expectations after a very challenging comparison in the first quarter. Probst: Sales of Courvoisier increased double digits in the quarter and were off 10% year-to-date as the brand cycles against 21% growth in the first half of 2012. The brand has continued to do well in the U.K. and Russia, but will still face headwinds related to China in line with other cognac producers as we have seen a reduction in gift giving in that market. Probst: We anticipate the unwind of the U.S. inventory build and the tough comparison in India will tamper our sales growth in Q3. We continue to expect a substantial operating margin benefit from Q1 to unwind in Q2 and Q3 or the impact will now be concentrated in Q3. We expect gross margins in Q3 will dip due to the confluence of several adverse timing items. Most notably, the impact of our raw material-related cost headwinds of approximately $35 million to $40 million, adverse foreign exchange and the mix and leverage impact of de-stocking in North America. Probst: Margin unwind in Q3 also includes a one percentage point adverse impact from the tough comparison in EMEA we called out last year. Due to the phasing of brand building activity, we expect growth in brand investment will run ahead of sales growth in the second half. While timing within the second and third quarters will result in lower year-over-year Q3 EPS, we expect strong growth in Q4. Probst: For the full year, we believe the net effect of the pricing environment is favor able and we now expect a point of benefit from pricing overall in 2013, the same level we achieved last year. This will be driven by a couple of factors. First, given sustained strong global growth of the premium whisky category, we are now implementing selective price increases in premium whisky especially bourbon. We expect this will be partially offset by targeted promotions in white spirits where category growth is a little softer. Net, we see a benefit for the year from pricing and that assumes no material change in white spirits category dynamics. Shattock: Clearly in tequila, we continue to see an excess of supply over demand. That's allowed other players into the market and as that inventory continues to be burnt off, you will see promotional activity taking place. I think that will go for another sort of 12 to 24 months, and then those people like us that have their own integrated supply chain and a secure supply will take advantage. So you will see some more promotional activity in that period. We'll also participate in that as appropriate to look after our share and then going forward over the medium term, we will see that supply demand come into balance, and that will favor those like us with integrated supply chains. In vodka, you are seeing a market that continues to be robust but clearly there is quite a bit of promotion going on in that market, but it continues to be one in three drinks of our important market. I think overall, what this reflects is that the price dynamics in the white spirit market and the competitive dynamics there reflect solid performance in the context of an overall strong spirits category. But clearly the move towards brand spirits and the strength we're seeing particularly in markets like bourbon and premium whiskies is really where all the action is and that's the environment where we've seen more pricing opportunity and we've taken select price increases in our premium whiskies. Shattock: we see a fundamentally steady market, as we analyze the various data points ava ilable to us. As we said in Q1, we saw a global market trending towards 3% value with the U.S. tracking more towards 4% based upon the strong U.S. [ph] candidates (34:09) we're seeing. As we come into the second quarter, we're seeing that market tamper due to a couple of factors. In the U.S., we are seeing a softer ready-to-serve category that's certainly been exacerbated by the weather and it appears that that sort of category softness helped trim the U.S. market growth to low single digits during the second quarter. And if you look at the sort of composition of that market in the second quarter, we saw some volume go from slightly positive to CLICK HERE TO RETURN TO INDEX
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negative and most of that, I think, is probably due to ready-to-serve. At a global level, coming into the year, we saw the emerging markets growing at double digit. We saw that moderating a bit and certainly that trend has continued to the second quarter. So really we see those impacts as being relatively temporary as we cycle through what is a very seasonal ready-to-serve market. And as we go through to the back half of the year we see the fundamentals of the market being pretty much intact in the core drivers that really are the sort of long-term industry fundamentals like premiumization, the share gain from beer and solid growth from innovation continuing and taking us back to a market that we see growing pretty solidly at a 3% level, but at sort of 3% to 4% market growth in the U.S. Probst: The emerging markets we saw softening a bit in terms of the growth rate in the first quarter, that's continued here in the second quarter. Obviously, in the back half of the year, we expect some gradual improvement there but not immediate. In terms of brown, we're certainly seeing that the strength of the brown spirits more broadly and of course we like that. 60% of our portfolio is brown spirits, and within that of course the strength in bourbon is fantastic with our bourbon portfolio as a third of our business. White spirits is still a huge space. So we're not in any way discounting vodka. It's still one in three drinks in the U.S., still plenty of opportunity there. Similarly, we really like tequila. So the mainstay of our portfolio, the dynamics we see in the medium and long-term there. So the dynamics here of a shift towards brown, we think is fantastic, fundamentally the overall dynamics of spirits winning share throughout, we think is benefiting the category overall. Shattock: The predominant driver we see in the dip in the market in the second quarter came from ready-toserve. But relatively speaking, brown spirits grew faster than white and you saw a little bit of a tempering, but I wouldn't say a dramatic change into the underlying growth of the white spirits market. As it pertains to pricing, we certainly see that there is a range of price points across the market in various elasticities. Certainly at the bottom end, it's a more price competitive environment and you've seen us manage our portfolio. We made some selective disposals apart from our portfolio in the year and certainly we managed the revenue there very closely, but that is certainly a more competitive pricing environment in that part of the market. Shattock: I think we continue to see good performance in terms of our ability to match demand with supply. We probably over the last five years, about half of our capital investments has been put into the bourbon portfolio, increasing both distillation and warehousing capacity. We've got the tightness as we said in brands like Maker's and where we can sustain good strong growth there, but we have to sort of balance that with the levers we'd previously mentioned, but I think one of the strengths we have is not just the capacity we've invested in below to the breath of our portfolio. We've got a very, very strong advanced portfolio in bourbon and therefore that allows us to use that portfolio to match the demand and supply. So we have a good supply of bourbon going forward. We anticipate we've been anticipating strong growth for the next several years and we've been investing accordingly. Shattock: It's early days in Latin America, but what's very encouraging is, that we see a very robust whisky market, including whisky in the form of scotch. It's growing well there. We're obviously fortunate to have another key position with Teacher's in that market, and in the long-term, we see very good prospects in Brazil and India, and other high whisky-consumption emerging markets for American Maker's spirit. We think the taste profile, as well as the imagery of bourbon will go very well in the long-term in those markets.
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Dean Foods
[DF] Earnings Call 8/8/13 Gregg Tanner, CEO: results were in line with our forecast and guidance despite a challenging environment. We are making progress in our efforts to reduce costs and drive efficiencies. These efforts offset much of the volume deleveraging associated with the transition of the private label fluid milk volumes we lost in the recent RFP with a large customer that we have discussed on previous earnings calls. Tanner: Overall, weakness in large format retail is offsetting solid growth in food service and small format channels. As a result, our share of the overall U.S. fluid milk sales volume declined approximately 140 basis points from Q1 to 36.4%, while our share on the branded milk category increased slightly. We continue to focus on strengthening our volumes at margin appropriate pricing levels and recent wins will begin positively impacting our volumes in the fourth quarter. However, we continue to expect our volumes to underperform the broader industry through the balance of the year due to the ongoing impact of the lost business. Tanner: Considering category trends in the second quarter and the impact of the lost volume over the rest of the year, we now expect our full year fluid milk volumes to decline in the mid-single digits. Tanner: We continue to view the fundamentals for raw milk in the U.S. market as relatively balanced at these levels for the remainder of the year. We believe solid supply growth, ample inventories and continued modest domestic demand is somewhat offset by the increased global demand for milk powder. Tanner: Overall, Q2 results were consistent with our expectations, despite a challenging environment that included additional category volume softness in large format retail. Our cost and efficiency initiatives are progressing and as we look ahead to 2014 and beyond, we expect to offset volume deleverage through continued reduction of fixed costs. Chris Bellairs, CFO: Starting at the top of the P&L, volumes declined 6% in the quarter. Although, we are making progress in our cost reduction initiatives, including the closure of 8 to 12 plants, the transition of these volumes out of our network resulted in fixed asset deleverage within the quarter, particularly toward the end of the quarter when we experienced the bulk of the volume transition. This drove a year-over-year decline in adjusted gross profit of $61 million or 11%. An $11 million reduction in distribution cost and a $43 million decline in SG&A costs resulted in an operating income decline of $7 million or 10% to $65 million. Tanner: We believe that the momentum behind our cost reduction activities will enable us to deliver solid full year results. This is despite a challenging environment that includes fluid milk category volumes that appear to be a bit softer than we originally anticipated. The dairy commodity environment looks to be a neutral factor in our forecast. Overall for the year, we continue to expect to substantially offset the financial impact of the lower volumes through accelerated cost reduction and productivity, resulting in a low single digit increase in operating income from the pro forma 2012 results. Tanner: We expect the third quarter to be the most challenging of the year. We expect adjusted diluted earnings of $0.05 to $0.08 per share. We expect Q4 to be stronger than the third quarter due to a normal seasonal strength, new business wins entering the system and accumulating benefits of our accelerated cost reduction initiatives. As expected Q2 was challenging. However, the hard work of our team to drive cost productivity delivered overall results largely in line with our forecast. We are delivering on our initiatives and with our decreased interest expense and cost reduction momentum heading into the second half of the year, we anticipate delivering earnings consistent with our initial full year guidance.
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Tanner: I think from an RFP perspective, we're not seeing any incremental activity. I think it's pretty much as we have seen. It is extremely competitive and continues to be, but has been for an extended time. So, we haven't seen any drop-off of that, nor have we necessarily seen it continue to heat up any more than normal. Tanner: I'm guessing that if the corn crop comes in as currently anticipated, you'll see the corn prices continue to decline and our feed prices decline. You look at the overall price of milk in general in the rest of this year, we expect it to be relatively benign. That it's it may go up a little bit at the end of the third quarter and into fourth quarter, but I wouldn't not significantly. So it would probably be 2014 before you would start to see that. And when you look at milk production, I mean it's a supply market right now. Milk production in the first half of the year was up about 0.5%. We're anticipating it'll be up about a full percent at the end of the year. So, production continues to be up, demand's a little bit tepid, so I would expect that you would see that moving into 2014. Bellairs: So, on EBIT per gallon in the third quarter, absolutely right. That is the math; it will be l ower in the third quarter and some of that is normal seasonality, some of it is, WhiteWave and Morningstar previously made the total Dean Foods EBIT per gallon look better because it's a more stable seasonal business. Now with just the Dean Foods business, the fresh dairy business, you will always see a bit more of a depressed EBIT per gallon in the third quarter. But, this year perhaps more than most, because the full amount of that the volume that we lost will transition out in the third quarter. Recall that the way it seasonalized in the second quarter, in April, we had lost very little of the Walmart business and by June we'd lost about 90% of it.
Flowers Foods
[FLO] Earnings Call 8/13/13 Allen Shiver, CEO: In sales and operations, we had good results across all categories in the quarter Shiver: From a customer standpoint, food retailers are well aware of the power of the Wonder brand, which drove good margins for them and also once had the highest household penetration of any brand in the white bread segment. Shiver: One of the questions we often hear is when will we reopen the Hostess bakeries? At this point, we're able to meet consumer demand through our existing bakeries. We're confident that consumer demand will increase as we reintroduce the Hostess bread brands. As we need additional production capacity, we plan to reopen bakeries. Shiver: The markets are very stable from a rate perspective, so we're very pleased with where we landed on our debt. But I think looking ahead, unless something happens dramatically to the interest rate environment, I think you can use that as a good proxy going forward.
Hillshire Brands
[HSH] Earnings Call 8/8/13 Maria Henry, CFO: Our fourth quarter financials, both the top and the bottom line, were cha llenged by some unusual items, but our underlying business continues to make progress, and we were able to end the year with EPS slightly ahead of our updated increased guidance. Henry: Within Foodservice, sales grew in Bakery as we lapped the difficult fourth quarter last year when we were going through the transition of our bakery plant in Tarboro, North Carolina. The Foodservice CLICK HERE TO RETURN TO INDEX
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environment continues to be challenging and beyond the broader industry challenges, desserts in particular have been a tough space. That said, we have an excellent Foodservice team and they continue to execute our strategy to grow through innovation and to take share in targeted spots. We've identified specific channels, product categories and customers where we see solid growth potential. We have strategies to capitalize on the opportunity in each of these areas and we're seeing success. Sean Connolly, CEO: Let's face it, the consumer spends half of their dollars on food away from home. So the market is enormous in terms of food sales away from home and consumers are also incredibly pressed for time. So the convenience channel in particular is a very strategic channel. In that, you've got a lot of our shopper base who are going in there, they're buying food, they're buying beverages and that channel in particular tends to skew toward men and men tend to skew toward protein. So it's an attractive space. The Jimmy Dean equity is a good example, It has very good equity in that space as does Ball Park, as does Hillshire Farm.
SYSCO
[SYY] Earnings Call 8/12/13 William DeLaney, CEO: While we've seen a slow and steady economic recovery, it is clear that the foodservice industry as a whole has not fully participated in that recovery. DeLaney: Consumer confidence is near its highest level since 2008, housing sales and prices have consistently improved this year and unemployment levels are declining. However, a deeper look at the data reviews that consumer confidence remains well off its historic highs, unemployment levels do not fully reflect the number of individuals who would like to work, but have given up and personal income is stagnant. As a result, we believe many consumers have become much more disciplined in their spending habits and this has directly impacted our business particularly our street business with independent foodservice operators. Today's consumer is more actively allocating their disposable income and eating out has been de-prioritized from some consumer's personal budgets. We believe this trend is more cyclical than structural in nature but acknowledge that greater consumer confidence will be required to reverse it. DeLaney: Our industry's being impacted by many developing trends and realities. Growth in fo odservice is projected to remain modest, about 1% to 2% real growth per annum. And our customers are increasingly value focused. As a result, we expect pricing pressures will likely continue and in addition, nontraditional competitors have become more of a factor. And lastly, consumer spending trends in our space are gradually shifting more to fresh, natural and sustainably produced products. We continue to focus on ways to respond to and capitalize on those trends, in our own business as well as in partnership with our customers and suppliers. DeLaney: Consumer spending trends in our space are gradually shifting more to fresh, natural and sustainably produced products. We continue to focus on ways to respond to and capitalize on those trends, in our own business as well as in partnership with our customers and suppliers. One of our most significant challenges continues to be gross margin compression. Several trends are contributing to this challenge. In addition, our shifting customer mix in recent quarters has adversely impacted gross margin as our more value-added local and street customer business has not kept pace with our larger but lower margin multi-unit customer business. This area has management's full attention and we expect to improve our gross margin trends as fiscal 2014 progresses by effectively implementing our category management initiative and gradually improving our street growth performance. Another significant challenge during the year was the unanticipated CLICK HERE TO RETURN TO INDEX
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delay in deploying our SAP technology platform. However, we are now making progress in developing required system enhancements. This work primarily focuses on simplifying certain processes to improve response times and to reduce system loads, which will lead to improve system stability and will also lead to improved ability to scale the system as we go forward. Robert Kreidler, CFO: While we have seen recent positive developments in the overall economy, the recovery continues to be modest. We believe that as a result, consumers have not yet fully recovered from the economic downturn. The foodservice industry is continuing to feel these effects seen in generally low growth and strained traffic patterns. While our financial results reflect these challenges, we are working to improve on those elements of our business that we can control including; enhancing our product and service offering, improving our execution on the gross margin line, managing our costs, increasing our free cash flow, achieving our targeted business transformation benefits, and addressing the requirements of our technology transformation in a prudent manner. The work we are doing will position us to take advantage of market trends, enhance our ability to grow our market share over the long-term, and expand our leadership position in the industry. DeLaney: We expect to see better trends on the top line and the bottom line. We've got our challenges certainly on the gross margin line. We've got a lot of good things going on, we think, in expense initiatives. So, we feel good about the direction. We think we'll begin to turn it here this year. But to Chris' point, we need a little more time deeper into the year to see how we start the year out, get further along on the technology deployment and the CatMan work and we hope to come back with you with a little better perspective here later in the year. DeLaney: The third and fourth quarter, they were more similar than they were different. Things kind of bottomed out in February, I think, in terms of the market from our perspective in the third quarter. Began to trend up a little bit in terms of March and April and we saw a fair amount of softness in June, in terms of restaurant numbers and that kind of thing. So, again, we're talking about a very choppy market here. But, the reality is we only grew our gross profit dollars 2%. Kreidler: Our trends prior to the end of the year were going the wrong direction. Said another way, accounts receivable and inventory were going the wrong direction. We were making up for some, but not all of that with accounts payable efforts. By the time we got to the end of the fourth quarter, we had balanced it out, and I believe working capital was a positive of only about $10 million at the end of the year. So, working capital wasn't a significant driver on a year-over-year basis. And, Meredith, I don't spend a tremendous amount of time looking at the quarters, because there's seasonality in those numbers for working capital from one quarter to the next, but year-over-year it was basically flat.
Bob Evans Farms

[BOBE] Earnings Call 8/20/13 Paul DeSantis, CFO: During the first and second fiscal quarters, we're planning on more remodels this year than last year. However, that tide begins to turn during the third quarter, and by the fourth quarter we'll have significantly less remodels than last year. As a result, we expect to see the remodel sales-related lift begin to accelerate in the third quarter through the fourth quarter, when we'll roll over more closed days last year than this year. DeSantis: Net sales were once again up double digits for the Foods business, but profitability was challenged. CLICK HERE TO RETURN TO INDEX
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There were three contributors to the profit decline year-over-year: Increased sow cost; the timing of trade spending; and incremental SG&A costs, primarily associated with allocation increases from the Mimi's business, and direct and indirect cost associated with supporting the ERP project. DeSantis: During fiscal year 2014, we expect to spend more in the first quarter and less in the second quarter, compared to the pace of spending last year. Overall, spending will be up for the first and second fiscal period, but primarily related to the increased volume. DeSantis: In terms of the seasonality of the business and our expectations, keep in mind that third quarter is the highest seasonality period for the business. So that's when we're running the most volume through our fixed assets. Steven Davis, CEO: We're in a unique position in that we do have a great balance sheet. We do have our transformative investments coming to pretty much a conclusion at the end of this fiscal year. So when we looked at our capital allocation strategy, acquisitions was contemplated in terms of do we have "dry powder."
Brown-Forman
[BF/B] Earnings Call 8/28/13 Donald Berg, CFO: The first quarter is typically our smallest quarter and is usually fairly quiet compared to the quarters straddling the holiday season. However, at times, the first quarter can also be a bit confusing because it is typically when we have taken a lot of price increases in our brands. This was certainly the case a year ago when we reported first quarter results for fiscal 2013. If you remember, we had 10% underlying sales growth due in part to the unusually large retail buy-ins in advance of some healthy price increases, the first pricing we had taken in five years. That was followed by the second quarter's relatively weak underlying sales growth of 6% as inventory levels came back into balance. Berg: Because we saw a smaller retail buy-in this year, we expect to see a stronger second quarter relative to last year's weak comps. And we believe that, after the second quarter, our first half results will be more in line with our full year expectations for high single-digit underlying sales growth. Three things encourage us to believe that we remain on track to deliver this growth outlook. Berg: In developed markets outside of the United States, underlying sales increased by 4%, but grew double digits if you exclude Australia where underlying sales declined by 5% despite some market share gains. While Australia's economy remains under pressure, economic trends in parts of Northern Europe appear to be stabilizing, including the United Kingdom, Germany and France. Each of these countries grew underlying sales by a double-digit rate, although the United Kingdom was helped somewhat by easy comparisons. These are large and growing markets for Brown-Forman's brands. But with relatively low market shares compared to our competitors, we continue to see significant opportunities to grow our brands and have continued to invest in these markets, while many competitors were allocating resources to other markets such as China. Berg: Regarding the seasonality, as we look back to last year's results, buy-in activity was highest during May and June and shipment growth slowed dramatically as we moved into July and August. So it's not surprising that, when look at our monthly sales figures this year, May and June were down given the challenging comparisons. These comparisons turned favorable in July, and we have seen the strong sales growth continue so far through August. We expect the adverse seasonality of the first quarter to reverse itself in the second quarter, resulting in first-half sales growth that should be more in line with our top-line expectations for the CLICK HERE TO RETURN TO INDEX
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year. Berg: We have a strong presence in the U.S. and Europe, markets where we are driving strong rates of growth, and the economic outlook looks better than the current trajectory for many of the emerging markets. And while markets such as Brazil and China appear to be taking a respite from the torrid pace of growth they have enjoyed over the last decade, our exposure to these markets is relatively limited today compared to our competitors. We remain bullish about the long-term prospects for our brands in the emerging markets and are investing in the brand-building activities that will best position us to realize the future growth potential and deliver industry-leading results for our shareholders. Berg: I think when you look at Australia overall, a lot of what you're seeing is around what's happenin g on a macroeconomic basis and the impact that that's having on consumers and consumer spending and alcohol consumption. I think within that, there's a couple of unique characteristics around Australia that we think about. Australia is one of these markets where, by law, they take excise tax increases every six months, basically around the rate of inflation. And because of the different taxing environment on spirits being higher than what they tax beer and wine, they've been doing this for several years, there's really a price disproportionality in that market that really puts spirits at a bit of a disadvantage. And so when you find yourself coming out of some of these recessionary squeezes and what have you, I do think that spirits ends up getting hit a little bit disproportionate to the rest of the alcohol industry. And within spirits, it's not surprising to see bourbon because it's such a it's the largest category in Australia, kind of seeing that hit probably sooner or bigger than others. Paul Varga, CEO: .our shipments so far in the second quarter are up at a double-digit rate suggesting we are off to a strong start to the second quarter.
Sanderson Farms
[SAFM] Earnings Call 8/27/13 Lampkin Butts, COO: Overall, market prices for poultry products were higher during the quarter, when compared to our third quarter last year. The Georgia Dock whole bird price during our third quarter averaged $1.05 per pound compared to the $0.94 per pound average during last year's third quarter. The Georgia Dock price for this week is a record high at $1.65 per pound compares $0.9525 per pound for the same week last year. Butts: While below last year's third quarter, prices for jumbo wings improved during our third fiscal quarter. Jumbo wings averaged $1.28 per pound, down 19.3% from the average of $1.59 during last year's third quarter. Butts: For the first nine months of the year, we sold 2.21 billion pounds of poultry product, compared to 2.16 billion for the same period last year and processed 2.22 billion pounds this year compared to 2.18 billion last year. We expect pounds processed during our fourth fiscal quarter to be approximately 818.1 million pounds, up compared to the same quarter last year by 5.4%. Joe Sanderson, CEO: We have we bought our basis for September, and it's all going to be domestic and the basis is a good bit lower for September than it was for August. And the basis going forward, particularly for meal, soybean meal is a good bit lower than what has been this summer. As our initial indication, we do not
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think we're going to need to source anything particularly corn, there seems to be plenty of corn. And what's happened in the last three or four days are just kind of first, weather scare of the maybe the second weather scare of the year. There was one back in the spring when it was too wet, that subsided and this is the second weather scare of the and it's really affecting soy more than we think the corn is pretty much done. Not totally, but pretty much. We could use one good rain and across the country. And I think everything would be over, but we don't think we'll have to buy anything. We like to say we already own our soy and corn for September. Sanderson: I think margins are going to come from a different kind of you're going to get another benefit because of lower grain cost. You're going to have same high-priced beef and it's going to be a different type cycle, and I think you're going to look at something different for the next six to nine months. I don't know about next summer. Next summer is what I don't know about. But I think for the next six to nine months, you're looking at $5 corn in normal basis instead of $7 corn in half-price basis, or $6.50 corn or whatever. And I don't know about meal yet, but you're looking at a whole huge different cost arena. And if you're looking at high-priced beef, which I think we are, you're still looking at a and then another thing, what are we looking at with the economy? Is the economy going to start picking up and is demand going to start returning? That question hadn't been answered yet either. And so I think this heading into our last holiday next week, and then into November-December period, is a bad time to be making decisions about what you look like. January 1 is the time and the spring and the summer is a lot different in it's a lot different perspective than what we're looking at right now. So I think we have good times ahead. Sanderson: In August last year, corn was $8.50 and soy meal was $5.50, I believe in August, and they started slashing exception. Right now, for the month of August, August is as good as July. People are making huge margins in August, and they don't have any reason to reduce egg sets right now. So I don't know if they're going to what they're going to do for November and December. I know what we did, because but I don't know what the industry is going to do, if they're going to cutback for the holidays. I've been I'm older than most people in the industry, I know what happens at Thanksgiving and Chri stmas. Sanderson: I am still optimistic about the economy for only because I think it's time for the economy to turn not because of the government, not because of the Congress or it's in my lifetime these things don't last quite this long. And we do have an economist that we use and he agree about what's going to happen for different reasons. He says it's going to be led by the housing, and he thinks it will happen in the fourth quarter of this year led by housing and next year will be even better. So he and I are both optimistic for different reasons. And he's an educated economist and I'm my reason is just history. But yes, I'm still optimistic about the economy turning.
Hormel Foods
[HRL] Earnings Call 8/22/13 Jeffrey Ettinger, CEO: The weakness for Refrigerated Foods was clearly the most pronounced in the earlier part of the quarter, ending up prompting us to come out with our guidance adjustment that occurred midquarter. At that stage, we were seeing some continued weakness in processing margins, but the bigger culprit had been the spike in some of the raw material costs, particularly bellies for bacon and trim costs for a number of our products: pepperoni and other items within the portfolio. Now as the quarter went on, the team had an opportunity to, particularly on the bacon side, price against with the new reality of what the cost situation is. Bacon belly costs are still at historically very high levels, but they have moderated some from the CLICK HERE TO RETURN TO INDEX
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peak. And we expect now as you kind of head out of the summer season, they should start to return to more normalized levels. Ettinger: Im really quite encouraged by International. I'm not only, as it had all three quarters solid quarters this year, but this would this will be the third consecutive year of really solid both top-line and bottom-line growth for International. I think our strategy of focusing on the Asia-based markets has proven out well and so we have good solid business performance in Korea and Japan; our partnership with San Miguel in the Philippines; and then the more majority-owned China ventures. China, in particular, we do feel we've now gotten to the point where we have sufficient scale in that business; that now it can generate a solid profit. And we're look the team out there is looking forward to bringing Skippy on board. So that'll be our third plant facility we'll be running in China and we'll kick that business well over $100 million once the Skippy contribution is in there, which we expect to occur in the next fiscal year. Ettinger: Our expectation for Jennie-O's performance is that this year's fourth quarter will have better segment profit results than last year's fourth quarter. Ettinger: In terms of our best read on the consumers are our own products, I guess, and throughout the more challenging economic times of the past few years that's been somewhat mixed. I mean, obviously, in the aggregate, we have enough products that are connecting with enough groups of consumers that we've been able to drive our business forward both on a top-line and bottom-line basis. That's our current picture as well. There were elements of the business, in terms of retail sales, that were a little bit softer this quarter. But I don't put a lot of stock, frankly, in one quarter. I mean, I've seen things go up and down, kind of quarter-toquarter in the past on certain businesses. Overall, I think the portfolio of items that we have, that we offer for sale into the retail channel whether they're through Jennie-O or Grocery Products or the Refrigerated Foods are in a good position to be able to continue to generate growth, both in the fourth quarter and beyond. And then on top of that, obviously, we have foodservice and other commercial-type sales that also are contributing to our overall results.
Housing/Construction
Sherwin-Williams
[SHW] Earnings Call 7/18/13 Christopher Connor, CEO: We often say that our visibility with respect to end market conditions and input cost trends improves significantly in the second quarter, and this year was no exception. This improving visibility over the past few months has revealed the mixed bag of stable to declining raw material costs, continued strength in the domestic residential market, stagnant nonresidential and industrial activity, all against a backdrop of continued global economic malaise. We've felt the effects, both positive and negative, of these disparate market conditions across different geographies and customer segments. I would say, however, that I'm generally pleased with our progress in most aspects of the business, although the second quarter had its normal share of ups and downs. Connor: June 24, we announced an extension of the original purchase agreement out to th e end of August. Last evening I spoke with the CEO of Comex, and he confirmed their equal resolve to pursue all avenues available to secure a confirmation of this transaction. We are clearly disappointed by this decision, but remain resolute in our determination to address their objectives and proceed with the transaction.
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Connor: Residential market demand in both new build and repaint remains very strong and even in the month of June. Most of the nonresidential markets, while positive, continue to lag the strength of residential. Protective and marine, for example, a strong category throughout 2012, has softened thus far in 2013. Connor: Global Finishes Group made solid progress in the quarter, despite the challenging conditions in most geographies outside of North America. Revenue growth in the quarter was aided by an acquisition completed in the fourth quarter last year, but the earnings improvement in the quarter came entirely from the core business. Flow through on organic revenue growth in the quarter was nearly 65%, with notable improvement in both gross margin and SG&A. Although we're not satisfied with the current pace of revenue growth in this segment, as market conditions improve at home and abroad, Global Finishes Group margins should continue to expand. Connor: Consumer segment continues to feel the effects of lost paint businesses at several retail customers, although they've worked hard to mitigate the impact of the lost volume on segment profit. Perhaps the greatest disappointment in our quarter was the $11.8 million charge to our Latin American Coatings Group. The charge is related to our handling of import duties on products brought into Brazil during the years 2006 through 2008. Although we believe our handling of import duties was consistent with the large number of multinationals doing business in Brazil, we elected to accept a voluntary amnesty program offered by the government to resolve this issue rather than incur significant legal expenses to contest it in court. In 2009, we changed our import duty process. However, the years subsequent to 2008 remain open to audit. Connor: On the raw material front, it's pretty apparent that the major chloride TiO2 producers were unsuccessful in implementing the price increases announced in the first quarter of 2013 to be effective early in the second quarter. Connor: The raw material environment certainly is looking better, but we've also just taken an 8% hit relative to this Brazilian tax. So holding the guidance level, we think indicates our confidence in the strength of the second half. Connor: There was a lot of noise in the market relative to other impacts to the demand curve there. We expect to have weather issues in various parts of the geography at all quarters frankly. And so the health and robustness of the residential markets, both new and repaint, are really the core thing that we're looking at and providing confidence on and we expect that over a cycle, weather will not be that big of an impact. Robert Wells, Senior Vice President: there are certain categories of nonresidential that have been real slow to start and that's not unexpected. Retail was severely overbuilt during the last run up. We're seeing solid construction activity in multifamily housing. We're seeing a pickup in office. Some of the institutional categories, specifically schools and government buildings, have been slow to start. So it's choppy across sub categories of the nonresidential market, but I think most of the nonresidential market is starting to pick up as expected. As a reminder, we do expect positive overall nonresidential volume this year in terms of square footage put in place. Connor: I think there has been some noise surrounding Brazil's overall economic environment. We've had some segments that have been a little bit harder hit. Don't forget that one of the things that Brazil has in its future is hosting this World Cup and the Olympics and the construction and build-out of the required stadiums, airport expansions, housing, all areas that would impact our business, so. That's a little bit behind schedule, but some of our strength is relative to the work we've seen happening in that space so far. Connor: We weren't sure whether propylene would remain stable. It appears to be holding pretty steady CLICK HERE TO RETURN TO INDEX
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despite the run up in crude oil. So I would say that, there's a lot more clarity now than there was three months ago. I wouldn't characterize our, on the total raw material basket, outlook for the industry as far better today than it was three months ago; it's maybe marginally better.
United Rentals
[URI] Earnings Call 7/17/13 Michael Kneeland, CEO: Right now the construction markets are still very soft, compared to the pre -recession levels, but our margins are extremely strong. And that's a powerful tailwind to take into the recovery. Kneeland: Right now the pace of the recovery is still lukewarm, although the overall trend is improving. Seasonally adjusted private non-residential construction has increased slightly year-over-year every month, except May. And our customer surveys show that our key accounts remained bullish about business conditions. In fact, our most recent surveys show that the number of customers expecting a decline is at the lowest level we've had on record and the demand for equipment is growing. By the way, as of today, our time utilization is at 70.5%, which is one month earlier than we saw last year. Demand clearly drove our second quarter results In other words, we're exactly where we want to be in the recovery with higher rates, volume, and utilization on our larger fleet. Kneeland: Western Canada is tied to the oil and gas sector and the Southeast is benefiting from a rebound in the macroeconomy in residential, particularly in the state of Florida. Although we see landscape is still uneven, our scale gives us tremendous advantage and our footprint is one reason why we're performing at record levels. Matt Flannery, COO: We actually are seeing the competition be pretty responsible. We're comfortable that the whole industry realizes that this is important for us all. You may have some one-offs in an individual market, but I'd say all the public companies specifically are doing a great job of rate discipline and we're seeing the benefit of the demand as well, and we know what the headwind we have to meet our full-year rate number. But historically, we've achieved what we need to achieve to get to our guidance and we have a laser focus on. Flannery: So the demand environment is very strong. Time utilization is a point higher than it was last year. We reached the 70% threshold at least 30 days earlier than we did last year. And the sequential rate improvement, we're very aware of the sequential rate that we need throughout the balance of the year to reach our target, and it has been achieved. And if you look the third quarter over the last few years is our largest sequential improvement. And we know it's going to take more focus than it has because of the slower start and we're putting that appropriate focus, but it is achievable or we wouldn't have reaffirmed that guidance.
A.O. Smith
[AOS] Earnings Call 7/24/13 Ajita Rajendra, CEO: We continue to see the benefits in our performance from the housing recovery in the U.S. and our expanding consumer business in China. Rajendra: We expect the sales growth of A. O. Smith branded products in China will be approximately 18% in 2013, largely driven by products with new features and benefits that provide incremental value to our
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customers. We also have seen a positive impact in sales coming from online purchases, and we expect online sales to more than double in 2013 from $5 million last year. You can infer from our 18% revenue growth assumption for the year that we expect our growth in China will slow to low double-digits in the second half of the year. We believe that tighter housing regulations implemented earlier this year will have the government's desired effect and slow new home occupancy. And we also have a difficult year-over-year comparison in the fourth quarter due to record fourth quarter sales in 2012. Rajendra: We are cautiously optimistic about the developing recovery in the U.S. housing and the overall economy in the U.S. We expect residential water heater volumes in the U.S. to be 400,000 units higher than last year based on an increase in housing completions as well as in replacement units. Even though the industry experienced strong commercial volumes in the first half of 2013 which we believe was partially due to a pre-buy related to a Northern California regulatory change, we expect commercial volumes to be up about 4% for the full year. John Kita, CFO: Obviously, recent housing starts weren't great, interest rates up. So, I mean, we're taking a relatively cautious view. I think last year's second half was about $0.82 or $0.83, and right now, our midpoint would be about $0.87. There's some potential headwinds we're just stepping back and taking a look at. But obviously, we've just had a great first half of the year.
Armstrong World
[AWI] Earnings Call 7/29/13 Matthew Espe, CEO: This past quarter marked the first year-on-year positive volume story for Armstrong since the second quarter of 2010. While 2010 growth was driven by emerging markets, in this past quarter, we experienced volume growth across all geographies. We also experienced volume growth in all three of our North American businesses for the first time since the first quarter of 2006. Signs of a modest recovery in the U.S. commercial markets are starting to appear. Espe: Sales were up in North America, primarily driven by homebuilder demand for wood flooring, but we also saw improvements in commercial ceilings and flooring. European sales were up in the quarter though the Ceilings business did benefit from a relatively easy year-on-year comparison. Pacific Rim sales were up despite continued weakness in Australia. And we were pleased with our sales performance in ABP Americas, but we missed our expectations in our businesses in Europe. Espe: The wood business remained a challenge for us in the second quarter The delay in the wood recovery is disappointing, but as I visited the plants in July, and as I've reviewed recent price and lumber cost trends, I'm confident we've taken the necessary actions and are on top of the issues. Wood profitability will build momentum in the third quarter, and we anticipate being ahead of last year by the fourth quarter. Now in the second quarter, the wood business continued to see strong demand from home builders and a modest uptick in consumer buying. Sales of $138 million were up $13 million from 2012 and when adjusted for the Patriot divestiture were up over $24 million. Despite our lumber procurement and productivity challenges, wood shipments were up in the high teens. Price was higher but we're still chasing lumber inflation and Tom Mangas will provide more details on lumber in a few moments. Espe: We experienced strength in commercial and residential vinyl products in the Americas, particularly luxury vinyl tile, but the laminate category faced tough year-on-year comparisons in the home center channel. European sales were up slightly driven by price gains, while volume and mix were flat. Within Europe, the CLICK HERE TO RETURN TO INDEX
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markets were a mixed bag with strength in Central and Eastern Europe, but continued weakness in Southern Europe, the Benelux, and Scandinavia. Pacific Rim sales were down as Australia commercial declines persisted in the second quarter, but the trend was better than the first quarter. And as expected, profitability in the Resilient segment was down versus last year. Espe: The Ceilings business experienced higher sales and profitability in the second quarter with all geographies growing sales. The sales gains were primarily volume driven, but mix and price also contributed. Much of the quarterly improvement was driven by the U.S. commercial sector, which saw solid improvements in volume, price and mix. Europe was up with strength in the UK, and the Pacific Rim was up despite continued weakness in Australia. Ceilings profitability was up in the quarter, driven by sales gains as well as manufacturing productivity, which overcame the cost headwinds associated with our new Ceilings plant in China and the plant construction project in Russia. Thomas Mangas, CFO: Tax expense was slightly higher despite earnings being down year-on-year, primarily due to greater unbenefited foreign losses in 2013. This year-on-year increase in foreign losses is largely a result of the expenses in China and Russia associated with plant construction and start-up costs. Mangas: Volumes were down in the Pacific Rim due to weakness in Australia. Sales in China were also down but this was expected. Mangas: Global sales were driven by gains in volume, price and mix. North America, Ceilings unit volumes increased low single digits. Regionally, we saw particular strength in the Northeast, and we believe a good portion of that strength to be driven by Hurricane Sandy related repair activity. Europe, Middle East, and Africa saw sales increase despite little to no benefit from emerging markets. Mangas: We think this quarter's relative strength is again a base period issue, just now in our favor. Pacific Rim sales were up in the high single digits despite declines in AustraliaThe corporate segment was down driven by the decline in our domestic pension credit, higher foreign pension expenses, outside consulting services, and higher benefit costs. Mangas: Inflation was almost entirely due to lumber. SG&A increase was driven by headwinds in corporate and emerging markets, partially offset by savings in the developed world business units. Mangas: June data from EUROCONSTRUCT, which publishes macroeconomic projections we use in our forecasting processes, points to more negative trends in non-residential construction for both new and renovation activity than their December 2012 projections, which had informed our previous guidance. Expectations for year-on-year change in critical markets like the UK, France Germany, Italy and the Netherlands are all down. This is more than this more than offsets positive revisions to countries like Spain, Belgium and Ireland. We expect China, India and Southeast Asia to grow faster than what was included in our previous guidance, but this is somewhat offset by an even more negative view on Australia. Mangas: We continue to expect annual inflation in the range of $50 million to $60 million, the lion's share of the increase impacting the Wood segment. We continue to target a 2.5% annual improvement in gross manufacturing productivity year-over-year. However, it's clear we will not hit that in 2013 due to the wood manufacturing productivity challenges Espe: While we're disappointed in the timing of the wood recovery and the outlook for further weakness in Europe, we're pleased with the top line strength we saw in North America. We're optimistic that a commercial recovery may finally be starting. And as we outlined in detail, are confident we've taken the necessary steps to
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address our wood segment challenges. Espe: Availability of labor is tough in some of the places just given the nature of where our plants are. And we tend to be in most of the locations of a wood plant, it's the largest single employer in the area, anyway so we've kind of soaked up a lot of the labor pool just to begin with. Again, we've seen very strong improvement in the trends in the labor productivity and the labor stability and we're confident that we'll be back at the appropriate and competitive service levels in the fourth quarter. Espe: We saw in North America we actually saw very solid signs of a modest recovery. So, we're beginning to see some traction in a lot of segments. I would point to the office segment and remodel as holding up relatively well. We're still seeing relative weakness in healthcare and education as it relates of course those are both tied to public spending and we haven't seen state budgets healing measurably yet, I think we are going to have to see employment strengthen somewhat more significantly than we have to see the tax revenue drive into the state budgets and that then finding its way into construction of schools and remodel schools. So, we're still a little cautious there, but we did see relatively strong results in almost every region in the U.S. across a series of market segments. We think that's mostly market related. Mangas: Really the quarter came in largely as we expected in the second quarter, which meant a pretty strong April and May and a pretty soft June. That's kind of how we expected it, that's how it came in. Yeah, that was that's true across both flooring and ceilings in the month of June. But in the month of July, we see it coming back. So I think it's going to continue to be choppy, where we're going to have signals of strength of demand, we're going to have signals of weakness in demand. And so we're just trying to do our best to discern it. But I'd say, June is off to a reasonably good start Espe: Despite some tightening in the financial belt, there doesn't seem to be any softening in the outlook for demand on housing starts. And, we're beginning to see a little strength in resi remodels that will drive some of the Wood business, too. And we'll see that through the big box channel. Espe: In terms of geographic cut, we are expecting continued strength in the North American business. If you look at our Ceilings business we're we're modestly optimistic at a modest commercial recovery. We would continue to describe the environment as choppy but I think we're somewhat we like what we see in the second half. Clearly on the flooring side of the business, we'll see Resilient Flooring kind of maintain a flattish kind of an outlook, but the wood the wood business will continue to be extremely strong. And so as we go into the other side of the supply versus demand issues, I mean, we're going to see our ability to supply that demand go up significantly as these 400 labor and production employees come online and become more productive. Europe is a it's kind of a mixed bag. We got some benefit of some timing in the first half. We expect to see Russia strengthen continued strengthening in the Russian market and it'll help in architectural specialties in the Middle East. In the Pacific Rim, we'll see relative strength in China and India. In both businesses we'll continue to expect an outlook of relatively weak Australia.
Stanley Black & Decker

[SWK] Earnings Call 7/26/13 John Lundgren, CEO: Security globally organic revenue was down 1%, due primarily to the Convergent Security Solutions volume declines in Europe, and that was partially offset by organic growth in both our Commercial Hardware and Access Technologies, or automatic doors business. The bright spots is, orders increased significantly in both North America and Europe as the quarter wound down, volume Niscayah CLICK HERE TO RETURN TO INDEX
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synergies and platform growth investments are expected to lead to margin recovery for Security in the second half. More about that at the end of our brief presentation from Don, when he discusses the outlook. But as a consequence, we are maintaining full-year guidance as our increased organic growth expectations, we expect to offset the significant headwinds that we are facing from foreign exchange in selected markets. James Loree, COO: The story at oil and gas was the recovery of the North American onshore market, which as you know for a year or two has been going in the opposite direction for us, and it really, really turned around. And we had seen that coming. In addition to that, we had strong offshore growth in connection with our organic growth initiative. So surging growth in this segment driven by the growth initiatives and Engineered Fastening performance, all-in-all a great story, which we expect to continue into the second half. Donald Allan, CFO: We believe based on the order trends, and the backlog that's been created during the first half of the year, that the North American business will begin to show more significant growth beyond current levels. However, that will be slightly offset by continued low single-digit decline in Europe, as that European environment continues to be a difficult environment, in particular for our Security business. Loree: I have spent a fair amount of time with the Security team, going through their pricing, their price discipline, going through their backlog and looking at the profitability of the backlog. And I can tell you that it is improving, and the new business largely being driven by the vertical market initiative and from the organic growth initiatives. The vertical market initiative is where we have put together the bundles and the value propositions that Don is referring to. And in fact what we're finding out in a lot of these orders, and the order book in general, from the vertical market initiative is that the gross margins are coming in at somewhat above line average. And that is where we want it to be, because we think the value that we generate in these verticals is very high, and therefore we should get paid for it. Loree: Brazil's consumer market, definitely a little slower than it has been. However, all these markets in Latin America are just exceptionally volatile, and they bounce around from the markets themselves and the demand bounces around from quarter-to-quarter, and then the currencies bounce around from quarter-toquarter so that your pricing and positioning in the market changes dramatically over time. And in addition to that, there are some countries that have major political, structural processes that drive further inefficiencies in the demand profile, and supply and demand. So, it's hard to predict anything in Latin America, other than just go there and execute as hard and as fast as you can. And that's where adding salespeople, bringing new products that are more appropriately designed for the mid-price point segment, and so forth, enable us to achieve growth rates that are definitely above market growth rates. And that's what we're what we've been doing in Latin America for a long time, because that's where we really, this formula that we're now applying to all the emerging markets, has been applied for the last 10 years, by the management team that is now running the overall emerging markets initiative, and that's they're finding actually that some of these other markets around the world are more stable than Latin America, and therefore, sometimes easier to penetrate that perhaps Latin America.
Ryland Group
[RYL] Earnings Call 7/25/13 Larry Nicholson, CEO: We're pleased with our performance for this period and believe that we will maintain growth in our comparative financial and operational results in the final two quarters of the year given the size and the quality of the current backlog. We have been focused on aggressively growing our business for some time now and our results are beginning to show the benefits of the strategy. CLICK HERE TO RETURN TO INDEX
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Nicholson: Home affordability is still great in most markets at today's interest rate levels. The combination of precipitous home price declines during the downturn and the increase in average rental rates made home ownership a very attractive proposition on both on an absolute and a relative basis. This dynamic remains in place even with the uptick in rates. While rates are important part of the home buying business, they are one of many factors. Consumer confidence, wage inflation and employment growth are just as important if not more so in determining the long-term health of our business. In other words, if we had to choose between low interest rate environment with a struggling economy and rising rates with an improving economy, we would take the latter. While the rapid price appreciation we've experienced in some of our markets has been a welcome change, our business runs fast when we see more moderate home price increases over a longer period of time. Interest rates are more normalized at more normalized levels should help smooth our volatility in our business and provide for a longer more sustained housing cycle. Nicholson: We saw a good quality strong traffic throughout the quarter. And while we do expect some seasonality, which maybe we haven't had in the last four or five years, we do expect to see a little bit of that, but we're real happy with the level of traffic which is usually one of the first indicators of what's happening. So, I mean you can read into that a lot of things. I know people think there's pause in the market, potentially that people just are grabbing and hold. I don't see anything today that scares me that the market is going to slowdown and the demand is not there. So I mean, I've been in multiple cities talk with all of our folks and I mean everybody is very positive, very upbeat.
D.R. Horton
[DHI] Earnings Call 7/25/13 William Wheat, CFO: We experienced some moderation in our net sales pace in the back half of the quarter after mortgage rates began to increase sharply. While each individual home buyer responds differently to changes in mortgage rates, we typically see some short-term moderation in buyer activity during periods of mortgage rate volatility as potential buyers adjust to the changing rate environment. We expect that most home buyers who slow their purchase decision while rates are volatile will ultimately still buy a house, since affordability remains strong and interest rates remain at historically low levels. Over the long term, however, we believe the demand for new homes is tied more closely to economic indicators in our individual operating markets, such as job growth, household incomes, household formations and consumer confidence. Additionally, we have been proactively adjusting our rate of sales while raising prices in many individual communities to ensure that our sales pace and backlog align with our construction cycles, which have been lengthened slightly. Donald Tomnitz, CEO: Our land and lot position across the country has never been stronger. Our sales improving 12% in units we were proud of, largely because of the fact that we have done a fantastic job increasing prices and taking advantage of pricing opportunities in a number of our markets. We didn't have that pricing power back a year ago. We do today. And we are focused on profitability in this company. We clearly have been the largest builder for 11 years. We want to continue to be the largest builder. But our bottom line goal is the bottom line. And we have focused on that very well and produced very well. Tomnitz: In Texas, generally speaking, homes continue to be affordable here; one of the most affordable places to live in the country. And there's no real barriers to entry and there's no real constraints to being able to build our units here like there are in a lot of states. So Texas will continue to be one of our leading states in our company, just simply because of the fact there's good demand here and there are very few barriers to CLICK HERE TO RETURN TO INDEX
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entry here and our costs are better here than most markets. Tomnitz: I think everybody is just going to have to get accustomed to the fact that we're in a slightly rising interest rate environment. You're not going to see anybody for a while because people are frankly a little freaked out about, well I missed the low. And why didn't I buy a home when the rates were an eighth of a percent lower? But those people come back and they're ultimately most of them going to buy. Tomnitz: Now clearly we've been in this business long enough to know that when the volume begins to decline too much, then we're going to adjust our incentives and move forward. But right now I have no desire to do that because we're in the heart of the market right now. We've got lack of supply, we've got wonderful pricing power that we hadn't had for five or six years. And it would be a bad decision for us and for our shareholders to go out there and look for excessive volume today, just so we could say, well we had a 25% increase in units versus a 12%, because we're increasing our profits so much more dramatically.
PulteGroup Inc
[PHM] Earnings Call 7/25/13 Richard Dugas, CEO: Recent analyst reports suggest that demand conditions have not changed materially and that house inventory remains extremely tight in most markets. At the risk of stating the obvious, I would remind everyone that while home prices and rates are higher, they started from such a low base that consumers can still find value in buying a new home today. This is especially true given that apartment rental rates continue to march higher in many markets. Dugas: Buyer demand on the East Coast was generally strong from the Northeast down to Florida with notable strength in the greater Boston area as well as Raleigh and Atlanta. The strength in Atlanta is a positive development in that it was one of the last markets to participate in the recovery. Given the volume and profit potential this city can generate, we are excited to see this turnaround turn into a meaningful and sustained up cycle. Further south, demand in Florida remains strong in the quarter as inventory levels are contained and pricing continues to move higher. Demand conditions in our Midwest markets continue to be robust. We are even seeing an upturn in demand in Chicago, which like Atlanta was one of the last markets to participate in the housing recovery. Chicago is another city that can generate substantial pre-tax income. So we are encouraged to see a revival in this key Midwest market. Dugas: The U.S. housing market continues to recover and history would suggest that there's a long way to go before the industry gets back to normal volumes. We will continue to monitor what if any impact the recent uptick in mortgage rates has on demand. Dugas: I guess we'll have to look at supply conditions by community overall. If we continue to see incredibly tight supplies in Northern California, Seattle, some of these other markets, I suspect price is going to continue to go up.
Waste Management
[WM] Earnings Call 7/30/13 David Steiner, CEO: The story of our quarter is that we had very strong results in our traditional solid waste operations. But overall results were muted by unexpected headwinds in our recycling business. Even with these headwinds, our operating EBITDA margins grew by 20 basis points. In our traditional solid waste
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business, we grew income from operations margins by 80 basis points, driven by our yield and cost programs. We expect this margin expansion to continue throughout 2013 and to accelerate into 2014. Steiner: The Chinese government has recently begun to in force limits on moisture and non -conforming materials in imported fiber and plastics. The higher quality expectations have translated into additional labor and maintenance costs to remove residual waste from the recyclable materials that we process for our customers. It has also resulted in fewer volumes to sell because of the higher residual material. That in turn has reduced revenue and increased residual disposal costs. So you can see why the Green Fence has had a negative effect on the results of our recycling operations. Steiner: Yield from our collection and disposal operations was 2.1%. This is the highest yield since the first quarter of 2011. And we've seen yield improve sequentially for four consecutive quarters. If you add in our fuel surcharge and adjust for our South Florida waste-to-energy plants, we achieved yield of 2.6%. We achieved core price of 3.6%, an increase of a 110 basis points from the second quarter of 2012. It's worth noting that the uptick in yield more than offset the reduction in volumes, so our pricing program is working very well. Steiner: We had greater than expected recycling headwinds in the second quarter but we overcame them. Consequently we're on plan through the first two quarters of 2013. We overcame the headwinds through good cost controls and an IRG that is more weighted to price than volume. We expect that our continued execution on yield and cost will help us manage against the $0.08 per share of recycling headwinds that we anticipate for the full year. Steiner: It's not like you're seeing volumes fall off the face of the earth or anything sort like that, but we didn't expect a volume decline in recycling and we don't expect to see our roll-off line bounce back to where we're getting hugely positive volumes because we're just not going to chase low margin business. So for the back half of the year, I think we're looking at volumes similar to what we saw in the second quarter. But, look, basically what you saw in the second quarter is our volumes went down 0.5% and our price went up 0.5%. And if I can get our price up a 0.5% and our volume down 0.5%, I'll take that trade off six ways to Sunday. Steiner: After the recession, frankly there wasn't enough tonnage in the market to fill all the landfills and so we had a choice to make. We could either get deeper into the collection business to help feed our landfill network or we were going to see volumes deteriorate at our landfill and we were going to be at the mercy of other collection companies. So it was a perfect tuck-in acquisition for us, it's a great market. We've been looking at it for a long time. James Fish, CFO: Q3 and Q4 have a bit of headwinds with respect to compensation accruals year -over-year. So while we're up for the first two quarters of the year, we expect that we'll have a little bit of headwinds and that's why I think we're comfortable with saying that we'll be flat year-over-year.
Masco Corp
[MAS] Earnings Call 7/30/13 Tim Wadhams, CEO: We're very pleased with our second quarter 2013 results, certainly one of our strongest quarters since the downturn and a continuation of the momentum which started for us in the fourth quarter of 2012. We continued our trend of delivering growth in the second quarter, with all five of our operating segments increasing top line sales and expanding operating margins.
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Wadhams: Demonstrating the strength of our brands was the strong sales contribution from new product introductions, particularly in our Paint and Plumbing businesses. And despite challenging macroeconomic environments in the Eurozone, our International sales increased in the quarter, reflecting strong performance by our International Plumbing and Window businesses. Wadhams: While we're pleased with our first half performance, we recognize that we still face macroeconomic challenges that we'll have to manage. The recovery in the U.S. is less than robust, and the Eurozone continues in recession. While new home construction in North America continues to increase, the composition of starts, at least at this point, continues with more multi-family homes, which has an impact on our mix. And commodities have, for the most part, temporarily eased. However, the potential for unforeseen volatility continues to exist. Despite these macroeconomic factors, we're committed to delivering strong performance and we've demonstrated our ability to capitalize on the improving market dynamics we are all experiencing. Wadhams: I think some of the fundamentals, when you think about housing turnover, you think abou t the fact that home price appreciation has continued, which is certainly a plus in that regard. Consumer confidence is ticking up a little bit. Job growth is there. So it would feel to me like, assuming that that continues in the second half, we ought to continue to see positive trends in those two bigger ticket items for our business.
Beazer Homes
[BZH] Earnings Call 8/1/13 Allan Merrill, CEO: As expected and reflective of a substantially lower community count, we sold fewer homes this quarter than the same quarter last year, but that was fully contemplated and won't impact our achievement of the profitability objectives. Robert Salomon, CFO: Overall with substantial margin improvement, increased absorptions, and significant cost leverage this quarter, we're extremely pleased with our results. I'm confident that the land investments we are making make today will help us continue to success as we return to profitability. Merrill: Two years ago we were last or nearly last among our peers in absorption rates, gross margins, and G&A leverage. Today this is not the case. In addition to these significant operational strides, our entire industry has enjoyed a recovering housing market this year, highlighted by higher traffic levels, solid demand, and increasing home prices, all of which make sense given the gradual improvements in the labor market, the extreme affordability of homeownership in most markets, and the cumulative increases in rental costs in recent years. But there is an elephant in the room, and that's rising mortgage rates. Ordinarily an uptick in mortgage rates acts as a bit of an accelerant, pulling demand forward as buyers worry about getting hurt by future rate increases. And when the rates started moving in May, that's what we anticipated. But it's turned out a little differently, at least in our communities. While traffic levels are still up year-over-year, our sales pace particularly in June and July has been a little bit softer than we expected. The question that I think is unfortunately nearly impossible to answer is this: are lower traffic conversion rates due to higher rates or higher home prices, or is it some other factor? Well, here's what I think is happening. I think the sheer magnitude of the rate increase was large enough to convince buyers that the much anticipated increase in mortgage rates had finally occurred, reducing the likelihood of another big increase in rates in the near term. As such, instead of pulling forward next quarter's demand, we've seen a little bit of the opposite. A lack of urgency has crept back into some buyers' minds. The change in rates has also likely crowded out some CLICK HERE TO RETURN TO INDEX
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of the upward momentum in home prices. A 100 basis point move costs a buyer about $150 a month for our average home. That's the equivalent of a 10% price increase in terms of monthly payment. Now make no mistake, home ownership is still cheap in relation to incomes and rent in all of our markets. But it isn't as cheap as it was six months ago, and it has moved quickly enough that I think we're experiencing a bit of softness in demand and resistance to further rapid price increases. So has the cycle peaked? Are we about to reenter 2008? I don't think so. Supply is highly constrained, ownership looks awfully good compared to renting, and employment continues to improve. Remember, we're still only delivering about half the number of single family homes than our economy requires for our growing population. So I believe we all need to have a bit of patience. While we may not be in the first inning of the housing recovery, we're still a long ways from the seventh inning stretch. Merrill: In terms of product overall, one of the factors going on in our business and we're often asked, well, are you abandoning the first-time buyer and moving to the move-up buyer? It's a hard thing to say and I alluded at this before. Price is easy for us to point at, and defining who the buyer is is a little bit tougher. It may in fact be a first-time buyer. But if they're 34 and have a 740 FICO and $100,000 in the bank and it's the first home they've bought, it sort of feels like a move-up transaction. They're first-time buyers, but they want granite and 42-inch cabinets and hardwood floor. So I would tell you we are trying to in every market be dialed into the buyer profile that is consistent with our land position as opposed to using some theory of buyers that we want to serve and making customers just accept the value proposition or the product proposition that we have. Merrill: If you looked at the 21 communities that we closed out of in the fourth or in the third quarter, the ASP in those 21 communities was $240,000. The ASP in the 17 communities that we opened was $346,000. Now what's really going on there is a geography shift because you've got California and Mid-Atlantic featuring fairly heavily in that. But there is also an inability for us to replace the very lowest entry-level product lot, and so as we build through those communities, they're not being replaced. So you've got an in-market mix occurring and then a between-market mix occurring, both of which are going to drive our ASPs higher in the coming years.
Scotts Miracle-Gro Co
[SMG] Earnings Call 8/6/13 James Hagedorn, CEO: After a slow start to the season we've had an extremely strong recovery. Entering Q3, consumer purchases of our products were down 28% from 2012 levels. As I sit here today, that deficit is almost entirely erased on a year-to-date basis, POS is now essentially flat. Hagedorn: While our business had a solid year in the DIY and hardware channels, we've not fared as well in the mass-merchant channels, where retailers got off to a slower start. Consumers in that channel also remain less engaged in our category, a trend that began in 2011. So until the broader consumer feels better and starts opening their wallet with more frequency no matter where they shop, then we still believe the unit volume growth will be tough to get in the core business. That's not to say that we can't get growth in the overall business. We believe that low single-digit top line growth is achievable in 2014, but we see it mostly coming from pricing, a slight rebound in our international business, growth in Scotts LawnService and perhaps some modest acquisition in adjacent categories. Barry Sanders, COO: This is a business that had a challenging year in 2012 and caught us off guard when the spring didn't materialize as we had expected. This year, however, even with the late spring, consumers are CLICK HERE TO RETURN TO INDEX
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more engaged in the peak weeks of this year not just in buying our products, but flowers, vegetables and other live goods as well. As is true with the rest of the business, we won't fully recover from the slow start but we're satisfied with the result given the circumstances. The same holds true in our controls portfolio, recall the both Ortho and Roundup had strong performances in 2012, so they did not have an easy comp. And while both are still negative on a full-year basis, both have been coming in strong in recent weeks. Roundup in particular has been doing well, posting increases of nearly 20% since June, as consumers try to fight off the weeds that have been aided by high levels of rainfall in much of the U.S. Ortho has been about half that rate of growth over the past two months due to a need for both selective weed and insect control products. Sanders: I'm not going to blame weather for the shortfall given the strong recovery we've seen in the third quarter. But the fact is that the delay we saw in March was clearly related to weather. When the weather broke, the season took off. Our retailers stayed engaged and helped drive the season and I want to thank them for that commitment. But even with their full engagement, when you look at our year-to-date results by geography, you can see that the late-breaking markets never fully recovered. Personally, I believe our term deserves a better result than we've seen this year because their execution this season was as good as I've seen in many years. Sanders: The broad trends we've seen in the U.S., a slow start followed by consistent momentum, has also been the story in Europe. After a slow start, also delayed by weather, we've seen a strong recovery. The business there should come close to the meeting their original plan for the year and I'm pleased with their overall progress. The European team has fully embraced Project Max and we've started the restructuring efforts we discussed on previous calls. We expect to start seeing the payback from those efforts in the next year. Hagedorn: I think that primarily what we're seeing in Europe is a rebound from just really sort of crap weather in the beginning of the season. I think they've ended up where it's been actually pretty nice and followed the U.S. as far as warm. My forward-view of Europe it's possibly, I guess that it's bottoming up. But, I don't think there here in Marysville there's a lot of view that there's a ton of upside on consumer demand in Europe until, I'm going to say, their economies start to feel a little better and I don't personally see that. And talking to other senior executives of European-based businesses, I'm not sure that they do either. So I think that for us, it was a lot of what happened was weather, but I think that the consumer had just not been a big help in Europe.
Automotive
AutoNation
[AN] Earnings Call 7/18/13 Michael Jackson, CEO: AutoNation is well positioned to capitalize on the continued auto recovery with an optimal brand and market mix and a disciplined cost structure. We continue to drive strong results during the multi-year recovery in auto retail. Over the previous 12 months, AutoNation has acquired 10 franchises and has been awarded four new franchises by manufacturers. For 2012 annual revenue for the 10 acquired franchises together with the anticipated annual revenue of the newly awarded franchises, once the stores are fully operational, is approximately $1 billion. Jackson: During the second quarter, we saw continued strength in the auto industry sales as the auto credit
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environment remained strong and consumers continued to benefit from the outstanding vehicle quality and selection available today. In addition, the Customer Care business will benefit as industry units in operation begin to recover in 2013. We're at the beginning of a broad-based recovery for the economy in auto retail. As we look at the rest of 2013 we believe that the improvement in new vehicle sales will continue and continue to expect new vehicle sales to be in the mid-15 unit level. Michael Maroone, COO: You've got to take your hat off to the domestics who now have introduced products in the Korean, that really give the Japanese imports a run for their money. The fusion is just hot, hot, hot. The Sonata has been very effective. Chevy's retooling the Malibu. And I just think the competition is really intense. The segment is very large Jackson: Obviously, automotive retail very much is in the short end of the yield curve, both for funding our inventory and what the financial institute the instruments the financial institutions use to fund auto loans. So we're not really impacted by 10, 20, 30-year rates. And I expect it to be quite some time until short-term rates begin to move. And if they do move, it's unequivocal that it will be because you have a dramatic you have an economy that's dramatically strengthening. So if you said, what's your choice, a weak recovery with low rates or a strong economy with normalized rates, I would take the second. I think it's a better place to be. So, also for our customers, 100 basis points on an average car loan is $15 a month. So it's manageable. But I think and we did not see rates move in the quarter on lending. You mentioned 20 or 30 basis points. We didn't see any movement in the quarter. So I think it's A) I think it's quite some time until you see material movement on rates on the short end of the curve. And when it does move it'll be because it's unequivocally, indisputably a strong economy. Maroone: If I look inside the segments, we grew margins in Domestic and Import. There was a little more pressure in Premium Luxury as it's a quite a competitive market. There were some shortages in some new products that are caused by some upcoming product launches. And so that off-lease Premium Luxury car was in a lot of demand. But all in all, I think that there's I think there was a very solid job done and used to drive the volume and the gross at that kind of level.
Genuine Parts Co
[GPC] Earnings Call 7/18/13 Thomas Gallagher, CEO: Our biggest challenges in the quarter were with customers in the original equipment manufacturing segment. Many of these customers have a fair amount of their sales volume tied to the export market, and they're being adversely impacted by the strengthening of U.S. dollar and by the overall slowdown in the global economy. Conversely, customers in the automotive, lumber and wood product segments are examples of segments that are showing solid growth for us. And we think it's indicative of the stronger new car sales that we're seeing in the U.S. as well as the recovery that we're seeing in the housing segment of the economy. Gallagher: Fortunately the most recent industrial production and capacity utilization indices both remain at historically healthy levels, which should turn out to be a positive for us in the quarters ahead. However, at this point, our sense is that customer demand patterns will remain a bit uneven and choppy over the remainder of the year, or stated another way, although we do expect modest sales improvement in the second half, we feel that the end market demand will be somewhat sluggish and a bit unpredictabl e for a few quarters yet. Gallagher: From a product category perspective, we continue to see positive results in furniture as well as in CLICK HERE TO RETURN TO INDEX
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cleaning and break room supplies, but these are being offset by decreases in technology products and core office supplies. These latter two technology products and office supplies are our two largest product categories and they both softened a bit further in Q2 from Q1. Overall demand in the Office Products industry is being affected by the movement to tablet-style devices as well as the ongoing digitization of the office environment. Additionally, demand is currently being impacted by sequestration and the general reduction in the governmental budgets at the local, state and federal levels, and the expectations is that all of these will remain headwinds for the Office Products industry until we see stronger economic recovery. In the meantime, our Office Products team remains focused on the key growth initiatives aimed at driving incremental revenue and market share gains. Paul Donahue, President: From a product category standpoint, we continue to see strong sales in our electrical category, primarily driven by our battery business. We'd like to take this opportunity to give a quick plug for our Get Back, Give Back battery promo currently running in the month of July in support of the Intrepid Fallen Heroes Fund. Our corporate-wide goal is to raise money and awareness in support of our returning military veterans. So in addition to our strong battery business, we are seeing solid growth from our heavy duty product category as well as our tool and equipment offering. An additional positive product trend is our improved sales in our all-important brake business. This is significant as we experienced slowing in this critical category in 2012 and only began to see a modest recovery in the first quarter of 2013. It would appear that our team's efforts to get this business back on track have taken hold. Gallagher: Our challenges right now are more concentrated in our non-automotive operations. End market conditions in each of these segments remain challenging and while we do expect to see second half revenues to improve somewhat compared to first half, we think that it's appropriate to trim our prior full year revenue guidance for each of these businesses. Donahue: May was a bit better than April and on a per day basis, June was a bit better than May. So, we do remain encouraged by what we're seeing in automotive and we're encouraged by the trend that we're seeing. Carol Yancey, CFO: Our core business probably was up slightly, but we're saying on a full -year comparative basis, the margins for GPC Asia Pacific are very similar to our normal business, our core business. You could have some differences quarter-to-quarter because if you may or may not know, but their quarters are completely opposite of ours. So our second and third quarters here in the U.S. are our strongest throughput quarters and these are pretty high operating margins for second and third quarters. But for Australia, it's the reverse on their quarters. So their stronger quarters are first and fourth.
Ford
[F] Earnings Call 7/24/13 Alan Mulally, CEO: In North America we had the highest second quarter and first half pre-tax results. And in Asia Pacific and Africa we achieved our best pre-tax profit of any quarter. Mulally: Europe incurred a loss, but it was improved compared with both a year ago and t he first quarter, as we continue to execute our transformation plan leading to profitability by mid-decade. Robert Shanks, CFO: Total automotive second quarter wholesale volume and revenue were both up strongly from a year ago. The higher volume reflects improved market share in all regions and the higher industry volume in all regions except Europe, as well as lower dealer stock reduction this year compared with a year CLICK HERE TO RETURN TO INDEX
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ago. The growth in revenue reflects higher volume in all regions and net pricing gains everywhere expect Europe, offset partially by unfavorable exchange in all regions. Shanks: While the outlook for the business environment in Europe continues to be uncertain, data trends suggest that economic and industry conditions may have begun to st abilize. Mulally: We project 2013 global GDP growth to be at the lower end of the 2% to 3% range. Global industry sales are projected at the higher end of an 80 million to 85 million unit range. U.S. economic growth is expected to be in a 2% to 2.5% range with industry sales supported by continuing improvement in the housing sector and replacement demand as a result of the older age of vehicles on the road. Mulally: In South America recent developments in Brazil add uncertainty to the near -term outlook, while in Argentina and Venezuela there are escalated risk as both economies are weak with an unclear economic policy direction. The Euro Area is in recession, but incoming data suggests that economic and industry conditions may have begun to stabilize. Recent policy decisions such as the European Central Bank's rate cut and the European Union's extension of deficit targets for some markets are positive steps. In Asia-Pacific and Africa economic indicators point towards growth in the 7% to 8% range in China this year. Growth in India on the other hand is below its full potential, due partially to high inflation and interest rates. Overall, despite challenges, we expect global growth to continue for 2013. Shanks: Our growth prospects for China, I think are sort of 7% to 8%. It is softening, although at a very high level, which is probably healthy for the long-term prospects for the economy. But we do see it softening a bit from where it had been in recent years. Shanks: Most of the buyers in China are still first time buyers. So that's one of the great things about our investments there is we're going after first time buyers. We don't have to steal them if you will, which is really hard. So first time buyers and it's coming from all the new products that we've launched. I mean, in this particular quarter, it was the Escape, it was the Kuga. The Focus is still doing very, very well, the refreshed Fiesta, EcoSport. But we've just we're expanding the lineup so quickly. And SUVs or utilities are really popular now everywhere in the world, and China is no exception. And so with the introduction of Explorer, EcoSport and Kuga, which is Escape here, the market has really responded very, very strongly and driving share. Shanks: I think Europe is such an important story. It's a major restructuring. It's in an environment that is not a great environment. But we clearly are on a very good track to deliver the transformation plan that we laid out in October last year. And it's not just for Western Europe, but we're growing in Eastern Europe where we've had a very robust activity in Russia with our partner Sollers there. So I think we feel very good about that. And the thing that's kind of interesting about what happened in the quarter, which is so exciting for us, is that with the profitability that we saw in Asia-Pacific, which was quite meaningful, and a return of profitability in South America combined with the lower loss in Europe, we actually combined in those three regions, effectively delivered about a breakeven. And I think in the first quarter that was a loss of over $600 million.
Hertz Global Holdings

[HTZ] Earnings Call 7/29/13 Mark Frissora, CEO: Hertz once again delivered record quarterly results across the board. Consolidated
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adjusted pre-tax income and margin were the highest of any second quarter in our history, increasing 35% and 110 basis points year-over-year respectively on a 22% revenue gain. Frissora: the good news is while auction values were the hardest hit in the second quarter, retail values held flat. So we shifted as much supply into the Rent2Buy in our car sales lots as possible. In the end, we sold 44% more units through retail this year compared with the similar quarter last year. Another good sign is that residual values have improved sequentially since May. And this month, we saw auction inventories tighten again. Elyse Douglas, CFO: The potential impact to Hertz from rising interest rates. We've been getting a lot of questions on this topic recently. The bottom line is that we don't anticipate a negative impact for at least the next couple of years, and here's why. Of the $1.2 billion of fixed rate U.S. fleet debt that matures between now and the end of 2014, the interest rates range from 2.8% to 5.4%. This is significantly higher than the 1.8% current indicative rate for three-year term ABS notes. At the indicative rate, annual refinancing savings would be approximately $18 million on a pre-tax basis. Additionally, we have the opportunity to call and refinance our 8.5% secured Euro notes at an indicative rate around 5.25%. This lower rate translates into $17 million per year in interest savings. We're currently evaluating whether it makes sense to pay the call premium today or wait until the bonds are callable at par next summer. And finally with respect to our maturing floating rate debt, short-term rates have not increased. The current market consensus is that the Fed and ECB will not increase them until late 2014 at the earliest. Frissora: The airport demand is being impacted by the sequester, and we believe airline capacity constraints in the associated higher fares. Moreover, on the residual front, Moody's is projecting the Manheim Index will decline 1.9% in the third quarter and 2.9% in the last six months of 2013 compared with the similar period last year. Fortunately, Dollar Thrifty revenue synergies from partners like AAA, JetBlue, and Marriott are already making a contribution, and we're leveraging the flexibility of our model and capitalizing on the diverse initiatives we've undertaken to drive incremental revenue and profit stability. Frissora: The issue is that the overall retail environment right now and leisure environment per consumers has softened. That's pretty consistent with everything you will see and hear in the retail environment. So, I think there's a lot retail statistics to support the notion that consumers are a little tighter right now and the sequester impact has been fairly significant in the commercial sector. Anything that's related to the government as well as the government business itself has been weaker. Those accounts that are tied to the government are traveling a lot less. And so, overall, that's those are the primary drivers. It's more about economy. It has nothing to do with Hertz. We're not losing share or anything. So, it's an overall economic environment that we're seeing right now. Frissora: Europe overall, we're seeing very strong leisure growth. In Spain, very dramatic growth there, Italy very dramatic growth. The only area that's probably still very tepid and in terms of its recovery is France. Germany's fairly, I guess, stable is the way I'd put it. But France is the only country where we're seeing some tepid growth. Everywhere else is growing, and in the leisure markets, we're growing very, very nicely; in those markets, double-digit type growth. Everywhere else, kind of low-single digits, and with France, kind of neutral right now, I think. I think we're pretty flat.
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Harley-Davidson
[HOG] Earnings Call 7/25/13 Keith Wandell, CEO: Harley-Davidson again turned in a strong financial performance in the second quarter with earnings growing more than 13% on a rise and consolidated revenue of nearly 4%. Wandell: While the U.S. retail environment in the second quarter in the first half proved challenging, given the persistently cool wet spring in much of the country, we once again gained market share, demonstrating the continued strength and appeal of the Harley-Davidson brand. John Olin, CFO: As we look forward to the remainder of the year, we feel great about our brand, our business, and our future. We expect a strong second half of the year behind significantly improved product availability, very exciting Model Year 2014 motorcycles, which will be introduced in three-and-a-half weeks, and relatively easy year-ago second half comparisons. Olin: We do believe retail sales during the quarter were negatively impacted by cooler and wetter than normal weather conditions in much of the United States. And consequently we believe that a portion of the volume that was lost in the second quarter will not be recovered by the end of 2013. This will put pressure on our ability to reach the high end of our full year shipment guidance. Olin: Second quarter retail sales in our international markets were up 6.7%. In our EMEA region Q2 retail sales were up 1.0%, despite continued softness in Southern Europe, especially Spain and Italy. While these markets remain down, they have improved from the previous couple of quarters as we lap the steep declines which began in Q3 of 2011. Retail sales in the Northern European countries in aggregate were up in the second quarter after being down the past two quarters, driven by strength in the UK, Switzerland and France. Emerging markets within our EMEA region continue to grow, reflecting our investment in the distribution network. Olin: We remain concerned with our European business due to the ongoing recession, which continues to result in low consumer confidence, high unemployment, and constrained credit. We will continue to focus on what we can control, which includes building our brand across Europe and expanding our distribution network in emerging markets in the region. In the Asia Pacific region retail sales were up 12.3% driven by a strong growth in Japan and double-digit growth in emerging markets. In Japan retail sales were up 9.5%, despite a challenging economic environment and intense competitive activity. Olin: We did have challenging weather as everyone knows. And most of that weather was unfavorable in the eastern two-thirds of the United States. It was cold and damp, and it was for a very prolonged period of time. When we do look at the pieces that were not affected by weather, which is really the western one-third of the United States, we saw actually in the second quarter double-digit growth. And we've seen some strong growth in the first quarter, which was pretty unaffected by weather as well. But that accelerated in the second quarter and we saw double digits. Now when we look at the western states dealers that represent slightly less than 20% of our overall volume. The other 80% of the U.S. was in the low single-digits and again clearly affected by weather. When we look forward we have no idea what weather will be. But last year's weather from August through December was much more in the normal range. Olin: Given the overall environment in Europe, we are seeing a lot of price competition. Harley -Davidson stays away from it. Sometimes our dealers do. But we try not to price promote in any way. And it just makes that price disparity between our positioning, which is a super price point position, versus some of our competitors a little bit greater. And as we look at our European business and understand how tough it is in CLICK HERE TO RETURN TO INDEX
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Europe, this is clearly a tremendous bright spot for us. So we're through six months of this year. Our share is up six-tenths of a percentage point, again given that super premium price point.
GM
[GM] Earnings Call 7/25/13 Daniel Akerson, CEO: General Motors has delivered a strong quarter, driven by our ongoing succe ss of North America and China, progress in Europe and some very well received new vehicle launches around the globe. Akerson: Looking deeper into the quarter, our aggressive roll-out of new products in North America is continuing to drive improved results, especially for Chevrolet and Cadillac. In Europe, lower cost higher volumes in United Kingdom and strong new vehicles like the Opel/Vauxhall Mokka helped narrow our yearover-year loss. But a demand-driven recovery isn't in sight yet, so we have to keep working on cost, complexity, and brand building. In China, our joint ventures delivered record sales and our results have been particularly strong in the mid-sized upper medium and luxury and SUV segments. Akerson: Deliveries in the United States and China, the brands' two largest markets, were up about 6% through June. And we've seen strong sales of the Sail, Cruze, Malibu and Captiva, which account for about 25% of Chevrolet's global volume. Keeping this momentum going and making sure we deliver a consistent brand experience around the world drove the recent appointment of Alan Batey as the Global Head of Chevrolet. Daniel Ammann, CFO: The market environment remains quite challenging as you're well aware. So, we're pleased with the year-over-year improvement we've shown through the first half of the year. We do typically have some seasonal challenge more in the second half, so we're going to work to work our way through that, but we're pleased with the performance so far, but still long way to go, particularly in the macroeconomic environment. Ammann: The just political unrest that we're seeing in Venezuela which has disrupted our operations on multiple occasions through the year. And that's an important market from a profitability point of view for us. Another component is there has obviously been some very substantial moves on an FX basis. While we are significantly localized in the market from a production point of view, we still have some meaningful amount of imported components and so on into the market. And so when we have the Brazilian currency, for example, devaluing in the way hat it has it does cause an impact to us; so our portfolio working well, Venezuela disruption making an impact, and FX making an impact.
Industrials
Capital Goods
Fastenal
[FAST] Earnings Call 7/10/13 Willard Oberton, CEO: Looking at the results for the second quarter, I think the main story is slow sales growth, and we believe that's really caused by a few things. One is the slow economic condition, it's very slow out there from an industrial side, and the other would be that we have just become too tied we were too
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tied on adding people in the fourth quarter and for the basically the last three quarters. Oberton: The major theme of the quarter was slow sales, but we're working very hard to correct that. Daniel Florness, CFO: Construction continues to be weak. We see just treading the water. One of the things that we've been experimenting with in a handful of stores, I believe, with a few hundred stores over the last two months, is introducing some additional construction products to see if we can stimulate some activity. Oberton: The pricing environment is always difficult. But with the economy slow like it is, it's more difficult to go in and ask for a price increase. And I think some of it is just reluctance of salespeople. When your customer is already putting pressure on you, it's harder to go in and push pricing. So it's just a more difficult environment. There's not real dynamic, not a lot going on. It's just when business is robust, it's a lot easier to walk in with a price increase than it is when business is slow.
Johnson Controls
[JCI] Earnings Call 7/18/13 Stephen Roell, CEO: We're very pleased with the results of our fiscal third quarter. The strong earnings and cash flow are consistent. We achieved those results despite the fact that business conditions remain challenging across our industries. Roell: In the quarter, automotive production on the continent was up 6% from a year ago. Dealer inventories are in fairly good shape and that bodes well for this quarter's production. We're currently anticipating the North American production will approximate 4 million units in the quarter ending in September, which would equate to about a 4% increase over last year's comparable period. Despite everything you read about a slowdown in China, automotive sales and production remains strong. In the quarter just ended, production will be up 10%. And we expect that in the upcoming quarter that we could see an increase of production of roughly 7% year-over-year. In Europe, production levels were slightly lower and recent industry forecasts are projecting that future periods will begin to show growth. We're still expecting that in the quarter that we're entering, that we're in right now, that production will be slightly lower than it was in the comparable period a year ago. Roell: Battery demand in the aftermarket in North America and Europe was weaker than expected again. Point of sale tracking that we have with several retailers reflects continued soft demand. Roell: Our European Automotive business turned profitable. That was a highlight again for the quarter. Building Efficiency orders were higher than last year, reversing last quarter's trend. Power Solutions has been awarded new business and we're in discussion with many other potential customers. Bruce McDonald, CFO: Geographically, and we always like to look at our geographic numbers in the context of the production environment, and pleased to stay that all regions we outperformed the market. So if you look at North America, talk about our sales being up 11% and that compares to the market being up 6%. In Europe we were up 4% in a down market where it's down 1%. Alex Molinaroli, Vice Chairman: Service has been strong and it continues to be strong. Even though we' re not seeing some of the top line that we've been hoping for, and maybe some of this warm weather will help out, but service has been incredibly strong. Systems continues to hang in there but it's not having the kind of growth that it's had in the past. GWS has actually grown and continues to grow, and then Asia. I think those are the places, and on the year-on-year basis, we're seeing some benefit in Europe but it's from a pretty slow. CLICK HERE TO RETURN TO INDEX
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Molinaroli: Now clearly, batteries have become better and better and the systems in vehicles have become better and better as it relates to their own systems and the wear and tear that they have on batteries. That is all true. But what we're seeing here is a phenomenon that correlates directly to weather. That doesn't mean that there is not other factors. So eventually this will catch up. Now there is some lag. If you go back in time when we had the downturn of the OE, you know the OE downturn, there will be a bubble that we would have, that we see. And car registrations have been reasonably consistent, not growing like we see in the past. But all of our models would say that we have pent-up demand. So I do still think it's just a matter of when, not if. We haven't lost any share. And even if battery demand was being put off , eventually we catch up to that.
Sonoco Products Co.

[SON] Earnings Call 7/18/13 Barry Saunders, CFO: Several businesses reported strong productivity, including the industrial businesses in Europe and thermoform plastics. This was somewhat deluded by the fact that year-over-year productivity was negative in our North American paper mills, but this was due to an extremely strong second quarter last year, making for a difficult year-over-year comparison, as well as some heavier repair spending as part of our maintenance *ph+ excellence (10:19) initiative. Saunders: Working capital was also favorably impacted by actually reducing inventory levels in the quarter, even with the higher level of activity, thus days in inventory improved. We also had lower tax payments yearover-year due to being able to reduce current taxes payable in the second quarter by $16 million related to the federal incentives for the biomass boiler investment. Jack Sanders, CEO: We had a pretty good second quarter that quite frankly could've been a little better, if not for some discrete one-time items, specifically the Canadian pension issue, which cost us about $0.01 per share. Overall, we had record sales, record gross profits, and record second quarter cash flow. Year-over-year free cash flow improved by more than $100 million, and we're comfortable, we will exceed $150 million in net free cash flow for the year after we pay dividends. We're also encouraged by what we see in some of our individual businesses. J. Saunders: As we enter the third quarter, volumes remain in pretty good shape; although I will point out that on a per-day basis, normally volumes decline somewhat from Q2 to Q3 in both the U.S. and Europe. So we remain cautious in our assumptions. Our paper operations in North America rebounded during the second quarter and volumes remained strong entering the third quarter. We do face negative price cost headwinds as OCC prices have already increased in July to $130 a ton in the Southeast, and we could see additional upward price movement during the quarter. J. Saunders: On the industrial side of the business, both transport, packaging and automotive remained strong. And on the consumer side, our legacy appliance packaging business showed good volume growth and benefited from new won volume at General Electric. We made good progress on our new molded foam plant in Central Mexico and recently announced a new facility to be built in Kentucky to serve the automotive market in the Central U.S. J. Saunders: In composite cans, we experienced strong gains in nuts, dough, powdered infant formula and coffee, with some of these segments showing growth for the first time in more than a year. In addition, we made solid we have solid momentum entering the third quarter. J. Saunders: If you look at unit cost to produce, which is really what we're chasing, every month this year, the CLICK HERE TO RETURN TO INDEX
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unit cost of producing paper has gone down. And in fact the unit cost to produce in June and July in June, excuse me, was less in 2013 than it was in 2012 in paper. And that's one of the first times we've seen that this year, and of course that's what we're looking for. So, it's going in the right direction. I think it's going to continue to go in the right direction. And we're going to get easier comps as the year goes on, but I'm less concerned about the comp and more concerned about the actual unit cost reduction on an ongoing basis. J. Saunders: I think one of the biggest issues that we're having in this business right now is certainly the Alloyd business continues to not perform at a level of expectation, and that's pulling those overall margins down a little bit. So, we need to improve on Alloyd. And I think ThermoSafe, they're somewhat seasonal in their makeup and they're entering their strong season. So, I think that they are as they enter a very strong season, you'll see some impact, I think on margins as their business picks up. J. Saunders: China business that's a little bit weak, but Southeast Asia is not bad. We had looked for consolidating tube and core opportunities or additional growth opportunities in tube and core and/or flexibles and composite cans as well and that we just opened a new plant in Malaysia for composite cans and even in China, we're putting in a new composite can plant, perhaps in Southern China. So, we see good composite can growth throughout Southeast Asia. J. Saunders: Brazil is kind of a slightly descending trend. It is weakening a bit as we go. China is probably more flattish on whole.
Dover Corp
[DOV] Earnings Call 7/18/13 Robert Livingston, CEO: I was very pleased with our second quarter results, which were driven by strong revenue growth, especially in the consumer electronics and refrigeration markets. Our energy and fluid markets also contributed solid growth. Livingston: From a geographic point of view, our North American markets were modestly positive, our China markets were strong, resulting in broad based growth of 20%. We continued to see significant growth from the investments we have been making in Latin America, the Middle East and Australia. Lastly, European markets were largely flat in the quarter. Many of the positive trends evident in the second quarter are continuing, giving us confidence as we move into the second half of the year. The served markets within energy, as well as the consumer electronics, refrigeration and food equipment, fluids and fast moving consumer goods markets should all be strong as evidenced by 8% bookings growth. Livingston: We expect the growth in consumer electronics to continue into the second half, driven by the Samsung ramp and several OEM product launches anticipated for the late third quarter or early fourth quarter. In our Energy segment, solid production activity, especially within international markets and continuing strength in downstream and retail fueling are among the trends that drove solid results. We expect the rig count to improve sequentially through the remainder of the year and for our production and downstream markets to remain strong. Livingston: I am very pleased with our second quarter performance as we've delivered strong results in a low growth macro economy. We also continued our practice of returning cash to our shareholders through our share repurchase and dividend programs. Our strong second quarter growth solid book-to-bill and the positive
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trends across many of our businesses give me confidence in our second half growth and earnings forecast. Livingston: Second quarter margins, down a little bit. My first comment would be to treat them treat that as a temporary blip. We did have some lower activity in Canada. Actually it was quite a bit lower than we anticipated coming into the quarter. But the other thing that was I would label as temporary; we did have some elevated product development spending in the second quarter. It wasn't all constrained to the second quarter, but the second quarter spending in this product area was quite a bit higher than the first quarter or even what we'll see here in the third quarter. Livingston: We do see some of the international business activity especially around production in Energy. Those most notably around production in Energy is being a little bit lumpy, and it's not a steady drumbeat. Livingston: I'm not sure that the split between gas and oil has changed any over the last couple of quarters, Deane. I think the when you look at the total rig count that is deployed. Gas rigs are down about 20% and we don't see that changing here in the second half. As we move into the second half of the year, I think we our plans, I think are calling for about a 3% sequential improvement in North Am erica rig count.
Danaher
[DHR] Earnings Call 7/18/13 Lawrence Culp, CEO: From a geographic perspective, high-growth markets grew single digits. In particular, we saw sequential improvements in Brazil and the Middle East, as each region was up more than 15% year on year. China saw low double-digit growth in the second quarter, led by our Life Sciences & Diagnostics and Dental segments, which grew in excess of 20%. In addition, our water quality platform in China grew at a double-digit rate for the second quarter in a row. Developed markets were up slightly, with the U.S. and Japan up low single digits and Western Europe down low single digits. Culp: Our Motion business's core revenues declined at a mid-teens rate, with weakness in most major verticals. We've begun to see signs of stabilization in North American distribution, which grew modestly both year over year and sequentially. As evidenced by strong profit performance, Motion continues to transition out of some of their lower margin business. This transition will continue to impact core revenues, which are expected to remain negative in the second half of this year. Culp: We were very pleased with our second quarter results. Better than anticipated core revenue growth and outstanding execution led to solid operational performance. Culp: We're still negative from a core perspective. I think we've got the potential to be positive in the second half, in large part because of the comps. But one geography in particular that we're watching closely, particularly in T&M on the instrument side, is China. China's been a real struggle, particularly as the export base has struggled there. The comps help us probably more than necessarily the underlying demand does. But I think that combination should help us get positive there in t he second half, but not wildly or overly so. Culp: Clearly, valuations are up. That means we can't buy every company we might want to buy, but that's never our MO. We're looking for great fits where we can add value where we can generate a return for our shareholders. And the silver lining in an environment like this, particularly for a strategic well positioned buyer like ourselves, is you can have high quality conversations with high quality companies. We're doing just that. So we continue to I think have that level of optimism of confidence that we will smartly deploy that capital to help build out the businesses as we move forward here; but again, not a dramatic sea change 90 days on.
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Culp: I think in terms of the control issue for the broader audien ce, we have seen in the U.S. some policy guidance changes which have negatively impacted some of our underlying volume in the business. I think that is modest and working its way through the business. Our European distribution change there continues. But I think we certainly had a better quarter in that regard than we did in the first, and continue to believe strategically we're headed in the right direction. And financially, we should see less headwind as a result. Culp: What we've tried to do is build on our China-first strategy the last couple years and taking the successes we've had and the learnings that we've taken to all the other high-growth regions of the world. I think the evidence that we're having good traction in that regard, for all the examples peppered through our prepared remarks in terms of the successes we're having in the Middle East, what we're seeing in Brazil, Eastern Europe, right on down the line. India has been a little softer for us this year, to be sure. Latin America, in part because of a couple of tough comps, was tough in the second quarter. But that basket, which is no longer a China-only basket, was up high singles here. I think we're mindful of the headlines relative to that basket as we think about the second half. I think that's part of our conservative posture on the macro. But strategically, These markets may slow in their overall growth, but they're still going to be best game in town. And the penetration levels of most of our products in these parts of the world are sti ll pretty modest.
Textron
[TXT] Earnings Call 7/17/13 Scott Donnelly, CEO: We saw solid revenue growth in Textron Systems and our Industrial businesses as well as strong commercial orders at Bell. On the business jet front, demand continued to be soft as we announced in April we took cost reduction and pricing actions appropriate for this market environment. Specifically, we relowered our light jet production line rates, reduced associated direct head count, downsized our indirect work force and reduced our jet discount allowance. As we expected, reduced discounting to entice customers into the market did result in lower sales volume as we delivered 20 jets compared to 49 a year ago. However, we achieved positive new jet pricing on both a sequential and year-over-year basis which was our intent. We still believe the overall market demand will eventually recover as global economies continue to expand. Donnelly: Our Finance segment. Slowness in the business jet market resulted in only a few new loan originations during the quarter. However, our segment profit benefited from good credit performance and a number of small asset transactions in our Non-Captive business. Donnelly: In our Industrial businesses, we saw good growth in each of our businesses, reflecting strong auto markets in North America and new product introductions and expansions of our global distribution channels. We also had good execution with an overall incremental margin conversion of 39%. We'll continue to invest in new products in our Industrial businesses as we believe that's the best way to win in the market and create high value growth. For example, during the quarter, we did introduce our redesigned TXT golf car, updating the model's curb appeal and improving performance while delivering new features as well as increased durability and simpler maintenance. Donnelly: In terms of the light jet market, the market is still very soft. And if you're not out there doing pretty aggressive discounting and trying to go to customers that are not ready to move yet, you're not going to see a whole lot of volume. That's exactly what we expected to see in the marketplace. So, there's obviously some activity. But it's still pretty soft.
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GE
[GE] Earnings Call 7/19/13 Jeff Immelt, CEO: Our environment improved slightly in the second quarter. Emerging markets remain resilient while Europe stabilized. Orders in the U.S. were the strongest we've seen in some time with 20% growth and overall our orders grew by 4% and backlog increased to $223 billion. Immelt: Organic growth ex Power & Water grew by 5%. Growth markets expanded by 5% with 4 of 9 regions up by double digits. We continue to make progress in key regions like Russia, Africa, and China. Our growth market position is a competitive advantage for GE. Immelt: We continue to be impacted by the sluggish European economy for gas-turbine services, and U.S. sequestration impacted our military spares business. The service margins grew by 70 basis points and backlog grew to $166 billion. Immelt: Every business grew in the quarter, except for home and business solutions. And even in that segment, appliances expanded while lighting lagged. And we're on track for 70 basis points for the year. Immelt: Overall margins were slightly better than we expected in the second quarter, and that gives us more confidence going forward. Jeffrey Bornstein, CFO: We ended the quarter with $391 billion of ending net investment. That's down $40 billion from last year and down $11 billion sequentially. Keith Sherin, CEO of GE Capital: I think the one bright spot in service was certainly in the U.S., if you looked at the U.S. PGS, the orders were up 29%... In Europe PGS had a really challenging quarter, down 59%, Jeff, the fleet operating hours, we had reduced outages, it's U.K., Italy and Spain. So we're seeing some positive benefits of the fleet in the U.S. and we're more than offsetting the drag that we have from the fleet in Europe right now in the PGS business. Bornstein: We've been very focused in the U.S., that's where the recovery has been the biggest the fastest. We're seeing some signs of life in Europe, in Northern Europe and the U.K. and France but there's still a long way to go there and Japan's a little bit better. So I think there still will be the opportunity to generate gains. Whether we'll be able to generate them as we move down the next $17 billion at the same rate I think remains to be seen. I think that's going to be little bit of a challenge . Immelt: I'd say there's still a fair amount of activity in the Middle East. China and Asia aren't bad. We expect the U.S. to be better this year than last, but at a small level. Europe pretty sluggish. Africa okay. But they tend to come in buckets. But my hunch is that's where the orders will come in. Immelt: We're not counting on the U.S. market in Healthcare to be super robust. And look, I think on the outpatient side, there's been pressure on reimbursements for a long time. So we're pretty cognizant of where it goes there. But I'd say the U.S. market feels like it's growing flattish to maybe up a couple points, and I don't see that changing that much.
Federal-Mogul Corp
[FDML] Earnings Call 7/22/13 Rainer Jueckstock, Co-Ceo: One of the important factors in the company's strong earnings recovery from the CLICK HERE TO RETURN TO INDEX
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second half of 2012 is restructuring and divestiture activity. The restructuring has included the announced closure of eight sites listed in this slide, some of which are still in the process to be finally closed. While these are always difficult decisions, these actions have already allowed us to move some customer programs to other existing Federal-Mogul locations, especially in lower cost locations in Mexico or Eastern Europe, while continue to serve our customers in all countries. We have also completed the divestiture of business that involves the elimination of loss-making or low margin non-core business. Jueckstock: Overall in the first half of 2013, the company has exited finally eight manu facturing plants in highcost countries via either closure or divestiture. We have also continued our ongoing streamlining to reduce support and SG&A costs and we continue to execute our other restructuring and downsizing actions that cannot yet be disclosed because we're in the process of discussion with employee representatives. Jueckstock: Powertrain in Europe, which represents approximately 50% of total revenue, had slightly revenue growth in quarter two. However, both light and commercial vehicle production went down, 3% in light vehicle and 8% in heavy-duty. Keep in mind, car sales in Europe in February, March, April, May each fell to a record 20-year monthly low. Further, heavy-duty globally in the first quarter in the first half was significant below record high levels of 2008 and the market is still below 2011 and 2012 production numbers. Jueckstock: The U.S. continues to get stronger in the LV market and has modest growth forecast through 2018. We see additional growth coming from current powertrain trends toward downsizing and down speeding since we often added more feature content to withstand the stress of these hotter-running, highlyloaded engines. We don't see an immediate turnaround for the commercial and heavy-duty markets, but we will be ready to leverage the eventual recovery in future quarters. Jueckstock: Europe remains concerning as the market growth is soft in the next few years. We have similar demand for added technologies from our core Powertrain product line and are hopeful that slight improvement in diesel penetration in quarter two 2013 is the beginning of a shift back to higher demand for more profitable diesel components. China remains a bright spot with vehicle production growing up to 31 million units per year and a compounded annual growth rate of 9% through 2018. India is concerning for its weakness this year and we are refocusing our attention on efficient use of our existing footprints as we watch carefully to see what this market is going to do over the coming quarters. Finally, Brazil is expected to show growth also from lower basis. We continue to focus also there on asset utilization and increasing penetration on global platforms. Kevin Freeland, Co-CEO: For the quarter, revenue for the VCS segment was $783 million, up 5% on a constant dollar basis compared to Q2 2012. The improvement was primarily due to a strong European aftermarket sales trend. Overall sales in North America were down 1% as we exited some unprofitable contracts. The U.S. aftermarket sales were up slightly versus Q2 2012. Europe, Middle East and Africa was a strong market for us in the second quarter of 2013 with total revenue up 20%, a 10% growth in the base business excluding the BERU aftermarket ignition distribution agreement that we entered into in Q1 of 2013. Jueckstock: We have solid market growth in both the OE and the aftermarket business throughout the globe. The period between 2013 and 2018 provides excellent opportunities to take advantage of growth in new vehicle production and global car parc expansion. That market share growth can continue for Federal-Mogul on the basis of our technologies to enable fuel economy, reduce emissions and provide superior vehicle performance with sensitivity to environmental impact. Vehicle makers are willing to pay premium for breakthrough products that enable them to meet these key challenges and this provides excellent drive for collaborative R&D in both segments. CLICK HERE TO RETURN TO INDEX
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Freeland: North American aftermarket has had some competitive ups and downs this year. There has been a lot written about the weather impacts both first quarter and second quarter in different parts, both conducive weather in the Southwest and out West and tougher conditions on the East Coast and South. So varying customers of our have had some pretty stark differences in terms of the orders that they've placed with us. Generally, as you look across to our businesses, in the sealing areas and in the chassis areas, we've had relatively good business through the first half of the year. And generally, the thing that has our attention today is the friction business, which in the aftermarket has held up fairly well and has been the area that we've struggled with the most. Jueckstock: The biggest thing impact we currently feel compared to 2012 first half year is the change in mix both on a geographic as well as the content point. We have lower sales in Europe, number one, higher sales into U.S. The European business heavily driven by diesel has a tendency to be more profitable than the U.S. business, which is mostly gasoline. And in all regions, our industrial and heavy-duty business is below 2012 first half year run rate. Jueckstock: We are positive about the way forward. Still, if you look into Europe, you're getting very mixed messages. Some of our peers in their earnings calls painted quite a critical picture about Europe in the second half. On the other hand, you might have seen Ford's announcement just a few days ago which was quite positive. Ford thinks that the bottom is reached in Europe and going forward there might be more upside than downside. We are probably more on the picture like Ford has.
Illinois Tool Works

[ITW] Earnings Call 7/23/13 Scott Santi, CEO: From a revenue standpoint, softer than anticipated demand in our North American industrial packaging, polymers and fluids and welding segments resulted in overall organic growth coming in 100 basis points below our expectations heading into the quarter. Also, our electronics assembly platform within our Test & Measurement and Electronics segment also faced challenging comps versus last year, as well as continued softness in their end markets. Santi: Overall, industrial demand remains choppy with the exception of a few pockets like construction and food equipment in North America. Ronald Kropp, CFO: Despite our flat organic revenue from soft North America end marke ts and $25 million in higher restructuring cost, our bottom line adjusted operating margin improved 40 basis points versus last year. We continue to see the positive impacts from our enterprise initiatives while continuing to manage overhead costs in an uneven macroeconomic environment. Santi: Electronics is still fairly weak. The color in the T&M space as the quote activity remains fairly robust but there is, you know, in the short run some level of, let's say, hesitation in terms of actually customers converting those quotations to actual orders. But, you know, our expectations are things continue to move forward at an okay pace and hopefully accelerate a little bit as we move through the year. I think on the electronics side I think we're expecting the year to be pretty tough all the way around. Santi: On the Industrial Packaging side, in terms of international revenue, the big contributions on the plus side came out of India and China. Europe was still down modestly year-on-year in the quarter. And in terms of the capital spending environment in Q2, what I would say is I think things were relatively sluggish throughout the quarter as and you talked about the segments that were affected. Food Equipment actually stayed CLICK HERE TO RETURN TO INDEX
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pretty strong through the quarter but certainly in welding relative to what we saw towards the back half of Q1, things certainly moderated in Q2 and likewise in the Test & Measurement arena as well. So, there was no sort of fall off the cliff in the second quarter. John Brooklier, Investor Relations Officer: I would say that if you look at the commercial construction numbers, particularly in North America, I think they're roughly in line with what we're seeing with Dodge construction data which is measured on a square footage basis. I don't think there's any disconnect there on the commercial side. Commercial has been much slower to recover. So, I don't think it's a penetration issue at all. I think it's just the market itself has been slower to recover as it tries to recover in line with what's going on in the housing side. Santi: I would say dimensionally the heavy equipment sector was softer in Q2 relative to oil and gas. I think in both areas, particularly on the capital goods, the equipment side, what we saw was certainly more continued tentativeness there around new equipment purchases. But, probably the heavy equipment's end market is softer than the oil and gas in the quarter. Santi: I think we have a relatively high degree of confidence that Europe has bottomed. Certain pockets have gotten a little bit better. I don't think we've seen anything that's gotten demonstratively worse. So, I think it's a bottom. The question is how long will the bottom take place. We're clearly not calling for big recovery in Europe, but I think that it's positive for us and other companies that Europe is showing signs of stability at the bottom. So, we'll continue to ramp-up probably big, no, good numbers from our auto business and then we'll keep track of what's going on in our other businesses and obviously update you on a quarter-to-quarter basis.
United Technologies
[UTX] Earnings Call 7/23/13 Gregory Hayes, CFO: In the U.S., the potential Fed tightening caused some volatility in the markets. But we still believe the economy is recovering, and we are seeing strength in the leading sectors. Auto sales were up 8% in first half and are growing at the fastest rate in five years. Housing starts are 24% higher year to date. And in commercial construction, the Architectural Building Index has shown expansion in eight of the last nine months, so good progress in the U.S. Europe, of course, is a little different story, with unemployment now over 12% and the PMI, or Purchasing Managers Index, consistently below 50%. We didn't plan for much growth in 2013, but the fact of the matter is we're actually still seeing a slight contraction in sales in Europe. Year-to-date sales are down about 3% across our Commercial businesses. On the other hand, we do see continued strength in China. We're all cautiously watching the economic indicators coming out of China. They talk about some falling imports, exports, tightening of credit markets, lower GDP forecasts. Whether it's 7% or 7.5% GDP growth, it's still one of the fastest growing markets because fixed investment has continued to grow. And that's driving very strong order growth at both Otis and CCS. Hayes: Despite the uneven end markets, strength in the U.S., emerging markets, and commercial aerospace are going to offset the softness that we're seeing in Europe in defense. Our orders momentum still points towards a recovery in the back half. Jay Malave, Director of Investor Relations: Solid growth in China and other emerging markets was offset by continued weakness in developed Europe and transition costs associated with the factory transformation in North America. Hayes: I think orders on a constant currency basis were up 35%. I think actual FX was 39% orders growth, and CLICK HERE TO RETURN TO INDEX
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sales were up about 20%. We also saw pretty good traction on the service business with sales up 25%, so good strength there. Pricing remains tough, but the margins are holding up in China because we continue to be able to take cost out of the supply chain and leverage on the higher volumes. As I think about it specifically from a market perspective, where we're seeing the growth, residential is obviously the key. It is the biggest market for Otis Elevators and it is very, very strong still despite some of the cooling measures. We've also seen commercial office building start to improve. Social housing has leveled off. I think Otis would tell you today that the market is growing a lot faster than what we had anticipated going into the year, and I think these order rates more than support that. Aerospace/Defense
Honeywell
[HON] Earnings Call 7/19/13 David Cote, CEO: As we continue to face an uncertain macro outlook, we think it's prudent to keep that pipeline full. So, we funded over $60 million of incremental restructuring this quarter, more than offsetting an OPEB curtailment gain and bringing us to approximately $100 million of repositioning actions funded this year However, while investing for productivity is important, it sure is a lot easier to expand margins when sales are growing. So, even in this tough environment, we're planting the seeds that will drive future top-line growth. Some of the lowest-risk, highest-return projects available to us are organic, so we continue to invest in R&D, new product introductions, and capacity expansion. Cote: Order rates were mixed in the quarter, with the U.S. stable, Europe trending slightly positive in both short- and long-cycle, and a notable turnaround in China from the first quarter with sales up mid-teens. The inflection point in China occurred in June, with broad-based performance improvement in all businesses. ACS short- and long-cycle businesses, along with stellar growth in UOP, added to a much stronger performance in China than Q1 and last year, while Transportation Systems continued its growth momentum from Q1. David Anderson, CFO: While sequestration headwinds continue to be a challenge for the business, we still had a number of key program starts in the quarter, and we continue to believe we're on track to our full-year expectations for D&S of down revenues 4% for the full-year. Anderson: In non-res, construction remains suppressed, although the orders pipeline does appear to be improving. Europe was up slightly, outperforming the overall market with good growth in ESS, partially offset by Building Solutions as a result of soft economic conditions. In China, sales were up 6% with good growth in both the short and long-cycle businesses in ACS. Anderson: ESS, Energy, Safety, and Security, sales were up 3% globally. We had particularly good performance in ECC, in Security as well as Fire, with organic growth in all of these pieces, 5% or better as a result of new products, continued good geographic expansion, and also evidence, continued evidence of the U.S. residential strength that I referenced earlier. Anderson: Fluorine saw a slow start to the cooling season, resulting in delayed purchases by customers, presumably that's beginning to pick up now. As well as lower production volumes from the continued Metropolis plant shutdown, which resumed operations at the site in July following approximately 12-month shutdown for structural upgrades. Anderson: We're really encouraged by what's been a relatively stable production environment, although, the
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possibility of a second-half inventory correction still exists, as new car registrations continue to be weak in Europe. Anderson: The environment has remained challenging, but Honeywell has continued to see strong execution supporting its results. And consistent with our prior views, we're not expecting, not counting on a big secondhalf recovery. We've seen pockets of short-cycle improvement. The comps are getting easier, and the investments in residential construction do seem to be improving. However, while we have seen some signs of improving quote activity, non-residential investment remains weak, and we'll be watching the customer demand signals in Aerospace and Automotive obviously very closely in the second-half. Emerging markets are not likely to accelerate in the near-term, so probably the best way to summarize our end market expectations for the second-half is really just stable.
Lockheed Martin
[LMT] Earnings Call 7/23/13 Marillyn Hewson, CEO: Overall, I would characterize the second quarter financial performance as broadbased across all business areas, with results exceeding our expectations. This strong performance enabled us to increase our 2013 financial guidance for operating profit, earnings per share, and cash from operations. Hewson: While future budget levels remain uncertain, the strategic need and support of a number of our key programs, such as the F-35 Joint Strike Fighter, missile defense systems, Littoral Combat Ship, and C-130J, remains intact. Bruce Tanner, CFO: Our sales were ahead of expectations in the second quarter, albeit not as much as they were in the first quarter. So we're tracking better than expected through the first half. The $825 million that we kind of came up with that would point towards the low end of the guidance was sort of as we've used in the past, sort of a parametric or a mathematically derived number that, frankly, we haven't seen materialize as quickly or as much as we thought when we did that calculation. So I'm hopeful that we actually are closer towards the maybe a little bit higher than the low end of the guidance as we sit here. As I said earlier, we've got one quarter to kind of squeeze out the fiscal year 2013 impacts of sequestration. It seems like a lot has to happen that quarter for that sort of mathematical modeling to come into fruition. Hewson: So our production rate today is about 13 aircraft per year, and it should continue on out through at least the 2017 timeframe. And then as we see additional orders come online, we would continue to stay on whatever rate that would lend itself to. We also have F-16 upgrade work that we're doing today, which is good work for us, as we with the Taiwan upgrade of F-16s. Hewson: Between now and the end of the year, we typically do actuarial studies that look at the current population of employees to see what has changed, and that population, as we do reductions in force, some of the dynamics of that actuarial study do actually change in terms of the composition of the workforce upon which that liability is built upon. One of the bigger changes that and it may not happen between now and the end of the year, but we're watching it closely, is we are expecting a new standard mortality rate to come out which, I guess from the good news perspective, says all of us are going to live longer. From the bad news perspective, it says your liabilities are likely going to be increasing for pension because people are living longer. So that'll have a bit of a mitigating effect on what we just described there in the numbers that you said. Hewson: I believe our second quarter results and increased guidance illustrate the solid position and CLICK HERE TO RETURN TO INDEX
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performance of the corporation to provide value to our shareholders and solutions to our customers. Even in an uncertain budget environment, our program portfolio, strong balance sheet, robust cash generation, and the exceptional execution by our 116,000 employees will continue to propel our corporation forward.
Caterpillar
[CAT] Earnings Call 7/24/13 Michael DeWalt, Corporate Controller: Last year's second quarter, dealers bought more machines from Caterpillar than they delivered to customers and their machine inventories rose again last year about $300 million. In the second quarter of this year 2013, it was the reverse. Dealers bought less from us than they sold to their customers and their inventory of new machines, as a result, declined about $1 billion. So, in combination, the impacts and the changes of dealer machine inventories was negative by about $1.3 billion for the quarter-over-quarter. DeWalt: Although Resource Industries sales of aftermarket parts are down a little in the second quarter of 2013 compared with the year ago, the decline is much less than the decline for equipment and in the context of the total decline in sales for Resource Industries, it's just not a significant factor. And the collective sales of equipment for forestry, paving and quarry and aggregates are also down, but again the vast majority of the decline in Resource Industries sales for the quarter, the second quarter of 2013, is mining equipment. DeWalt: If the world economy continues to improve, we would expect commodity production to increase and that coupled with a relatively large number of new machines placed in service over the past several years that should be a positive for mining aftermarket parts sales. DeWalt: Commodity demand is driven by economic growth, population increase and rising standards of living and we believe that will all continue to improve over the long-term. In addition, declining ore grades imply that in the future more material will need to be moved per ton of commodity output and that's another positive, at least from our perspective, for long-term equipment needs. DeWalt: Our long-term view of China is positive. We expect continued urbanization and improvement in the standard of living for the people of China. We believe that means more electricity production will be generated and increased production and consumption of goods in general. Now increasing electricity production in particular is a positive for coal. Coal makes up a large portion of the electricity generated in China and they continue to add coal-fired capacity. Now that said, we do not expect the significant economic growth rates that China experienced over the past 10 years will continue indefinitely. But we do believe that China will continue to grow at a much faster pace than the rest of the world. And it's also important to remember that over the past 10 years, the size of the Chinese economy is more than doubled and that means that economic growth rates of 7% to 7.5% have a greater impact today than the 10% growth rate would've had 10 years ago. It's a big economy that, relative to the world in total, is growing faster. DeWalt: While it was certainly a tough quarter for sales and profit, our Machinery and Power Systems operating cash flow was better than it's been in a long time. We generated $3 billion worth of operating cash flow in the quarter and that's a substantial increase from $1.3 billion in last year's second quarter and we've put that to work for stockholders. DeWalt: I think for Power Systems overall, they had a pretty darn good quarter. Sales volume was down a little bit, but some of the pieces were up. I think more of their profit improvement had to do with, they had a little price realization and they've done a pretty good job on cutting costs. And as opposed to Power Systems CLICK HERE TO RETURN TO INDEX
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as opposed to Construction and Resource Industries, they didn't have near the decline in inventory that those other two segments did. So the absorption impact was relative to the company in total. A lot smaller for them. DeWalt: I think for mining in general, it's a tough market out there right now. I mean volume is down quite a bit and I think by and large we're pretty close to holding our own again. It was a slight reduction in the quarter compared with a really big quarter year ago. I don't think there's any big fundamental shifts.
General Dynamics
[GD] Earnings Call 7/24/13 Phebe Novakovic, CEO: Aerospace had a powerful quarter with the highest revenue, operating earnings and operating margins reported in the last six quarters. We had good contribution from Jet Aviation and Gulfstream's performance was superb. Novakovic: Marine group revenues were higher than Q2 2012 and the prior quarter. However, oper ating earnings and operating margins were down 2.7% and 100 basis points respectively. Entirely as a result of the completion of the high margin T-AKE program in 2012. Novakovic: Revenues were higher this quarter than in the second quarter 2012 as well as the prior quarter in a tough market primarily with respect to our Army customer. The revenues of each operating unit within the group improved sequentially.
Leggett & Platt

[LEG] Earnings Call 7/26/13 Karl Glassman, COO: We are optimistic about the longer-term view for the office furniture industry, but we expect 2013 volume in this business to be somewhat soft. EBIT and EBIT margins increased versus the second quarter of 2012, reflecting higher sales in the absence of last year's restructuring-related expense. We will face very strong third quarter comparison in this segment from large store fixture programs that were shipped last fall. In the Industrial Materials segment, second quarter same location sales decreased 9% due in roughly equal parts to lower trade sales in our rod mill and steel-related price deflation. The decrease in trade sales of steel rod during the quarter was more than offset by an increase in intercompany rod sales, and the rod mill continues to run at 100% capacity utilization. Glassman: The price increases in Residential were singularly placed in carpet underlay, where there had been a significant shortage of the scrap material that ultimately becomes rebounded carpet underlay. In the first half of this year, there were a number of price increases implemented. We now believe as we start the third quarter that we're fully recovered, for the first time we've been in that position since the tail end of the fourth quarter of last year. In Industrial, there was a slight downward pressure at the rod and then wire level in the second quarter of this year. As I said earlier, we expect that there will be some re-inflation in both wire and rod in the latter part of the third quarter, based on currently-announced increases. Glassman: It's our expectation in April that there would be a stronger back half of the year. We did not experience that obviously in the second quarter. While we think we had a really strong second quarter from an operating performance standpoint, the one area of disappointment was lack of top line and we're forecasting a continuation of that through the back half. Generally, we were more optimistic just a quarter
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ago, as it relates to sales, than we are today. Glassman: The second quarter started pretty slow. April and May were slow. We started to see some pick up in June. And I would say collectively the furniture manufacturers feel a little bit more bullish than the bedding side. Our domestic hardware units were up 8.5% in June. It feels like there's more strengths in U.S. manufacturing, certainly some Chinese domestic consumption softness and some softness in Europe that had a negative impact on our mechanism sales in the second quarter. But yeah, I would say that, overall, we'll know more next week in the Las Vegas Market, the furniture manufacturers are pretty bullish right now. Glassman: The forecast for office is stronger for next year than this. Aerospace is expected to grow, from a production perspective, greater next year than this. As long as consumer confidence holds together with the housing statistics that we're dealing with now, we're confident that we'll see continued growth in carpet underlay and we continue to be very bullish on furniture and bedding, but it takes a confident consumer. We'll see what happens to the consumer in the back half with inefficiency of our government over the whole debt ceiling situation, which makes us a little bit nervous. But we'll see how all that plays out. Another positive trend is we are now just eclipsed three quarters in a row where innersprings are growing at a faster rate than non-innerspring bedding. So, the belief that innersprings are dead is proving to be not factual. So, we're very, very bullish. But we're just concerned about the back half of this year. Glassman: The bedding industry, both at the manufacturing and the retail level, has conditioned the consumer to only buy mattresses when they're heavily discounted and heavily promoted. So, it's a little bit of a feast or famine. Glassman: European units were up 18% in the second quarter after a strong first quarter. I will say the mix isn't as good as it was a year or so ago. So, we're selling more units, but of lower average unit selling price and lower specification. The reason for our relative success in Europe is we tend to be U.K. and Northern Europebased Scandinavian countries, where higher quality, higher average unit selling prices consume. We don't have much of a position in the southern part of Europe. We continue to gain some share because of some currency exchange rate negatives to others that are trying to ship into U.K., where we're really the only large producer of any size on the island.
BorgWarner
[BWA] Earnings Call 7/25/13 James Verrier, CEO: Despite low production levels in Europe for both light and commercial vehicles, our operational efficiency and cost controls enabled us to post a strong operating margin in these conditions. Verrier: In the commercial vehicle markets, our overall expectations are unchanged. We still expect stability in 2013, but not much growth. So in Europe and North America, we expect production to be relatively flat compared with 2012, which is consistent with our previous outlook. However, our view on CV production in China has improved. In April, we said that we were expecting a double-digit decline in 2013 CV volumes; however, a strong first half has changed our view, so we're now expecting CV production in China to be flat with 2012 levels. And in Brazil, we still expect double-digit growth and a strong half of what we've seen supports that view. Verrier: The macro environment is improving, but still has its challenges, especially in Europe. However, BorgWarner's record financial performance in the second quarter underscored our operational proficiency and our ability to manage costs during challenging times. CLICK HERE TO RETURN TO INDEX
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Ronald Hundzinski, CFO: Our performance relative to North American market continues to be a challenge, as the adoption of advanced powertrain technology continues to lag other markets. We expect this to improve over time. Hundzinski: Weak market conditions, particularly in Europe, will likely result in sales growth below our longterm trend in 2013. Despite this, 2013 should be another year of record sales and record profits for BorgWarner. Over the long term, we intend to execute our growth strategy, and over the short term remain focused on efficiency, regardless of the direction of the market.
3M
[MMM] Earnings Call 7/25/13 Inge Thulin, CEO: Second quarter was another good one for 3M. We continued to grow our sales, profits and free cash flow in the face of a continued slow growth economy and a strong U.S. dollar. Sales grew 3% yearon-year to $7.8 billion, an all-time record for any quarter in 3M's history. Thulin: Geographically, Latin America-Canada led the way with organic growth of 9%. Asia-Pacific and EuropeMiddle East-Africa each grew 2% and the United States was up 1%. Currency impacts reduced worldwide sales by 1.3% impacted by the weak Japanese yen. Acquisitions added nearly two points to second quarter growth. Thulin: Entering 2013, we anticipated slow market growth in the first half of the year and that is how it played out. I am pleased with our performance especially given this backdrop. We also expected a second half recovery based on improving macroeconomic trends and a recovery in the Consumer electronics. This remains our view today. David Meline, CFO: Health Care had another excellent quarter posting the highest organic growth and the highest operating margins amongst our five business segments Sales in Health Care grew organically in all geographic regions led by double-digit performances in both Latin America-Canada and Asia-Pacific. Healthcare second quarter organic sales growth was 15% in developing markets on top of 13% in the first quarter. These are highly promising growth sectors for 3M and we continued to funnel investment dollars them towards and we're encouraged to see the positive results. Meline: Q2 is when we begin to see the impact of the back-to-school season and growth thus far has been encouraging. We have good placement and promotional programs in place and we are seeing some sales lift from our newly introduced family of Scotch Expressions tapes. Thulin: First half conditions were challenging and 3M executed very well under the circumstances. We anticipate demand recovery in the second half of the year with some help from both the macro economy and the consumer electronics markets. And we remain focused on driving productivity and executing our plan with strong discipline. Thulin: Western Europe first of all we saw very, very slight growth for the first time in eight quarters, which was encouraging for us. And the way we look upon it we separate the in between North and South. And in North are growing slightly better than in South and I would say in terms of when you look upon the countries I would say Germany was basically going sideways on a lower level and we had little bit better growth in U.K. Up to 5% to 6% in that country. And North for us would be identified as Nordic, U.K., Germany, Benelux and also Alpine as the Alpine countries are very dependent on Germany. So it's on a lower level going sideways but at least was encouraging to see that we for the first time in eight quarters saw slight, slight growth from that
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part of the world. And as we had talked about earlier, we have really worked on the back end of the organization there in order to streamline that combined regions and try to manage the cost in the back end of the operation.
Raytheon
[RTN] Earnings Call 7/25/13 William Swanson, CEO: The company continued to perform well in the second quarter. Sales, margins, EPS and cash flow were all ahead of expectation on strong international sales growth. Our solid execution on productivity initiatives is helping to drive both our financial performance and our ability to provide affordable solutions for our customers. Combining these initiatives with our technology investments and innovation yields a powerful strategy that continues to show positive results. We remain confident in our overall outlook and have raised our EPS guidance for the year. Swanson: Congress and the administration continue to work toward a compromise on the fiscal 2014 budget and are not there yet. Current versions of the budget don't include sequestration and barring some type of grand bargain, the defense budget ultimately will need to be reconciled with the cap spelled out in the Budget Control Act of 2011, which is about $50 billion lower than the currently proposed levels. The outcome remains unclear but as we've said all along, we remain focused on executing our strategy and managing the business in order to deliver the best value for our customers and shareholders, whatever the environment. Swanson: International continues to be a key driver of the business. In the second quarter International grew by 10% compared to last year's second quarter and was 27% of total sales.
Parker Hannifin
[PH] Earnings Call 8/6/13 Donald Washkewicz, CEO: Our performance for fiscal 2013 largely reflected soft global economic conditions, particularly outside the United States So, what was happening basically is the lower margin acquisitions were replacing higher margin organic growth throughout the year. Washkewicz: Our sales for the fourth quarter were a record for the company. We're finally coming off the bottom with respect to order trends Washkewicz: Looking out to next fiscal year, we are anticipating a modest growth here as a result of the global macroeconomic conditions and have provided guidance of $7.35 to $8.15 in diluted earnings per share. These estimates for fiscal 2014 compared with 2013 include an expected gain of approximately $1.50 from the joint venture with GE Aviation and higher operating expenses of approximately $100 million due to possible restructuring activities. Washkewicz: The worst two segments for us as far as market segments are Construction and Process markets. Okay. Construction, pretty much globally is down and I think that is probably the major decline that we've seen in the last quarter or quarters, if you will. Some of the more positive segments are Commercial, Aerospace, both on the OEM side and the aftermarket side, our Distribution is still positive, not as strong as it was, but still positive, Farm and Ag is a real strong segment for us. Cars and Light Trucks shouldn't be a surprise, that's been doing pretty well. Semiconductor is turning around, it's actually improving now a little bit. Forestry, Industrial Trucks and Industrial Refrigeration are all positive. So that would be some of the markets
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that we're tracking positive. On the down side, in addition to the Process and the Construction market, Oil and Gas is softening, and then the Military markets, both the, on the Defense side, Defense OEM and Defense Aftermarket are both negative as far as order trends for us. And then the rest of them would be flat. So the rest of them would include things like Machine Tools, General Industrial Power Gen and Commercial Air Conditioning and Commercial Refrigeration. Washkewicz: I think North America slight positive, Europe a positive trend at least in this early going, which would be that's good, because they've been down in recession for quite some time there, we like to see that come back around and Asia being not so good right now and Latin America kind of flat. So that's a little color on some of the markets and some of the regions as we see it here. Jon Marten, CFO: It was our best quarter of the year in Industrial International, and we do see, the Eurozone starting to stabilize and maybe bounce up from the bottom that has been formed and an inflection point being incurred there. Asia, which is the other major significant portion of that segment, is still down, and the order trends are still down. And we're projecting that to move back up later in the year. That did not move up as quickly as we hoped during Q4. Washkewicz: The raw materials, actually compared to where we were last time, actually have come down a little bit. Some of them have. Some are flat, some of the inputs for instances here castings and steel and zinc die-cast parts and, frankly, oil. Those would be some of the categories that have been flat. Natural gas is down. Nickel is down. Nickel would be in there some of our stainless and higher-alloy products is down. Aluminum is down, and copper is down. So some of the input raw materials are down. Steel is relatively flat. That would be a big input for us. So, it's a little bit of a mixed bag. But the general trend, I think, is softening. And I think the copper being down is probably directly related to the fact that China has stopped growing and stopped the construction has kind of flatlined over there at least for the time being, and because they were consuming most of the copper on the planet, I think, going back from a year ago.
Deere
[DE] Earnings Call 8/14/13 Susan Karlix, Manager, Investor Communications: John Deere's strong performance continued in the third quarter of 2013. Earnings jumped 26% on a sales increase of 4%. Both earnings and sales were the highest of any third quarter in the company's history, and it marked our 13th quarter in a row of record profit. Karlix: Beef prices are leveling off at historic highs, while pork and milk prices are favorable. On the other hand, farm machinery demand is expected to be lower in 2013 as the financial crisis continues to weigh on farmers' sentiment and softness in the U.K. continues. Karlix: The outlooks for GDP and government spending have softened since last quarter. Although overall economic growth continues at a sluggish pace, we are beginning to see some positive indicators. While moving very slowly, residential investment is growing, home sales and prices are increasing, and there are reports that the number of build-ready lots are dwindling. Global forestry markets are now expected to be up 5% to 10% in 2013, as weakness in Europe and Russia is more than offset by improvement in North America. Forestry markets in the U.S. are considerably higher due to the year-over-year increase in housing starts. Fiscal 2013 net sales in Construction & Forestry are now forecast to be down about 8%. Our previous outlook was down about 5%. The year-over-year sales decline is reflected in lower inventory and receivable numbers, and it has had an impact on mix, as we reduce shipments of high-margin equipment. CLICK HERE TO RETURN TO INDEX
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Karlix: John Deere is well on the road to another year of impressive performance. Even with a difficult comparison in store for the fourth quarter, our financial guidance implies a healthy level of income, helping us wrap up a third consecutive year of record results. Also, it is significant to note that Deere has been consistently setting new performance records despite facing some significant headwinds, including a sluggish global economy, political gridlock in Washington, and a host of major product changeovers associated with more stringent emissions rules.
Briggs & Stratton

[BGG] Earnings Call 8/15/13 Todd Teske, CEO: While we anticipated a rebound from last year's drought, the late start to the spring lawn and garden season put us behind our projections early in the quarter. While retail sales appeared to pick up during May and June, easily beating last year's drought impacted season, it was not enough to compare positively for the season by the end of June. We believe that to the end of June 2013, the U.S. retail market for walk and ride mowers decreased 3% to 5% compared to the previous year, while shipments into the channel by OEMs were flat for walk mowers and slightly up for riding mowers. As a reminder, last year's season got off to a fast start with unseasonably warm temperatures in February through April, during which retail sales of mowers was quite good until the impact of the drought took effect beginning in May. Because of the drought, retailers and OEMs had more inventory than desired as the season concluded. In addition, our lackluster snow throwers sales season did not help in terms of retailers being reluctant to buy more lawn and garden inventory in the spring, especially with lower sales in March and April compared to last year. Equipment OEMs in turn were also cautious to reorder and build more inventories and responded by reducing production. In response to these market dynamics, we took down production, which had the positive impact of controlling inventory, but also had the near-term impact of reducing fixed cost absorption and thus lowering gross profit margins for the quarter. Teske: We had lower sales of engines for snow throwers in the U.S. and Europe, and lower sales of engines for lawn equipment in both Australia and Europe. Sales of engines for walk mowers in the U.S. increased over the last year while engines for riding mowers decreased due to channel inventory reductions. Teske: In a difficult market environment we've been operating in the past several years, our employees have done a great job in responding to the challenges through Lean process initiatives, eliminating waste, and reducing costs whenever possible. We will continue to focus on this moving forward to maintain our cost competitiveness. Teske: While our business in fiscal 2013 was significantly impacted by weather, both good and bad, it would be fair to say that the market recovery here in the U.S. fell short of our expectations. Even so, our team has remained focused on executing our strategy, and the things that we have within our control to make us a stronger company, a leaner company, and one that is well positioned to capitalize on future growth in both our traditional markets and emerging regions around the world.
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Transportation
Union Pacific
[UNP] Earnings Call 7/18/13 Eric Butler, Executive Vice President of Marketing and Sales: In the second quarter volume was down about one percent compared to last year as strong growth in chemicals and solid gains in automotive were offset by declines in intermodal and ag. The drought related decline in ag continues to have a significant impact on overall volume. Setting ag aside, the other five groups were up about 1% in total. Butler: Driven by replacement demand, favorable financing, and an improving overall economy, vehicle sales continued to gain momentum with the seasonally adjusted annual sales rate reaching 15.9 million in June, the highest level since late 2007. New models offering more futures and improved fuel efficiency are compelling consumers to replace aging vehicles. In addition, upticks in housing and construction activity have increased demand for light trucks. While overall auto sales continue to reflect strong growth, our finished vehicle shipments saw more modest increase reflecting a 2% gain as select OEMs faced downtown to deal with model changes and new product launches. Parts volume increased 5%, while pricing gains in the previously mentioned Pacer network logistics management arrangement increased average revenue per car. Butler: Growth in housing starts and residential improvements increased the demand for lumber with shipments up 11%. Although the housing market continued to strengthen, lumber's pace of growth eased slightly in the second quarter, as falling lumber prices, excess inventory, and wet weather slowed lumber shipments. Butler: Our current outlook is for the economy to show some improvement from the sluggishness we've seen in the second quarter. Although we'll continue to face challenges in some markets, our diverse franchise still provides opportunities to grow in others. The diminished 2012 corn crop will continue to impact ag products in the third quarter. But an improving export wheat market should offers some relief. The pace of decline for ag products should ease with third quarter volumes expected to be down in the lower single digit range. We hope to see a return to trend line yields when the new crop corn crop, comes in later in the year which should provide some opportunities. Butler: Crude oil should continue to drive chemical's growth, but the growth rate will continue to ease against 2012's larger base. Most other chemical markets are expected to remain solid. Butler: While we expect coal volumes to increase sequentially into third quarter, year over year volume growth for the quarter will depend upon weather conditions. Industrial products should also continue to benefit from shale-related growth, with increased drilling activity and a ramp up in pipeline projects, after a slow start to the year. The housing market continues to recover, which is expected to drive demand for lumber. We expect continued success in converting highway business toward domestic intermodal, and international intermodal should pick up as a slowly growing economy is expected to produce a positive, but somewhat muted, peak season. Robert Knight, CFO: Assuming an improving economy and summer weather conditions that will drive coal demand and fall crop harvest yields, we're projecting positive volume growth for the second half of the year, which should bring full year volumes to the positive side of the ledger. CLICK HERE TO RETURN TO INDEX
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In the third quarter, we'll continue to see a year-over-year decline in our ag volumes, however not at the magnitude that we saw in the second quarter. As for our coal shipments, summer weather will be the determining factor. In addition, we'll have to see how consumer sentiment and the economy impact the intermodal peak season this year. However, we do think there are continued growth opportunities in other market sectors that have the potential to offset these uncertainties. Butler: There's always significant competition between all of the ports up and down the West Coast, and between ourselves and our competitors, but there's no significant share swing that has occurred. The real fundamental issue is retail indicators in this country, retail sales have really been mixed. And you could argue even in the second quarter they look like they have softened a bit. Supply chain manufacturers and retailers are continuing to thin out the supply chain and trying to squeeze out inventory. So you have actually seen lower volumes coming in to all of the West Coast ports from Asia. Certainly what's going on in China might also have an impact to that. Certainly near sourcing to Mexico might have an impact to that. But you have seen lower volumes into all of the West Coast ports in the second quarter. Butler: Coal is hanging in there pretty solidly at a 38%, 39% market share of total electrical generation. We see nothing on the horizon that's going to substantially change that. Certainly there could be some environmental regulatory thing that could change it. But right now from a business economic standpoint, we see nothing on the horizon that's going to change that. Butler: The Mexican grain business is always very strong for us. With the drought last year we have seen some weakness, but as you have normal crop yields that is always a target area for us. And then intermodal is really kind of the untapped area. There's a significant amount of intermodal today in terms of for the auto manufacturers, but if you take the auto manufacturers out of the mix, there's significant North/South truck moves, and we believe that that's an untapped area for us to penetrate and grow our Mexico business. So we're very excited about Mexico. Butler: The export market was somewhat disappointing this year given some of the economic difficulties, particularly in Europe, less so in Asia. We do expect that as the world economy grows that the export market should strengthen and there will be upside to that. But this year will be a little higher, call it around 8 million tons, averaging up.
CSX
[CSX] Earnings Call 7/17/13 Michael Ward, CEO: On the revenue side, we were encouraged by the solid growth across many of our markets offsetting the ongoing challenges in coal. Overall revenue was up slightly on 1% volume growth, combined with the team's ability to drive solid core pricing for the service value CSX is providing. Clarence Gooden, CMO: Looking at the key economic indicators, they continue to point to slow, steady growth in the U.S. economy. In June, the Purchasing Managers' Index registered a reading of 50.9, reflecting a modest expansion of U.S. manufacturing. At the same time, the Customers' Inventory Index registered a reading of 45, indicating respondents believe their inventories are still below normal levels. Gooden: The Agricultural sector was flat with growth in phosphates and fertilizer offset by the ongoing challenges in feed grains, soybeans and ethanol. The coal story was mixed. Domestic volume was up 5%, against a very weak second quarter last year, while export volume was down sharply.
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Gooden: Looking at the third quarter, growth is expected in the industrial sector driven by ongoing opportunities in chemicals, particularly in commodities related to oil and gas drilling. The automotive market will also remain strong, although we continue cycling tough comparables. We expect the agricultural sector to recover with the anticipated improvement in crop yields, supporting growth in grain shipments, primarily for animal feed. Finally, we anticipate the steady recovery in the construction sector will drive growth in building products and aggregates. Gooden: International volume grew less than 1% as growth with existing customers and from new service offerings was partially offset by volume lost to a carrier port shift. Total intermodal revenue per unit increased 2% on core pricing gains. Fredrik Eliasson, CFO: Looking to the second half, coal will continue to be a challenge driven by a depressed global coal environment and high domestic inventories. In addition, the year-over-year impact from real estate transactions, which was positive in the first half, will be negative by a greater amount in the second half. At the same time, liquidated damages, which was positive in the first half, are expected to be flat to slightly down on a year-over-year basis in the second half. Taken altogether, we are modifying our full-year earnings per share guidance slightly to now be roughly flat with 2012. Ward: We like what we see: relentless consistent performance and a promising future. Your company is well positioned to drive strong earnings growth and margin expansion long-term as the economy continues its slow recovery and the energy environment evolves. Eliasson: there are two basic macro assumptions, that coal overall will be flat as we get through 2013; though between domestic and export, we think it's going to be flat. And we've also said that underlying that guidance of 10% to 15% CAGR in earnings is going to be an economy that is going to grow but albeit at a continuous modest pace. Clearly, export coal is has gotten weaker, but inherent in the inventory overhang that we're dealing with on the domestic side, there's an opportunity perhaps for a pick-up as we get into 2014 as well. I think overall, that's the macro assumptions that we have talked about, and I think as we stand here today a quarter into the new guidance that we've talked about, we still feel very comfortable with our guidance for 2014 and 2015. Gooden: I met with two truckers last week and they're not seeing as much impact as some of the people have forecasted. So they're looking at some numbers around 5%. At times as I'm sure you know 5% loss of productivity and as I'm sure you know there has been a lot of projections about much larger impacts on productivity than those numbers. I think it's too early to tell and so people settle down some type of working pattern of exactly what the impacts going to be. I think the more important thing in intermodal is the value that's been offered to the customers both in terms of service and in terms of price that's available to them now and a better awareness of the beneficial cargos of what those values are. Eliasson: Overall between domestic and export and obviously as we're looking at the market right now, there is more downward pressure on export and perhaps more upward opportunities on domestic. But we got two and a half years until that endpoint, so a lot of things will change.
Kansas City Southern

[KSU] Earnings Call 7/19/13 David Starling, CEO: We're very pleased with our second quarter results, especially in light of having to manage through the revenue impacts of one of the worst droughts in U.S. history. On the whole, KCS hit its CLICK HERE TO RETURN TO INDEX
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targets for the quarter and remains on a solid growth trajectory. Second quarter revenues came in at a little over 6%. While absolutely no apology is necessary for 6% growth, the fact is, if not for the drop in our grain traffic due to the drought, our revenue growth would have been around 11%. True, you can't take that to the bank, but it does give us considerable confidence that we could see strong revenue growth during the second half of the year after the crop is harvested. Starling: There's an old adage in sports that it's funny how the luckiest players always seem to be those who practice and prepare the hardest. The same held true in our case. Our luck in hitting the market at a time when the rates were at historic lows was a result of a multiyear process that entailed a lot of work by a lot of people. In the end, that work resulted in a major refinancing that will materially benefit the company and its investors for many years to come. Starling: We believe that with a good corn crop this summer, the comps will benefit us later in the year. With this potential tailwind, coupled with other business opportunities, we are extremely confident in our midsingle-digit volume guidance for 2013. Pricing remained in the mid-single-digit range we'd previously guided to. Patrick Ottensmeyer, Executive Vice President, Sales and Marketing: Two areas that stood out during the quarter were petroleum and plastic shipments in Mexico, which represents about two-thirds of the revenue growth in this segment. You may recall that this business unit was not particularly strong in the first quarter, and back in April we reported that we did not see this as a cyclical turning point in this business, which has historically been one of the most reliable leading indicators in our business. As we expected at that time, we saw a pickup during the quarter, as sequential volumes and revenue were higher by about 5% and 7%, respectively, from the first quarter. Ottensmeyer: We saw pretty decent volume growth in metals and scrap, particularly in the U.S., which was 6.9% higher, and pulp and paper, mostly in Mexico, which was about 6% higher. And these are two of our larger commodity groups, but the volume growth there was essentially offset by decline in appliances, lumber, and plywood and other, which is primarily military shipments. We did see strong growth in cross-border shipments of paper rolls during the quarter, which is very encouraging. Ottensmeyer: For Ag & Minerals, as was the case in the first quarter, this group continued to be weak, although we did see some sequential improvements from the first quarter, with revenues and volume each improving by about 7% from the first quarter of 2013. We talked a lot about this area in the first quarter, and there really is not much new or different to add at this time. The problem is the continued impact of the drought from last year. Growing conditions are certainly better than last year in our key origination regions, and we still feel good at this point about the new crop. Our order book for the fourth quarter is quite strong in some of our larger customers. So, again, assuming that we have a decent crop and I'll probably say that at least two more times in this presentation the end of the third quarter and the fourth quarter should be very strong. Ottensmeyer: With adjusting for the weakness in grain, revenues in the quarter would have been up 11% on 4% volume growth. We are expecting grain to show continued double-digit year-over-year declines in July and August, but expect that the comps will turn positive in September, and then turn to a fairly strong positive versus last year in the fourth quarter. And once again, our outlook is dependent on the weather and growing conditions for the rest of the season, which at the moment certainly look better than this time last year. Ottensmeyer: Eliminating the impact of lower grain and food products business, our cross -border revenue CLICK HERE TO RETURN TO INDEX
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would have been 14.5% higher than last year. This positive trend should continue, again, if the grain business meets our expectations, in the fourth quarter. Ottensmeyer: While the utility coal comps are going to get a little tougher in the second half, we are experiencing very warm weather in much of our service region, so the burn rates are high at the moment and stockpiles are at normal level. Ottensmeyer: As a result of a very volatile peso during the quarter, we saw the currency devalue from 12.35 at the end of the first quarter to 13.02 at the end of the second quarter, which resulted in foreign exchange losses of $22 million.
UPS
[UPS] Earnings Call 7/23/13 Scott Davis, CEO: International freight forward operating profits and margins continue to be influenced by moderating demand and changes in shipper preference. Customers around the world continue to put greater emphasis on cost rather than time in transit trading down in the UPS product portfolio. We believe this trend is primarily cyclical. Over the last few quarters, there's been a trough in the innovation cycle. Demand for new high-tech products traditionally drives express small package and air freight out of Asia. On the other hand, some of the trade down is likely permanent. More international trade is being conducted regionally and Supply Chains are becoming more efficient so the need for the fast express options may not grow quite as strong in the future. Here in the U.S. volume growth was a little less than we expected. Some opportunities were missed due to labor negotiations. Davis: Looking forward at the macro picture. Though global economic expansion for the second half of 2013 is still expected, forecasts have been lowered in 10 of the 12 largest economies, including here in the U.S. One area the U.S. continues to struggle with is exports, especially to Europe. So UPS strongly supports the Transatlantic Trade Investment Partnership. This is a great opportunity for the U.S. and the E.U. to set the standard for trade pacts. Davis: Looking at the remainder of 2013 for the segments, in our U.S. Domestic segment, we expect daily volume will increase between 2% and 3%. Growth should get stronger as the year progresses as we convert missed opportunities from earlier in the year. Revenue growth should be slightly higher than volume. Package characteristics and lower fuel surcharges will continue to mask the base rate improvement somewhat, and profitability will be up at a mid-single digit pace. David Abney, COO: Economic cycles and consumer behaviors change, creating challenges and opportunities. The key to long-term success is adapting our model to capitalize on these changes. This is something we've been doing for more than 100 years. Kurt Kuehn, CFO: The biggest issue clearly in the second quarter for domestic was the slowdown of volume growth below what we'd expected and Myron clearly you guys are adapting to that. Myron Gray, President of U.S. Operations: on the heels of slower growth and what we expected, when you look at the ramp up of the basic product in the SurePost, we were able to improve our operating margins by deploying SurePost redirect. During the second quarter on average we saw 17.5% of the packages that would have been delivered by the Post Office, we were able to redirect through our package delivery drivers with matching them up with other stops that were going to residences which drove density. So we'll see continued
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expansion of our productivity and moving into the third quarter, we'll try to hone those productivity improvements. Kuehn: We're looking for basically a steady-state economy, unexciting, a little under-performing, clearly, from where we thought it would be at the beginning of year, but not radically down. We do expect the U.S. business to ramp-up a bit as we ramp-up some of the customers perhaps that got deferred or delayed during the negotiation period. So, we'd like to see volume growth strengthen with Q4 clearly being stronger than Q3. On the International side, kind of steady as she goes on that. Clearly there's volatility in the air freight, but we feel pretty good that the core business is very strong. Europe continues strong. So no real unique shape to the rest of the year as far as economic conditions. James Barber, International President: Just to put color, the issue it's more of a challenge for us coming out of Asia, where you fly the goods. When you hit the cross border in Europe, you can obviously move between air and ground and have flexibility. But the challenge for us, obviously, is when business slows down from out of Asia, you fly it. Barber: In the second quarter if you watched economic stats, the inventories got liquidated so inventories are pretty low level right now and U.S. exports are really weak. So those two areas could really help B2B going forward to get back to normal.
Norfolk Southern
[NSC] Earnings Call 7/23/13 Charles Moorman, CEO: We continued to face a difficult environment in export coal, with loadings down 16% in the quarter. In addition, we had a $65 million headwind associated with the fuel revenue lag. Second quarter of last year had a $61 million favorable fuel lag compared to this year's $4 million unfavorable. Despite these two factors the majority of our other businesses performed well in the quarter. Revenues other than coal were up 3%. Donald Seale, CMO: In the South, challenging coal dispatch economics and high stockpiles built in 2012 remain an impediment for coal demand, but we see some signs of improvement ahead. Domestic metallurgical volumes were down 11% for the quarter due to weaker steel production and the continued impact of the RG Steel bankruptcy, a comp which we cleared on July 1 this year, and industrial coal volume was down 6%, due to competition from gas and higher tons per car as higher efficiency equipment is deployed in this segment. Seale: Iron and steel carloads were down 19%, primarily driven by the reduction in import slabs, reflecting excess capacity in the domestic steel industry. Coil steel was also down due to an unscheduled plant shutdown in April. As with coal, the RG Steel bankruptcy also continued to plague year-over-year comparisons, which we have now cleared. On the positive side, aggregates and miscellaneous construction were up 6% and 2%, respectively. Agriculture continues to be impacted by last year's poor crop due to the drought. Volumes fell as tight soybean supplies were partially offset by increases in corn driven by increased volume from Iowa and Nebraska into the Midwest processing plants. On the plus side, the current crop is shaping up to be a good one which bodes well for increased shipping activity later this fall. 2013 corn acreage totals 97 million acres, the most planted since 1936. Seale: The market ahead continues to be mostly positive, but we face continuing headwinds across most of our coal business. Competition from natural gas and flat to declining electricity demand will continue to CLICK HERE TO RETURN TO INDEX
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impact our utility franchise. But firming natural gas prices reflects some relief for coal in utility dispatch curves. And we're seeing utility stockpiles move in the right direction. With respect to export met coal demand, we see continued sluggish demand in Europe and slowing shipments into Asia. Asian shipments are further being impacted by the weakening Australian dollar and lower benchmark met coal price settlements. Also, thermal coal exports will face lower yields and volume associated with the weak API 2 Index in the Northern Europe. In view of these challenges in both met and thermal coal exports we expect continued headwinds for export volumes through the rest of the year with a softer third and fourth quarter than we experienced in the first half of the year. And finally, regarding domestic met coal here in the U.S., we expect modestly improved comparisons for the balance of the year. Seale: Agriculture should generate additional volume as soybeans and corn beginning in the fourth quarter as a result of the new crop and we expect modest increases primarily in frac sand in the metals and construction segment.we expected our diverse market base to generate volume growth ahead, despite continuing challenges in the coal market and a slow growth economy. We also remain committed to market based pricing at levels that equal or exceed the rate of rail inflation. Obviously, with current conditions in our coal business this is a short term challenge but that doesn't alter the value of our strong service product across a very diverse set of markets where our pricing remains solid. Seale: In the North, we're seeing stockpiles normalized. In the South, we're still seeing stockpiles above normal. We're seeing heavier gas competition in the South as well. But with the summer burn that we are seeing, we're seeing stockpiles begin to come down in the South and they're at the normal level in the North. Moorman: We're seeing Europe in terms of their economic recovery not doing very well and Europe, Northern Europe in particular is a natural market for U.S. export coal. So until we see the European economy begin to recover, we will continue to see exports from the U.S. be challenged. I do believe that thermal coal in the world market, the demand for that, will continue to grow, probably by as much as 50 million tons next year in just the year 2014. So power plants are being built. Coal usage is being ramped up around the world. It's all a matter of who is going to supply it and who has the cost structure to be able to supply it at world prices.
Paccar
[PCAR] Earnings Call 7/23/13 Mark Pigott, CEO: PACCAR's second quarter truck results reflect gradually improving industry truck sales in North America compared to the first quarter of this year. In fact, second quarter truck and parts revenues increased by 10% compared to the first quarter. Class 8 industry retail sales in the U.S. and Canada were 54,000 units in the second quarter this year, compared to 45,000 units in the first quarter. Customer truck purchases are focused primarily on replacement vehicles for their fleets. PACCAR delivered 34,800 trucks during the quarter. In addition, PACCAR generated record parts revenue in the second quarter. Pigott: Turning to Europe, freight in Germany as measured by truck miles driven or the MAUT continue d at levels comparable to last year. DAF truck orders for the second quarter increased by 34% compared to a year ago and were up 19% from the first quarter. Customers, particularly in the UK, are accelerating purchases of Euro 5 vehicles before the introduction of the Euro 6 emission standards in January 2014. In Europe, the greater than 16-ton truck market is projected to be in the range of 210,000 units and 230,000 units. Looking forward, PACCAR truck deliveries in the third quarter are expected to be 1% to 2% higher compared to CLICK HERE TO RETURN TO INDEX
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the second quarter. The benefits of a slightly higher daily build rate are offset by the regular annual two-week factory summer shutdown in Europe. Third quarter gross margins should be similar to the second quarter. Pigott: There are a number of encouraging macroeconomic data points in North America that should benefit truck demand. First, construction activity is picking up, specifically the housing sector. Housing starts in the U.S. are projected to be approximately 1 million units this year. Second, North American auto production is expected to be 15 million vehicles this year. And third, freight tonnage in the U.S. is at a seasonally adjusted record level, beating the previous record set in December of 2011. These economic improvements have enabled many dealers and customers to generate strong results. Pigott: I think there's getting to be some fundamental improvement throughout our industry as we've seen many, many of our dealers and they're in very good position, have relatively low inventory. They've got a good population of trucks. The parts and service business is good. There's really excellent utilization by fleets. Fleets are making reasonable money; some are making record results. So the general economy in North America, let's say, is growing 2%-ish, flat to down depending on what country you're looking at in Europe. And then in North America I think people are saying, these vehicles are getting old now, not only age but also in terms of miles, and they're excited by the benefits they see on our new vehicles. So I think the foundation is getting strengthened and I think it will translate into improved sales over time. Robert Christensen, CFO: Obviously the housing industry and the car production uses a lot of let's call it vocational vehicles, so that's continuing to be a strong point for us. In Europe, of course, car production is at about a 20-year low, so we're not seeing quite the benefit there, but in North America, it's a good, consistent performer for us, and we have brand new vehicles, which the customers and dealers are looking forward to. Pigott: As the general economy improves, which we're starting to see some of the benefits of, I think truck sales will improve, because it is a fairly old fleet out there and the new products that certainly we're introducing and have introduced will directly benefit their bottom line. So we're encouraged by it. We're pleased by the strength of the dealer and customer body out there and should be an exciting couple years. Pigott: As we look at Australia, Australia is a strong market for PACCAR, always has been, a market leader there. Australia is a reasonably good economy, and some of the challenges currently with some of the minerals, but the long-term outlook for Australia and our business there is very positive. Pigott: Inventory levels are always probably looked at a little bit differently between the OEM and the dealer. I think our dealer inventory levels in North America are at a lower level. I think our dealers probably think that's a good thing. But certainly we think the inventory levels could be a little bit higher, but we're certainly meeting our customer demand. In Europe, slightly different economic outlook. As we get into the pre-buy, orders are moving through the dealers very quickly and right into the customers' hands. So I think the dealer inventory level in Europe is it's satisfactory.
Boeing
[BA] Earnings Call 7/24/13 James McNerney, CEO: Global customer demand remains strong for our fuel-efficient and value creating commercial airplane family, and that is evident in the continued vigorous order activity we are seeing. During the second quarter, we booked 481 net orders, which increased our record commercial airplane backlog to nearly 4,800 airplanes, worth $339 billion. Our customers continue to replace older airplanes in favor of new ones that offer compelling economics and increased fuel efficiency. Deferral request requests remain well CLICK HERE TO RETURN TO INDEX
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below the historical average, and requests to accelerate deliveries continue at a healthy pace. McNerney: Passenger traffic trends are healthy, and have grown even stronger in the past few months. While we continue to see near-term pressure in the cargo market, we are pleased with the recent 747 freighter order activity, highlighting the superior value proposition of our airplane and its competitive position in the market. Strong customer interest in our future new airplanes has fully affirmed our product strategy, and the market leading position it has earned us. Our airplane families produce provide the most comprehensive value in the market, with a product strategy that is customer-driven, customer-focused and customergenerated, and touches every market segment. McNerney: Despite budget pressures, growth is still emerging in those areas we have been targeting with investment and innovation, such as commercial derivatives, space, unmanned systems, intelligence, surveillance and reconnaissance and cyber security. Growth in international markets continues to help us mitigate domestic market pressures. International Defense, Space & Security business represented 23% of our revenue during the quarter and remains approximately 40% of our current backlog as we continue to expand our share in addressable international markets. McNerney: Commercial Airplanes was $13.6 billion, and operating margin grew to 10.7%, resulting from lower R&D, higher volume and strong program execution. Marking our highest output level in nearly 15 years, we delivered 169 commercial airplanes in the second quarter, including 16 787s.
US Airways
[LCC] Earnings Call 7/24/13 Derek Kerr, CFO: Despite challenging weather conditions, our 32,000 team members delivered outstanding operational results and thereby earned $2 million incentive payments in the second quarter, and that's $8 million year-to-date. Kerr: We reported our highest quarterly profit, ex specials, in our company's history. Scott Kirby, President: Operationally, of the network U.S. carriers from 2008 through 2012, US Airways has had the number-one on-time performance, the number-one [ph] ranking in departures and zero (16:22), has had the lowest mishandled-baggage ratio, and the lowest cancellation rate. Kirby: Over the past 24 months, US Airways has outperformed the industry domestically in 19 months of 24 months, and in 16 months of 24 months across the Atlantic, despite the fact that we've had higher capacity growth than the industry. And our cost discipline has been equally impressive. First, since US Airways stopped hedging fuel, we've had the lowest or second lowest cost of fuel in 10 of the last 14 quarters, a strong validation of our no hedging strategy. And from 2008 to 2012, our stage-adjusted CASM, excluding fuel, is up only 1.4%. Three of the big five are up double digits over that timeframe, while the fourth, and I'm happy to report is our merger partner, was just under 10%. Kirby: Demand weakened towards the end of the first quarter, about the same time as the sequester kicked in. Demand did improve throughout the second quarter, however. And in June in particular, booking volumes for business demand got stronger, which led to June RASM up 1% compared to our initial guidance of flat to down 2%. Kirby: Going forward, the demand environment remains quite good for both leisure and business demand. Stronger consumer confidence, business confidence and macroeconomic performance seemed to be CLICK HERE TO RETURN TO INDEX
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combining to drive the improved revenue environment. Business demand strength in particular is continuing into the third quarter. Some of the summer strength is probably due to high demand period which allows our yield management team more opportunity to hold out for higher fares. Kirby: We see strong business demand and leisure demand in Europe. Business leisure demand is clearly strong and we've also increased our penetration of selling tickets to Europeans coming to the U.S. and in particularly in business we've done a much better job at getting business traffic on our planes. We actually in the quarter, one statistics we watch is envoy demand from corporate customers which is clearly one of the focus areas and that was up 16% in the second quarter. So as we continue to improve our penetration have continued to improve our penetration of corporate accounts on the continent that has helped European performance significantly. Kirby: When you look at the second quarter, our RASM was actually down slightly. But there has historically been a pretty high correlation with about a three-month lag between fuel and revenue. And fuel prices were down even more this quarter than revenue was. Revenue or RASM was down a little bit and fuel prices were down even more which led to by a wide margin the record pre-tax earnings. Kerr: We've made a real push to be more aggressive about having a sales force in Europe who's off signing up European accounts. We historically hadn't done that as aggressively and three or four years ago we decided to try making a commitment to that. We did that sales team has done a fantastic job. We've continued to add more resources to help do that because we've had great results from getting actual corporate accounts in Europe signed up and getting them to fly and follow through on their commitments to fly with us. Kirby: Air travel continues to be a great bargain for consumers. And prices in real terms from 2000 to 2013 over this period have declined by 15%. That is in spite of the fact that oil prices are in the same window are up 291%. And our security costs have also increased dramatically in the post-9/11 world. So, even in a world where we've had those big increases and costs, fares have continued to decline and I think air travel is one of the greatest bargains around for consumers. Perhaps I'm not objective, but I certainly think it's a fantastic bargain for consumers. One of the ways we've done that as U.S. Airways but industry has done similar stuff, is to be more efficient about where we fly capacity, that goes back to the Thanksgiving example. Flying a lot more seats on the day after the Sunday after Thanksgiving than you do on the Sunday before Thanksgiving. By being more efficient about how we allocate capacity and keeping our costs down, that's wound up being good for consumers.
Delta Air Lines Inc.

[DAL] Earnings Call 7/24/13 Richard Anderson, CEO: On the revenue front, we increased passenger revenues by about 1%, even though economic factors reduced fuel costs by more than 10% in the quarter, which resulted in almost $300 million in year-on-year fuel expense reductions. This is an important point. We increased our revenue base while fuel dropped $0.34 per gallon in the quarter. This illustrates the resilience of the Delta business model in a more rational industry environment. Anderson: Summer weather has been unusually difficult with repetitive thunderstorms around the country Edward Bastian, President: We've gotten off to a strong start to the summer season, and had record revenue performance over the July 4 weekend, as the Sunday and Monday following the holiday became the second and fourth highest system revenue days in our history. Corporate travel continues to be strong. In our most CLICK HERE TO RETURN TO INDEX
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recent survey of corporate travel managers, 80% indicated their second-half-of-the-year spend on Delta will either be maintained at the same pace or increase on a year-over-year basis. Anderson: I think the main challenge, and candidly, I must say I think it's an embarrassment for our government that as much as we as an industry pay in to customs and border patrol, that we have issues at not just JFK, but at Newark, at Chicago, at Los Angeles, where we cannot seem to get our government to perform a very basic service. And those of us that travel extensively around the world and go to countries like Japan and China and Europe, customs is a breeze. And in the U.S. despite all the investment that we make as an industry, we collect a fee from every passenger, we cannot get the kinds of levels of support that if we are going to grow our economy in the U.S., travel and tourism is an important part of that equation, and it's one that needs to be fixed and that we're pursuing every avenue in Washington and in Congress to get this problem solved. The answer shouldn't be to outsource JFK to Abu Dhabi. John Walker, CCO: Obviously, our growth in New York has contributed a lot to the strength we're se eing domestically. It's done well here in Atlanta. I'd say on an industry profile, technology manufacturing has picked up. In terms of our corporate revenues from our manufacturing base, it's been strong at high singledigits. And but the overwhelming lion's share of the improvement is coming from the financial services and the banking sector. Walker: I'd say the revenue environment is really solid. Our summer bookings are strong, our unit revenues are up 3% in July, and we expect a similar performance for August. So, I'd say everything we're seeing in the revenue environment is solid and quite stable.
Knight Transportation
[KNX] Earnings Call 7/24/13 David Jackson, President: Revenue continues to trend positively as we recorded the highest revenue, excluding trucking fuel surcharge, in a single quarter in our company's history in the second quarter. Our nonasset based businesses continue to grow at a rapid pace, while at the same time, improving margins. Our growth remains organic as we continue to invest in providing logistics solutions to our customers that have led to and will continue to lead to additional revenue opportunities The rate environment remains a challenge. Kevin Knight, CEO: I would say that we do expect rate growth to continue throughout the year, but it's turned out to be more challenging than we had hoped. And I would say that probably if you go through the month, maybe June wasn't quite as strong as we would have hoped and it's going to be interesting to see how the second half of the year materializes. And so I would say, we're a little less bullish on rates than we have been. With the cost inflation that we're facing as an industry, we absolutely have to continue to work on improving our rates with our customers. I think you can continue to see throughout the industry more trucks coming out of the system and sooner or later if not sooner, certainly later then we should find ourselves in an environment where rates will strengthen.
Alaska Air
[ALK] Earnings Call 7/25/13 Bradley Tilden, CEO: Things are tracking along really well at Alaska, as we had a solid second quarterWe continue to produce very solid cash flows from operations and industry-leading returns on invested capital.
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Tilden: Our pilots at Alaska and our flight attendants at Horizon have each ratified new five -year agreements. Having long-term agreements puts us in a position to focus on running a great operation, taking care of our customers and beating the competition. Andrew Harrison, Vice President, Planning and Revenue Management: Ever since the industry started charging for bags, we've seen a considerable number of lesser checked bags below a significant amount, 30% to 40% less. What I can tell you is upstairs is, as when you fly, we have a very intricate process to manage carry-ons like we've never had before. Every space in the bin and under seat is taken up. So when I look at payloads, for example, on our flights, payloads are pretty much the same as they were before. In fact, you know, we've had to increase the ratio of a passenger and a carry-on upstairs, relative to the total payload of the airplane.
Southwest Airlines
[LUV] Earnings Call 7/25/13 Gary Kelly, CEO: We're very pleased a strong second quarter earnings performance and we had record earnings, record earnings per share, record revenues, the first half results are records as well. As with a year ago, we produced very strong operating and net margins and strong returns on capital. Our cash flow from operations was also very strong and we were able to repurchase $251 million worth of stock as well as quadrupling the quarterly dividend. The domestic economy was worse than what we had assumed in our second quarter plan. And really that's for the fourth year in row. Fuel prices were nicely below plan and that provided a nice offset at least. Kelly: The economy has been worse than what was assumed in our plan. That has impacted our performance and it may continue to and that simply reinforces our very careful outlook with regards to capacity and fleet expansion. We've lowered our expectations regarding 2014's available seat miles, for example. We have significant opportunities to grow the network after next year with the repeal of the Wright Amendment and the introduction of international capabilities and of course those opportunities are in Dallas and in Houston and really to all points in North America. Tammy Romo, CFO: In spite of the weak revenue environment, our second quarter net income excluding special items of $274 million was a record performance. Our earnings per share of $0.38 was in line with consensus expectation and that's up 6% from last year's record results. Romo: For the month of June, trends in the back half were stronger than the first half and trends have strengthened further here in July with the July 4 holiday being particularly strong year-over-year. Based on current bookings, we expect July's unit revenues to grow 3% year-over-year and current bookings for August and September also look good. Romo: Overall 2014 will see a lot of movement within our fleet composition; however, we remain focused on keeping our fleet relatively flat in 2013. Were making great progress on our 2013 plan. While revenues in the first half were softer than planned, recent revenue trends are encouraging. Our strategic initiatives are largely on track with our 2013 plan with one exception, migration of the O&D revenue management system has begun as planned. However we're not yet fully comfortable with the results being produced versus our current method. So we've chosen to continue our cautious rollout in a way that is even more gradual than we originally anticipated. Romo: While our outlook on the second half of the year is encouraging, our first half results were significantly CLICK HERE TO RETURN TO INDEX
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impacted by the economic weakness which makes our ability to achieve our 15% pre-tax return on invested capital plan this year more challenging and less likely. Kelly: I think relative to a longer-term comparison maybe 10 years or 20 years, there is no question that the traffic in short-haul markets is less today than it used to be. So I think that's probably the only thought that comes to mind about a secular change and I'm not ready to predict that the short-haul markets won't show improvement in the next decade. But clearly the growth within the airline business over the last decade has been in longer-haul trips which is why we are pivoting more at Southwest towards longer versus short trips, and the medium-haul market is sort of around 1,000 miles interestingly enough are relatively flat over the past 10 years to 15 years. Kelly: The government travel which is defined I'm defining as a customer flying on a government fare, so it's something that can readily identify, that traffic is down dramatically. And I think as much as 50% at times. So I think a rule of thumb, would be down 35%. So, there are markets where we do see some weakness along the East Coast, where you can sense that there is a lot of military or government travels beyond what we can actually track on the fare and that does seem to support that. But, I think we all know the sequestration is real. I spent a lot of time in Washington and they are definitely managing through cuts, and beyond that, I would say that the regions look pretty consistent across the country.
Swift Transportation Co
[SWFT] Earnings Call 7/25/13 Richard Stocking, COO: So far this year, we have not seen a strong freight environment that we were expecting at the beginning of the year. Based on discussions with our customers and our outlook for the second half of the year, we expect our year-over-year rate increases to be stronger than what we experienced in the second quarter, but on the low end of the 2% to 3% range that we've previously given. Stocking: The trend of the increases or increase was neither accelerating nor decelerating, but rather staying flat. On the volume side of things, miles and demand grew throughout the quarter with June being the strongest. However, we lost one business day in June when compared to the prior year, so the growth rate for loaded miles for the month did not look as strong as April and May. Stocking: We don't believe we are seeing anything differently than our peers. However, I believe we are well positioned to lever the opportunities in the marketplace when they become available to us. A lot of it comes down to the breadth and maturity of our multiple service offerings, our focus on our customer service, and the long term partnerships we've had we've developed with our customers. Jerry Moyes, CEO: Our customers are cautiously optimistic about the second half this year and at times have expressed concern about capacity availability, especially if the economy picks up a little bit. As a rule of thumb, our customers are optimistic about the second half. Stocking: This past quarter, we experienced unusual softness in that upper Midwest and the Pacific Northwest regions, conversely the South regions, particularly in the Southeast, we're very strong in our network. This slight imbalance led to us needing to reposition some of our power units which did have an effect on our deadhead in the quarter. Ginnie Henkels, CFO: The used truck market has remained relatively strong as evidenced by the healthy gains on sale the industry experienced this quarter. Our gains in Q2 were up mostly due to the volume of equipment
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that was sold, which we expect to be even higher in Q3. Therefore, the gain on sale in Q3 could be equal to or greater than Q2, but should taper off in the fourth quarter. Stocking: Pricing is not as robust as we would like, but it hasn't slowed. Revenue, excluding fuel per load, increased 1.2% in the first quarter year-over-year and increased 1.3% during the second quarter. Competition in lanes is constantly rising and falling depending on the freight environment, the time of year and market balance. So I wouldn't say there's anything that is outside of the normal course of business. As far as the market shift from truck to intermodal, I wouldn't say it has changed significantly over the past few months. Stocking: The freight market has been more challenging than we would have liked, but we have seen some wins in our Dedicated recent wins in our Dedicated segment and have several more in the works that we're very excited about. As a result, we expect to grow our truck count in the range of 100 to 200 trucks by the end of the year, assuming we're successful in the bid process. However, because we are adding these trucks in the latter half of the year, our full year operational average may not reflect that full amount. Moyes: The macroeconomic environment is much tougher than most of us anticipated and as a result, many of our peers have reported the truckload freight market continues to be very challenging. This has caused us to be slightly behind in some of our internal goals but we're pleased with the strong operating results and continued year-over-year improvement our team has been able to deliver in spite the industry headwinds. We remain very close to our customers and are excited about the opportunities we have for the second half and beyond.
Cummins
[CMI] Earnings Call 7/30/13 Norman Linebarger, CEO: We saw a 38% decline in shipments of high horsepower units, driven by global weakness in Mining and other highway markets. EBIT for this segment was 12.8%, and held up well compared to 13.2% last year considering the decline in high horsepower markets. Performance rebounded strongly from first quarter levels due to higher demand across a number of on-highway markets in North America and higher joint venture earnings in China. Linebarger: Demand continues to recover moderately after a period of very weak industry orders in the second half of 2012, but OEMs remained cautious in raising build rate. Linebarger: Demand for excavators remained weak in the second quarter, with industry sales up 5% against weak comparisons, but down 12% year-to-date. We continue to expect no growth in this market in 2013, as OEMs continue to reduce inventory. Linebarger: In Europe, we experienced a 3% decline in revenues year-over-year. Revenue in the Components business increased by 17% due mainly to the acquisition of the urea dosing business completed in the third quarter of 2012. This increase was offset by continued weakness in the Power Generation business. Overall, I was pleased with our performance in the second quarter, and particularly with the improvement and profitability from first quarter levels. I remain very confident about our ability to execute both in strong and weak markets, as well as our prospects for sustained profitable growth when global markets recover. Patrick Ward, CFO: International sales decreased by 4% as a result of weaker demand in Power Generation and in Mining markets. Ward: For 2013, we continue to expect sales to be down 3% compared to last year primarily due to weakness CLICK HERE TO RETURN TO INDEX
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in Europe and in Russia. We are maintaining EBIT projections for the full year of between 8.5% and 9.5% of sales. Ward: I think the one segment that we are looking for continued improvement in the seco nd half of the year is Power Gen. Linebarger: When you go to Latin America- things are definitely moving in a positive direction. Mexico is pretty good. I mean, this quarter aside, generally speaking, it's been pretty good. But I would say in India the trend is not good. Not only is it not bottoming, it's hard to say kind of what's when it's going to bottom, but I don't think it's bottomed yet. I don't think it's going to get a lot weaker, but it's not strong. China's the most perplexing. It really is flattish. It's not getting a lot worse, but it's not getting a lot better either. There's clearly a lot of pent-up demand. When you visit there, you will definitely hear all the reasons why next week it's going to be taking off and doing great. It just turns out that that's not been true for some time. So my own view is that China is the one where if it got going, a lot of other things would get going. But right now, I just don't see that in the near term. The one with the most positive potential short-term is the U.S. I think if we can get some confidence in the U.S., we would see turn, at least in our businesses and the U.S., pretty quickly. It would be true in Power Gen and other things as well. And that would be a pretty good boost to demand for a whole bunch of companies like us, and we'd be ready to respond with the capacity. Whether that's going to happen or not is another question, but right now, I think the flattish view is about right. It doesn't seem like it would take a whole bunch to change the fortunes of the U.S. and China in the market to at least get a little bit better, and that would make a big difference. I don't think India's going to turn so quickly, but I think China and the U.S. could, but when? I don't know. Linebarger: There are some emissions changes coming up which we think stimulate some demand for us even in flat markets. So, obviously, we're hoping for some good recovery in 2014, that'd be terrific. But we also have some sort of non-cyclical things going on. We've got Tier IV. We've got Euro VI coming, each of which are going to increase content and increase demand some of our businesses irrespective of volumes going up. Richard Freeland, President of our Engine Business: We are seeing all around the construction, with housing up is helping us, we're seeing that. We're seeing the agriculture business up good. And then we're seeing some modest improvements kind of across the board, once you back the Mining out, and once you back the oil and gas out, which are both, down. Linebarger: GDP is not doing that well. I mean, overall Brazil, it's definitely showing some signs of flowing again. The government lowered their forecast for GDP. Orders have weakened for trucks. So the signs are, that despite a pretty strong start, it doesn't look like it's going to hold up. It doesn't it's not plummeting or anything, but it's not doing as well as it was. So that's kind of why we didn't grab the first quarter and say, okay, now we're going to see this big upturn. It's because in fact, things are not a quite as strong as maybe we were hoping and certainly it hasn't gone from build and it hasn't gone from strength-to-strength. We'll see what happens, but overall, I think economic growth while it's there, is not nearly as good as their government was originally hoping for.
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JetBlue Airways
[JBLU] Earnings Call 7/30/13 David Barger, CEO: Second quarter results were below those of a year ago, driven primarily by continued maintenance cost pressures and a sluggish economic environment. In addition, the timing of the Easter and Passover holidays had a significant impact on year-over-year unit revenue comparisons. Barger: Although the yield environment was somewhat sluggish during the quarter, jet fuel prices declined, as we experienced a tighter correlation between revenue and fuel. However, on a historical basis, fuel prices remained very high. Thus, we have remained keenly focused on running an efficient operation. Our crew members, again, do an excellent job operating in highly congested airspace in the Northeast where we have nearly 80% of our operations. Barger: We believe the third quarter is shaping up to be a strong quarter. We have significant revenue opportunities in front of us this year. Based on our current revenue outlook, we expect margins to improve in the second half of the year as we continue to execute our network strategy and contain costs. We also plan to continue improving the balance sheet and make prudent investments in the business. Mark Powers, CFO: Our research shows that customers do not factor change fees into their purchase decisions. For this reason we believe we can raise change fees without negatively impacting our brand. We expect total ancillary revenues in 2013 to increase about 15% year-over-year. Robin Hayes, CCO: I think when we look back at the quarter I think the revenue story was very much defined by April where I think we saw a much bigger Easter and Passover shift throughout the network. So we had a very strong March. Conversely April was a month where we had significant negative RASM. May and June, I would we were up sort of flat to low single digits. June was a little bit masked with the TrueBlue accounting adjustment of $5 million. Otherwise, I think we would have hit 1%. That wasn't in our Q2 guidance originally. We thought that was something that was going to happen in Q3. So, I'd describe sort of overall demand in quarter two as kind of okay, slightly sluggish, certainly not as strong as going into the quarter. But when I then look ahead into quarter three, very pleased with the summer. Hayes: We continue to outperform our competitors from a routing point of view from the New York metro area to most of the markets that we fly to Florida and we have been able to continue that. And certainly an expanded portfolio of slots at LaGuardia has also helped that.
Goodyear Tire
[GT] Earnings Call 7/30/13 Richard Kramer, CEO: our team's outstanding performance over the past three months. This performance resulted in the highest second quarter segment operating income in Goodyear's 115-year history, record second quarter segment operating income in both North America and Asia Pacific and year-over-year volume growth, which gives us confidence as we go into the second half of the year. In what remains a tough global economy, our team delivered in the quarter. Kramer: Our Asia Pacific business, we delivered record earnings in the quarter with segment operating income of $91 million, a 28% increase over the same quarter a year ago, and the second consecutive recordbreaking quarter. Our business in China continues to grow faster than the industry and is focused on premium segments, delivering a strong return on our investments in the region. CLICK HERE TO RETURN TO INDEX
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Kramer: Though our business in Europe, Middle East, Africa showed signs of recovery in the second quarter, we are still experiencing weak conditions in Europe. Headwinds in much of Europe continue to have a dampening effect on the automotive businesses, directly affecting consumer demand. But that said, we are seeing progress even amidst the slugging economy. EMEA had higher volumes and year-over-year segment operating income improvement, reversing the trend of the past five quarters. Improved earnings reflect the strong performance of our summer tire portfolio, which stood apart from the competition in the important magazine tire test. Kramer: In both Consumer and Commercial Truck, we're seeing the benefit of our strong label grades which demonstrates our ability to deliver top performance in both traction and fuel economy. In Consumer Tires, Goodyear has the highest rated label portfolio in the industry with more BA rated products than anyone else. This is a tremendous achievement and delivers on our promise to lead the industry in tire labeling. Kramer: Looking ahead to the second half of the year, we anticipate some volume growth in mature markets, and we plan to capture our share of this growth concentrated in our targeted segments. Clearly, the global economy is taking longer to improve than most, including us, had anticipated. Now that said, we remain optimistic over the long term that volume will return to more normalized levels and that the trade will restock their inventory. We continue to believe in our mega trends and the migration to high value-added tires, a trend that has not slowed down much, even in this downturn. Tough decisions, disciplined behavior and commitment to our strategy are paying off. During the quarter, we delivered record earnings. Our cadence of new product introductions remains vibrant. We had strong cash generation. And our cost reduction initiatives are taking hold. Though we take the long-term view, our success in the second quarter increases our optimism about the future. Darren Wells, CFO: European industry volumes in the second quarter began to show signs of stabilization, although at low levels with the consumer replacement industry increasing 4% and commercial replacement increasing 5%. In the Consumer business, the growth is mainly driven by higher summer tire volumes as the summer season was delayed in Q1 by late winter weather. This was offset partly by a slow start to pre-season winter sales. In OE, we saw a minor increase in Consumer and a 3% reduction in Commercial Truck. Wells: Although our cost performance was negatively impacted by low production volumes, we saw solid steps forward in our process to close the Amiens factory in France and in our efforts to drive an additional $75 million to $100 million in productivity over the next three years. These actions, along with our continued investment in industry-leading products and technology, will help us return our EMEA business to its historical margins. Wells: Obviously winter weather is going to be a key for us here in the second half, but I think we're real confident in our value proposition. So, if you take that summer and winter together, you'd say clearly we look and say part of the significant weakness that we saw in Europe during 2012 and early this year was some element of dealer destocking, and obviously once that's done, it's done. But I think that there is also some stabilization in the sellout and that is is ultimately what we need. We need to not only sell the tires in as an industry, we need to sell them out to retail or out to consumers, I think we are seeing some better stability there. Kramer: Just as consumers coming into stores in Europe really value the magazine test for winter tires, it's almost a directory to say which tires they want to buy and consequently which tires that dealers want to stock. We're seeing a migration to that very similar in terms of labeled tires. As the consumer gets to the counter and as a purchase decision has to be made, those label scores have a significant and increasing impact CLICK HERE TO RETURN TO INDEX
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on purchase decision of the consumer. I would say that that's a trend that's probably still a bit nascent. It's going to expand. We're seeing it more in the Germanic Countries and in Northern Europe today. In Southern Europe where I think the economies are a bit tougher, it's probably less relevant today. But ultimately, I think it will become a bit more pervasive. But I can tell you from direct discussions with our customers out in the field, it's I think some of them have been surprised at some of the consumers coming in fairly well-educated on label scores, and consequently, making that a real element of their purchase decision.
Genesee & Wyoming

[GWR] Earnings Call 8/1/13 John Hellmann, CEO: Our railroads, which is the apples-to-apples comparison with other freight railroads, we've now improved to an index of 0.5. Despite our significant progress with the newly-acquired RailAmerica railroads, we still have a long way to go in order to realize the cultural changes necessary to make these safety results sustainable, but we are committed to make that happen and are equally committed to our long-term objectives of no reportable injuries at any G&W railroad. Hellmann: In agricultural products, traffic was down around 4% in the second quarter due to nonexistent winter wheat exports in Eastern Canada as well as the net impact of the U.S. drought. While agricultural products shipments are difficult to forecast for many reasons, our best information right now is that our U.S. agricultural products are expected to weaken somewhat in the third quarter due to the ongoing drought in Kansas and Missouri, where we originate grain, while our Australian agriculture products should remain stable due to the current expectation for another good harvest. Timothy Gallagher, CFO: Coal traffic is expected to be stronger due to the completion of a scrubber upgrade at a coal utility in Ohio. The coal utility was out of service from September 2012 to April 2013. In addition to the crude by rail, we expect our petroleum products traffic to benefit from a start-up of a new natural gas liquids fractionation plant in Ohio. Gallagher: Australia grain volumes last year were negatively impacted by mechanical failure at an export grain terminal. Last, minerals and stone traffic is expected to increase approximately 5,000 carloads due to stronger North American salt and aggregates, partially offset by the impact of the limestone customer shutdown in Australia. The Australian customer shutdown is expected to reduce fourth quarter minerals and stones traffic by approximately 2,000 carloads. Currency and fuel assumptions for the fourth quarter are the same as for the third quarter. Hellmann: If you look at Australia, our volumes are a little bit lower than our budget would have expected. So, I'm speaking right now to our kind of our internal look at the business. Each of those volume shortfalls has nothing to do with macroeconomic variables. Each of them of are there are mine-specific reasons for some of those tonnages being a little lighter than we expected. You can see we're doing quite well on the cost side, but our tonnages are actually a little bit lighter. So, we're not in terms of both the structure of our contracts and the purchasing agreement that the customers have overseas, which is mostly in China, we have not seen any impact on our business. You've seen the Aussie dollar weakening, but in terms of our shipment levels, we haven't seen any macroeconomic impact there. We do there continue to be projects in the corridor that are active and we continue to be working on those.
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YRC Worldwide
[YRCW] Earnings Call 8/7/13 James Welch, CEO: The second quarter results reflect that we're continuing to make progress on our turnaround efforts at YRC Worldwide. While our performance shows incremental improvements, there's still no doubt that many opportunities remain to make additional progress on our operational and financial results. During the second quarter, we continued to focus on investing in the long-term future of our business. Welch: At YRC Freight, certainly the change of operations in May was a big hurdle. However, there is no doubt that YRC Freight is the company with the most potential. The $55.2 million operating income improvement during the first half of 2013 indicates that they continue to move forward in a positive way. Welch: During our first quarter call, we emphasized that 2012 was a year of progress and that 2013 would be a year of performance. For the first six months of 2013 compared to 2012, we improved operating income by $57.4 million despite a comparative difficult winter season and challenges experienced during the YRC Freight network optimization. We certainly performed better in the first half of 2013 compared to 2012. And while encouraged with our improved trends, we know there is still much left to accomplish. Jeffrey Rogers, President of YRC Freight: Despite the fact we faced challenges with the implementation of our network optimization, we continued to make operational improvements in the second quarter of 2013. Our ops planning team spent months analyzing data on how we could drive more efficiencies into the system. And the end result is an enhanced network that is designed to increase density, allow fewer touches of shipments, increase load averages and reduce linehaul miles. During implementation, our execution was hammered due to increased shipment volumes we were experiencing at the time. Consequently, service, operations and second quarter performance were adversely affected, but I'll take that tradeoff for the long-term gains that we anticipate for the future.
Arkansas Best
[ABFS] Earnings Call 8/9/13 Michael E. Newcity, CFO: Arkansas Best reported results that continued a trend of the past several quarters. Our second quarter net income was highlighted by continued revenue growth and margin improvement at our non-asset base businesses and continuing cost pressures at ABF. Despite increases in tonnage and revenue, ABF's second quarter operating profit was somewhat below that of last year as union wage and benefit costs continued to impact operating results. On a year-to-date basis, ABF's high labor costs were also the reason for operating losses. Newcity: LTL commodity class was down in the quarter. Weight per shipment, length of haul and commodity class are the three biggest factors impacting yield changes and in the second quarter, each of them had a dampening effect on revenue per hundredweight. Newcity: Our second quarter results reflect success by all of our companies in increasing revenues and generating profits in the midst of an economic environment that remains constrained and choppy. Our emerging non-asset based businesses are making positive contributions to our financial results as they experienced continued growth in revenue, operating income, and cash generation. ABF was profitable during the quarter as it typically is during the second quarter, despite its continued high-cost structure. However, year-to-date losses of $17 million at ABF continued to be unacceptable.
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Newcity At Panther, much like we saw in the first quarter, second quarter revenues and margins were impacted by sluggish demand for expedited services that resulted in an excess of available capacity. Demand in the market segments that Panther serves continue to be mixed, but they are improving. Second quarter growth was seen as a result of increased customer commitments in the life sciences and high-valued product segments of the business. The stability of automotive supply chains reduced the need for Panther's services within that segment. Lower government spending related to the sequester resulted in military base closings on Fridays and thus fewer available shipments for Panther.
Visteon
[VC] Earnings Call 8/8/13 Timothy Leuliette, CEO: If you look specifically at the largest customers in China we have, which are Shanghai GM, Shanghai Volkswagen, Hyundai/Kia, they were up a significant 29% in the first half of the year versus prior year. We don't expect that kind of pace to continue. We expect that to fall back about 5% to 10% from that pace in the second half of the year, but still very strong and a good growth representing good growth for the future. In Europe, European volumes we also expect to soften. Again, there is always a softer second half than there is a first half in the industry. But we also see some inventory balancing that will occur in the second half. And most of that will be in Q4 in Q3 as some of the OEMs probably built a little ahead of the market. We're seeing Europe remain weak, but we don't see it deteriorating further. And in certain areas we're seeing some strengths, but bottom line is our margin increase, our revenue increase, then our EBITDA contribution from Europe, is generated not because of volumes increasing at this stage but because of content and because of some innovative products that we're launching with our customers. Jeffrey Stafeil, CFO: In the second quarter, sales improved year-over-year for Climate and Electronics. However, Interior sales decreased due to lower volumes for certain key Visteon vehicles in Europe. Stafeil: Adjusted EBITDA margins on cockpit electronics were up year-over-year but were offset by the balance out of our vehicle electronics business. Furthermore, cockpit electronic margins were negatively impacted by a temporary contract manufacturing relationship which will create operating efficiencies for Visteon starting in the third quarter. Excluding the impact of this contract manufacturing relationship, adjusted EBITDA margins for cockpit electronics would have increased by 100 basis points versus the second quarter of last year.
Avis Budget Group

[CAR] Earnings Call 8/7/13 Ronald Nelson, CEO: While our second quarter didn't come in exactly as we expected, our results do reflect progress on a number of important fronts; growing our revenues, controlling costs and delivering on our strategic initiatives. In North America, car rental volume and pricing both increased as we continued to take price increases where and when we could. In Europe, we continued to grow our Budget brand at a rapid pace. Our performance excellence and customer led initiatives delivered significant benefits, strengthening our brands and our bottom line. We made substantial progress in the integration of Zipcar. We acquired Payless Car Rental in July, providing us with a meaningful position in the deep value segment of our industry. Nelson: The normalization of residual values in North America had more of an impact in Q2 than we had expected. And when combined with a somewhat surprising soft operating environment in Australia, this had CLICK HERE TO RETURN TO INDEX
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an impact on full-year guidance. To put a somewhat finer point on it, these two issues along with the continuing soft economy in Europe are the key near-term challenges that caused us to narrow our guidance to the lower half of the range. Nelson: In each of 2011 and 2012, our industry benefited from anomalous and market-driven spikes in used car prices that drove temporary imbalances between the supply and demand of late model used cars. Our 2013 business plan assumed that such spikes would not recur and that our fleet costs would therefore normalize over the course of the year. The first quarter was consistent with those expectations, but we were surprised to see the market decline as much as it did in April and May before leveling off in June. This caused our North America per unit fleet costs to increase 60% in the second quarter, 10 points more than we had anticipated at the time of our last earnings call. This impacted our North American fleet costs by roughly $20 million in the second quarter. Nelson: Rental volume in Latin America/Asia Pacific increased 9% year-over-year, primarily due to the acquisition of Apex. Pricing in our Latin America/Asia Pacific region, however, was weak, with price declining 4% in the second quarter even excluding the effects of foreign exchange and the acquisition of Apex. The weakness is primarily related to Australia where significant reductions in government spending and economic weakness notably in the mining sector have reduced demand causing industry-wide over fleeting during the usually softer trough winter months. We've seen significant rate reductions in the leisure market as competitors attempt to utilize their excess fleet. We're hopeful that the Australian market will stabilize towards the end of the year and into early 2014 during the peak summer demand period there. In the meantime, we're taking steps to mitigate the impact including an increased focus on ancillary revenue growth along with stringent cost controls and fleet rationalization. What we're not going to do, however, is cede our strong position in this market despite the current pricing pressures. Nelson: The economic environment in Europe remains tough, but we saw some encouraging signs in our results at least during the second quarter. Our volume increased year-over-year in France, Italy, Spain and the U.K., and our initiative to expand our presence in the value segment of the European market continued to bear fruit with Budget volumes up over 50% across Europe. Nelson: We expect volume trends to be positive in the second half of the year as our growth initiatives continue to deliver and airline capacity begins to increase. We are seeing volume pressure from the effects of the sequester on government spending and from our decision to move away from certain opaque business, but gains in the other more profitable parts of our business are offsetting these challenges. David Wyshner, CFO: The second quarter marked our 12th consecutive quarter of year-over-year revenue growth, principally as a result of higher volume and improved year-over-year pricing in North America, as well as our first full quarter including Zipcar's results. Adjusted EBITDA declined year-over-year primarily due to higher fleet costs in North America. Wyshner: International adjusted EBITDA declined in Q2 due to inflationary increases in operating costs and higher commission expense in Europe. Nelson: I still think we see somewhat the similar trends. I think the following by our competitors is choppy. I think we probably do see a little more consistency out of the Enterprise complex of brands than we do out of Hertz, but I think the fair answer is it hasn't changed much over the course of this year in terms of people being followers. Nonetheless, I will point out that we are undaunted in moving forward. We are continuing to post price increases. We're continuing to go after commercial rate increases, and I don't think this is about CLICK HERE TO RETURN TO INDEX
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driving as much profit as we can out of these rentals. This is really about getting the return on capital in our industry up to rates where we think a business that uses a much capital as we do should have. And so, we're going to continue to push and particularly as we move into the third quarter and into the fourth quarter.
Information Technology
Microsoft
[MSFT] Earnings Call 7/18/13 Amy Hood, CFO: In many ways, our fourth quarter results reflect the trends we saw developing throughout the fiscal year. The consumer x86 PC market declined as users continued to prioritize devices with touch and mobility. At the same time, we saw continued strength in our enterprise products and cloud solutions, and increased adoption of our consumer services. This quarter, our Windows business declined as the device market continued to evolve beyond the traditional PC. We are working to transition the business into this modern era of computing, taking advantage of the new scenarios enabled by Windows 8. As we've said before, given the complexity of the ecosystem, this journey will take time, but we continue to make incremental progress. Hood: In Windows, we expect revenue to continue to be negatively impacted by the decline in the consumer x86 PC market. Hood: Windows business did make incremental progress in the business side. We expect that to continue in Q1. And with the end of life of Windows XP next year, we expect continued migrations. And today in the enterprise about three quarters of desktops are already running Windows 7.
Verizon
[VZ] Earnings Call 7/18/13 Francis Shammo, CFO: We continue to work through economic challenges in the enterprise space. Many of our customers are focused on improving their cost structure, which can result in reduced services with us. In addition, many customers continue to be cautious regarding new investment decisions.
Advanced Micro Devices

[AMD] Earnings Call 7/18/13 Rory Read, CEO: Our professional graphics business also recorded its fourth straight quarter of growth, delivering record revenue as we continued to aggressively pursue this lucrative market. Looking at the second half of the year, we believe we have good opportunities for growth based on the PC market strengthening slightly from the first half levels and the ramp of our semi-custom business. Read: We are pleased with the progress we are making to restructure, accelerate and ultimately transform AMD, as strong demand for our latest products drove improved financial and operational results in the second quarter. We expect to deliver significant revenue growth in the second half of the year as our strong new products position us to gain share in our traditional businesses and our first semi-custom SoC win allows us to participate in new markets. CLICK HERE TO RETURN TO INDEX
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Read: As we look forward, we see a continued opportunity in the PC segment. While we see it only slightly stronger than the first half and I believe down year-to-year, I think there is an opportunity for us with our stronger product portfolio to continue to build on the momentum that we saw in the second quarter. Clearly, the market is moving down into the entry and mainstream price points where we've played very well. And I think this is a very good opportunity for us to continue to build share. Now having said that, clearly the momentum and acceleration of revenue will come from the new segment as well as off of that initial base. But those SoCs that we won in semi-custom are going to be a key driver moving forward in 3Q.
Intel
[INTC] Earnings Call 7/17/13 Brian Krzanich, CEO: At Computex, we launched the Haswell family of processors, which deliver the biggest improvement in battery life in Intel's history, making no compromises, high-performance two-in-one devices that make all-day battery life a reality. Haswell along with Bay Trail will power the more than 50 different twoin-one devices in the pipeline, including the very first fanless Core designs. Stacy Smith, CFO: As expected, inventory levels across the worldwide PC supply chain grew slightly, as customers began building Haswell-based PCs, but inventory levels are still being managed well below historical averages based on uncertainty heading into the back half of the year. For the third quarter of 2013, we are forecasting the midpoint of the revenue range at $13.5 billion, up 5% from the second quarter, which is at the lower end of the historical range as a result of our expectation that our customers will continue to operate with lean inventory levels exiting the third quarter. Smith: While our first half financials played out as expected, the overall PC market segment for 2013 is expected to be weaker than we forecasted at the beginning of the year. Our expectation is now that revenue will be approximately flat to last year. Smith: I think the tale for us will really be written in the back half of Q3 when we start to see how our customers are putting in place inventory in anticipation of that fourth quarter selling season. And right now, our view on that is fairly cautious. We expect that they will continue to run lean inventory levels, but the reality is we won't know that until we get into late August, early September. That's when you'd normally start to see them putting in the supply line. That also aligns with other things in the industry. And so we think that's when we're likely to really get a sense of Q3 and the momentum into Q4. Krzanich: I think the things that were positive for me is that our customers especially, they want Intel to get into this expanding ultra-mobile market. They're looking for Intel to be stronger and have a better and more capable product lineup in there. And they're excited about the products that we have coming, Haswell and Bay Trail. So the key message that they've been giving us is we really want you there. We see the products coming. We want even more and we want a faster lineup following those. And so you heard in my speech today and in the earnings release that we're really putting a much, much stronger effort on Atom and driving our SoC integration and pulling it forward to the leading edge. So I'd say that was the major point or major comments I got back from our customer base.
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IBM
[IBM] Earnings Call 7/17/13 Mark Loughridge, CFO: From a geographic perspective, our growth market performance was consistent with first quarter at 1% constant currency growth. Major markets declined year-to-year though improved from last quarter's rate. Overall, we improved our performance in several areas of the business this quarter and our first half operating EPS is nearly flat and that's after fully absorbing the $1 billion workforce rebalancing charge. This puts us on a good footing as we entered the second half. Loughridge: So let me wrap up the quarter. We had a good performance in our higher margin businesses like software and System z mainframe and we had continued strong performance in our growth initiatives of Smarter Planet, Business Analytics and Cloud. We returned to growth in Global Business Services led by consulting and systems integration and for total services we had the strongest backlog growth at constant currency in years. At the same time we took actions to better position our business for the future. We rebalanced the workforce to align resources to the best opportunities and we announced and recently closed the acquisition of SoftLayer to enhance our capabilities in cloud. As we move into the second half we expect to continue our progress in areas like analytics and cloud and Smarter Planet, leverage the benefit from our workforce rebalancing activity, capture additional opportunities in cost and expense through net income and of course continue to return value to shareholders. At the same time, we're dealing with a more challenging currency environment. Loughridge: So if you look at the second half of the year, obviously we have a headwind on currency and, more specifically within that, the yen. Loughridge: GMU economies which have been challenging in the first half. But I'll tell you, as we look at the second half, we have some very, very distinct tailwinds that we have driven to drive our performance. So first of all, software pipeline, we've got a very good software pipeline going into the second half of the year. And if you look at that software performance in the second quarter, boy, they really hit the ball. So not only did software grow the total by 5% but that key branded middleware was up 10%, and we gained share in every single one of the sub-brands in that software business. We see real momentum going from that second quarter into the second half of the year. Secondly, very, very important, we have services backlog growth on a constant currency basis of 7%. That is the best backlog growth positioning we've had in four years going into the second half. 3% at actual, but that 7% at constant currency, the best we've seen in four years. Loughridge: Two quarters of very good signings performance. As we've always said, the proof in the pudding is going to be in the backlog and sure enough, the backlog did show up as we entered the second half. And we're going to see that revenue impact as we start to move that glacier north with positive revenue performance from GTS low-single digit and mid-single digit revenue performance from GBS. Loughridge: The areas that we had more difficulty in our growth markets frankly, can be, I think, best attributed to kind of three large countries, China, Australia and Russia, and they account for about 40% of the GMU base of business. Without those three countries, GMU frankly would have been up 7%. Now within those three countries, I'll tell you that China and Russia, who were both down in the second quarter of 2013, had a very, very big comp to overcome. Last year China achieved 24% growth in the second quarter of 2012, and Russia had 39% growth in the second quarter of 2012. So very big compares. Now with that said, we will remain cautious as we go into the second half of the year in GMU until we start to see more demand pattern driving that more typical performance level that we've seen in the past.
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Apple
[AAPL] Earnings Call 7/23/13 Peter Oppenheimer, CFO: We established a new June quarter record for iPhone sales, driving Apple's strongest June quarter revenue ever. Oppenheimer: iPhone sales were ahead of our expectations and we were particularly pleased with very strong year-over-year growth in iPhone sales in a number of both developed and emerging markets, including the U.S., the U.K., Japan, Brazil, Russia, India, Thailand and Singapore. iPhone 5 remains by far the most popular iPhone, but we were also very happy with sales of iPhone 4 and 4S. Oppenheimer: iPhone once again achieved the number one spot in U.S. smartphone market for the three month period ending in May with over 39% share. Oppenheimer: Customers continue to love their iPads. For the second consecutive time in the two -year history of the survey, iPad ranked number one in the 2013 U.S. Tablet Satisfaction Survey by J.D. Power & Associates. And again in its latest study published today, Chitika reported that iPad accounted for 84.3% share of tablet web usage by customers in the U.S. and Canada, its highest level this year. Timothy Cook, CEO: We feel good about where we are. We had we had an incredible quarter in U.S. education setting a new record for iPad. We're really happy to be selected for the first phase of the 660,000unit rollout at LA Unified and a really bold move that they're making to change teaching and learning. And we had double-digit unit growth in China for iPad, in Japan, in Canada, in Latin America, in Russia, in the Middle East and in India, and so we're really happy with what we saw. Cook: China was weaker in the quarter. If you look at sell-through, it's important to do that. And so our sellthrough in China was only down 4% from the year-ago quarter when you normalize for channel inventory. Hong Kong was actually down more significantly than that. Mainland China was actually up year-over-year. It was up 5%. But that is a lower growth rate than we have been seeing, and I attribute it to many things, including the economy there clearly doesn't help us nor others. In Hong Kong, Hong Kong is an international shopping haven, as you know, for not only tourists, but also some resellers and we saw a more dramatic downturn there. It's not totally clear exactly why that occurred, but it was down on a sell-through basis by about 20%, and so that weighed greater China down.
Texas Instruments
[TXN] Earnings Call 7/22/13 Ron Slaymaker, VP of Investor Relations: Earnings in the second quarter were strong, a result of good operational execution, an improving product mix, and a transfer of wireless connectivity technology to a customer, reflecting our continued monetization of the legacy wireless business, even as its product revenue declines. Slaymaker: Looking into the back half of the year, I think we're still optimistic that well, actually, first of all, let me say that what we're seeing in North America is a combination of continued W-CDMA deployment but also accelerating LTE deployments as well. So, again, as you know, we play quite strongly across both the new LTE technology as well as the more entrenched W-CDMA. So we're seeing strength on the combination. In terms of China, we, like many other people, are waiting to see the impact of and whether in fact we'll see second-half deployments. But clearly that's our expectation. We've seen some activity, more so from the CLICK HERE TO RETURN TO INDEX
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standpoint of customers getting prepped for that in Japan. But we haven't actually seen the bigger lift. And I think that's pretty much consistent with at least my understanding of what other players have been describing as well there. Kevin March, CFO: I think for factory loadings in the back half of the year versus the first half. Clearly, our loadings have been stepping up. Second quarter was higher than first. And we would expect third quarter to be higher than second on the basis of our growing backlog. Slaymaker: From an absolute dollar standpoint, distributor inventory was stable. From a days, it went down about a day to below 5.5 weeks in the quarter. Slaymaker: In terms of automotive, our revenue was strong. That goes across both Analog as well as Embedded Processing. Part of that is clearly the market. The end market is strong. Part of it is TI is benefiting from design wins, really in a couple of areas. One is the Advanced Driver Assistance Systems, as well as infotainment. We're also seeing new opportunities in a couple of areas. Advanced Radar Systems, for example. That's partly the driver assist, such as blind spot detection, but we're seeing radar technology in automobiles start to get deployed much broader than just or at least considerations much broader than just blind spot detection. Computing, no surprise there. The news flash is the overall PC market has been weak, continues to be weak. We'll see what happens when some of the new processors get introduced here in second half, but that space has been weak. Slaymaker: I would just say that game consoles were weak last quarter, as we have manufacturers in that space preparing for new product interruptions and transitions here in the second half. Television I would describe as generally weak. I think there's some new technologies that are being introduced that hold some promise for growth there. But overall I would say the market is weak. Slaymaker: Our revenue in the second quarter, we saw the highest growth and this is just on a dollar basis out of Asia, followed by the U.S., followed by Japan. Europe was down what I would characterize as a little, meaning a couple percent. But all regions were up. Asia was the strongest from a dollar standpoint, but it's also where over, what, 60%, 65% of our revenue is shipping these days. And then U.S. was the strongest in terms of percentage growth but is much smaller than what Asia is for us. And then the only caution, that I always attach to that is you have to be a little careful. I mean, Asia is where a lot of products are being manufactured and then turned around and shipped back to other markets such as the U.S. for consumption. So it's not a statement about economic conditions or changes there in those markets. It's strictly a matter of our customers manufacturing in those various regions.
AT&T
[T] Earnings Call 7/23/13 John Stephens, CFO: We passed a crucial threshold with U-verse. It now accounts for more than half of all consumer revenues. Two years ago, U-verse was less than a third of consumer. Now, it's more than half and growing very fast. That's a remarkable benchmark as we transform our business. We now have 9.4 million total U-verse subscribers. That's more than double the number we had just two years ago. Stephens: The economy continues to be challenging and is not providing any assistance to our efforts here. But, on the bright side, we do see some signs of improvement from the first quarter. Business revenue was down 2.2% year-over-year but increased sequentially, with both enterprise and small business showing sequential revenue growth. Small business also showed growing customer momentum with U-verse CLICK HERE TO RETURN TO INDEX
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broadband net adds. Part of the business continued to do very well. Growth continued to be strong in strategic business services; that's products such as VPN, Ethernet, hosting, and other advanced IP services, which were up more than 15% in the quarter. Ralph de la Vega, CEO: We had a really strong quarter in all aspects, and in fact, we ended up in June with significant gains in smartphone-only growth, not just wireless home phones. So we feel this is one of the best quarters we could have turned in, especially considering the fact that one of our competitors got the iPhone in the same quarter. To turn in the performance that we did, when you consider all the factors, was a remarkable accomplishment, and we're very pleased with the overall phone growth, not just on smartphones, but feature phones and wireless home phones. De La Vega: So happy customers are buying more of our product and are buying it in bigger quantities. And I think that is what I see driving it and we're just getting started. What I love about the LTE network that we have built is it's giving great service but at the same time that that network is performing as good as any network, I think, on the planet right now. Stephens: We are just seeing that there is an acceptance across business for VPN, Ethernet, hosting and those high-quality IP services. We are specifically seeing an improvement in our small business high-speed broadband. I think they were 81,000. That's a quarterly record for us that our small business customers took so even in a difficult economic situation and in a difficult in a challenged economic segment, we are seeing customers willing to upgrade to higher quality speeds. With that, we are also have a all-out focus from our sales team on our sales effort on strategic services. They are really performing well. DeLaVega: Quite frankly, the spike that we have seen from the T-Mobile getting the iPhone is significantly less than the spikes that we saw with Sprint and the spikes that we saw with Verizon. And my expectation is that they will continue to come down over time. And so that's kind of where we stand today.
Time Warner Cable Inc.

[TWC] Earnings Call 8/1/13 Robert Marcus, COO: Q1, subscriber net adds were down in the second quarter on a year-over-year basis, although it's worth noting that the year-over-year trends in Q2 were somewhat better than in the first quarter. The second-quarter decline was driven primarily by much lower Triple Play connect volumes and fewer upward migrations of existing customers from Single and Double Plays to Triples. Video-Internet Double Play connects and high-speed data Single Play connects were actually up year-over-year in Q2. Despite the overall despite the year-over-year declines in connect volume, aggregate new connect revenue, meaning the product of new connects times revenue per new connect, increased over last year's Q2, and that's the ultimate test of the pricing architecture. Arthur Minson, CFO: we had a good quarter financially. Business Services had another strong quarter, and on the Residential side, a number of our revenue initiatives began to kick in and should accelerate in the back half of the year. We delivered very strong free cash flow of $1.4 billion, which gives us the confidence to raise full-year free cash flow guidance to $2.5 billion. Minson: We expect to see sequential-adjusted OIBDA margin, erosion from Q2 to Q3, similar to what we saw last year. That will be the result of higher programming costs, higher marketing expenses and lower ad sales due to reduced political advertising and growth in lower margin revenues associated with certain third-party ad rep deals. Our current expectation is for healthy sequential margin expansion from Q3 to Q4 due to highCLICK HERE TO RETURN TO INDEX
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margin sequential revenue growth and ongoing cost efficiencies in areas such as Residential phone. Marcus: There's no question that the programming battles generally and retrans battles specifically have become more public and more publicly contentious And that's not healthy for the industry and it's not healthy for our customers, most importantly. And we've continually referenced the fact that the real victim in all of this is the customers who get stuck in the middle. Marcus: I would generally say that the promotional environment continues to be pretty intense. There have been some differences across our geographies and I would call that, in particular, the competition and the competitive dynamic in the Midwest, where U-verse in particular has been very aggressive on pricing. The net effect of that was that despite the fact that we have only about a quarter of our total PSUs in the Midwest, I think the Midwest accounted for more than half of our total PSU net losses. So, there's no question that the aggressive pricing in the Midwest had an impact.
Cisco
[CSCO] Earnings Call 8/14/13 John Chambers, CEO: Q4 was a record quarter on many fronts, with record revenues of $12.4 billion and record non-GAAP operating income, record non-GAAP net income and non-GAAP earnings per share of $0.52. In every case we exceeded the midpoint of our guidance. We generated $4 billion in operating cash flow in the quarter, another record as well. Delivering the record results we did this quarter and every quarter this year despite the challenging macroeconomic backdrop speaks to our increasing strategic position in the market and our ability to manage our overall business as a portfolio across technologies, customer segments and geographic regions. Chambers: Despite hype around new technologies and potentially disruptive competitors, our performance in switching has been extremely solid, and we're innovating to continue to lead in the future. Chambers: We saw another strong record quarter in our wireless business, up 32%. We were particularly pleased with the performance of our cloud networking business, based upon our acquisition of Meraki this quarter, which grew orders over 100% from the prior quarter with an order run rate now annualizing Q4, of over $250 million. Chambers: One of the most positive trends we saw in Q4 was the continued improvement in our Europe, Middle East, Africa, and Russian region, which was up 6%, and Europe itself was up 6%. Economic conditions in Europe still vary significantly by region with the North and U.K. showing very positive progress. We remain; n cautious, however, given the instability of the southern region. Chambers: In technology areas, we are seeing switching and data center strength offset by routing and set top box weakness. In customer segments, we see public sector momentum offset by softness this quarter in Enterprise. In geographies, we see improvement in the EMEA, in Europe, if you will, offset by weakness in APJC. Despite these trends, we continue to grow. Our total product order growth continues to slowly increase over the last four quarters, excluding acquisitions and divestitures so we compare apples to apples speaking to the power of our portfolio and our execution. While the trends of ICT spending and global GDP growth according to industry experts continue to be revised downward for calendar year 2013 industry estimates have the growth of our total available markets and were looking through calendar year 2017 in the 5% to 7% range,
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once again echoing our view that this is the area that we ought to grow in over the longer time period. I believe the macro effects will fuel a continued mixed environment, but I feel very good about how we are positioned and about how what we can control. Frank Calderoni, CFO: 1 FY 2014, we're managing the business to account for a slow inconsistent recovery. With that in mind, we expect revenue growth to be in the range of 3% to 5% on a year-over-year basis. For the first quarter, we anticipate non-GAAP gross margin to be in the range of 61% to 62%. Our non-GAAP operating margin in Q1 is expected to be in the range of 27.5% to 28.5%. And our non-GAAP tax provision rate is expected to be approximately 21% in the first quarter. Chambers: The combination of weakness in APJC offsetting what went on in Europe, the strength in the U.S. offset by what went on in emerging markets, et cetera, is kind of leveling off. So, what we see is slow steady improvements but not at the pace we want. Now if we're going to lead in this industry, the one thing I've learned over the years is you are the first mover. We have to very quickly reallocate the resources. So a fair amount of that 4,000 people will be allocated to new growth opportunities. Chambers: Every well-run business in the world grows and keeps expenses in line with revenue growth and driving up productivity. Candidly, we didn't drive productivity this last year. So with the change in the macroeconomic environment and you saw this from the Fed officials, you've seen it in all the forecasts on emerging countries, et cetera, and you saw it in our business numbers, with inconsistent data, even in our own operations, which tends to be more lumpy than I like to see, this is just good business management. And I've learned in this industry, you lead with your mind, not with your heart, and this is something that we think will allow us to grow our profits but also, most important, to achieve the number one position in the industry and move our resources very quickly to the growth opportunities. If this were a normal pace, you could move those resources over two years with attrition and realignment. Chambers: The good news and part of the challenge is the U.S. economy is one of the is the strongest engine right now in the world as far as pulling the rest of the world and we all know GDP growth has been projected decelerating here versus what we would have thought just one or two quarters ago in terms of the direction. So it's a better number to work with, and that's part of it. But the real issue is, we're learning how to sell architectures and solutions to our customer's needs In a business that is growing primarily as U.S. enterprise grew a 9% year-over-year and it's been in high single digits for several quarters now. The number of million dollar deals in the pipeline is up 50%. They're selling solutions. That's how you beat it. It doesn't matter if it's a different consumption model. It doesn't matter if it's IP as a service from Amazon. It doesn't matter if it's individual companies trying to put together product solutions. And in that, that's where you sell to the business leader as well as the CIO.
Applied Materials
[AMAT] Earnings Call 8/15/13 Michael Splinter, Executive Chairman: We delivered earnings at the midpoint of our range, with global appetite for mobile devices and larger TVs driving healthy demand for our semiconductor and display equipment. As we outlined at our recent analyst event, across the company we're building momentum for profitable growth. Industry trends in semiconductor and display favor Applied Materials' leadership areas, and at the same time, we are seeing results from changes to the organization and our spending profile designed to strengthen customer collaborations and speed up product development. CLICK HERE TO RETURN TO INDEX
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Splinter: Consumers are making buying decisions based on battery life, features, form factor and digital experience, which means that our customers' ability to deliver winning products requires new device technology at the right yield and cost. Splinter: The market environment in both semiconductor and display provides a firm foundation for profitable growth. At the same time, major industry trends are playing to Applied Materials strength and precision materials engineering presenting us with an unprecedented number of opportunities. Most importantly, I'm confident that we have the right strategy, the right talent, and the right new CEO to take Applied to new levels of performance. Gary Dickerson, CEO: 2013 is shaping up to be a year where we are building momentum for profitable growth for 2014 and beyond. We are making great progress building a more competitive company that executes better, faster and at lower cost. Robert Halliday, CFO: We expect the company's net sales to be flat relative to the th ird quarter with a little more risk than opportunity.
Hewlett-Packard
[HPQ] Earnings Call 8/21/13 Meg Whitman, CEO: As we continue our fix and rebuild year, parts of the business, like Printing, Enterprise Services, Converged Storage and Software, are making progress while others like industry-standard servers and Personal Systems have not completely turned the corner. So overall, I would say our turnaround continues. We're moving forward against our plans and I remain comfortable with where we're headin g. Whitman: From a macroeconomic standpoint we see a continued weak enterprise spending environment. Sentiment in the U.S. is improving, although it's not translating to our results yet due to inconsistent execution. I would characterize Europe as challenging and China continues to be soft. We're also seeing acceleration in trends driving customers to the cloud and shifting to mobility. For the third quarter our results were driven by solid execution in Software, Printing, Converged Storage and Enterprise Services coupled with the savings from our restructuring program and improvements in our operations. As a result of our focus on operations, we were able to bring our cash conversion cycle down to 18 days, a remarkable achievement compared to 27 days in the prior year. Catherine Lesjak, CFO: In Q3 one of the big drivers of the year-over-year improvement was in days payable, and that is really that was the result of some purchasing linearity in the quarter. When we step back and we look at what is a long-term sustainable kind of cash conversion cycle for the company, we think it's more in the low-20s. And that's really where the pull-back that we expect to see in Q4 as well. Whitman: As you would expect in any turnaround, some businesses are performing better than you would think and some are somewhat performing not as well as you would hope. But what has changed about 2014's revenue outlook for me is a couple of things. First is Enterprise Group's performance especially during the last quarter. I would say the weak execution has amplified the market challenges that we know exist and it's been a very aggressive pricing environment. The server market growth rates have come down in the last quarter. The PC market has not stabilized as much as I had anticipated it would. That stabilization has yet to occur. And then finally Enterprise Services, which is good for this year, is running the revenue is running off more slowly this year, which is good for this year, but creates growth challenges for next year. So I am confident that we can address the challenges. There are some segments that will absolutely grow next year and will deliver very CLICK HERE TO RETURN TO INDEX
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good performance, but I think it is unlikely given the changes that have occurred over the last quarter or so that we're going to see growth in 2014 as I had hoped. Whitman: We are in a happy position now from a capital allocation perspective of being able to our capital allocation strategy has been very clear. Return cash to shareholders in dividends, buyback enough shares to offset dilution and pay down debt. So we now have an opportunity to say where can we use strategic acquisitions to further our overall objectives as a company? And we will be back in the market as we think about acquisitions that can further our objectives. Again, we will be incredibly measured and disciplined. We are very mindful of the event that we just came off with Autonomy, so don't worry about that. We are very focused and disciplined, but I think as we see these big tectonic plate shift, there's no question that acquisitions are going to have to be a part of how we turn this company around. Whitman: China is softer than we'd anticipated, and it is actually across the board. We are seeing more rapid growth in Tier 4 through six cities, a little less in the big areas, but it is reasonably soft demand across the board, at least as we see it. Lesjak: Networking in China for us was very strong. We saw very good growth year-over-year in Networking in China, and you all may not focus on this, but we do. We are the leading market share holder in China for Networking, so we're pleased with the results in Networking. And then in Printing as well on a local currency basis year-over-year, we grew revenue as well.
Health Care
Johnson & Johnson
[JNJ] Earnings Call 7/16/13 Alex Gorsky, CEO: As the global economy evolves, more people are entering the middle class in emerging markets and increasing demands on the healthcare systemwe're investing in growth and expansion in the broader emerging markets by leveraging our strong iconic brands as well as acquiring market-specific products and, today, they account for nearly a quarter of our sales. Gorsky: The pace of growth in the global MD&D market has slowed and competition is intensifying. In spite of the economic compression however, the medical device industry remains attractive and we're transforming our go to market approach to drive our competitiveness in this dynamic environment and ensure we continue to lead the sector. With market-leading platforms and products we've succeeded in sustaining or growing share in the majority of our key platforms holding #1 or #2 positions in about 85% of them. Gorsky: Our Consumer segment is showing signs of its continued return to growth through its increasing momentum in returning a reliable supply of U.S. OTC products to the shelves, the continued expansion of iconic brands in the emerging markets and an overall focused portfolio management approach. Sandra Peterson, Group Worldwide Chairman: In the first half of 2013, we achieved U.S. OTC operational growth of 19.7%, which includes 26% growth in revenues in over-the-counter medicine. We are winning the hearts of consumers as these products return to the shelves in all four segments: cough, cold and flu; allergy; pain; and digestive health. Peterson: Healthcare is a challenging but immensely rewarding space. CLICK HERE TO RETURN TO INDEX
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Dominic Caruso, CFO: While there are some indicators of general economic improvement, the healthcare market data we see in terms of utilization is still relatively flat over the prior year with just a modest sequential improvement over the first quarter utilization data. Overall, however, we continue to drive growth in many areas of our business, especially in the Pharmaceutical segment with the launch of new products addressing unmet needs. Gorsky: If we look at MD&D, clearly we've been challenged by the macro economic situation that's having an impact on demand around the world. And if I start in the United States, what we've seen is fairly flat performance overall. And by the way, if we look at some of the leading indicators, for example, if we look at hospital admissions, if we look at inpatient procedures, we see relatively flat to even slightly negative statistics. Even primary care physician visits are in the low single digits. We've got multiple quarters, consecutive quarters now with those types of trends. We don't expect that to turn in the near-term. Longerterm we'll have to see the impact of the Affordable Care Act on that. That being said, we remain very committed to our MD&D business. In areas such as Biosense Webster, ENT, Vision Care, we have seen very positive performance this quarter. However, if we look at some of our other core businesses in surgical care, for example, sutures and surgical instruments, we see the challenges associated with the macroeconomic environment. Gorsky: In general surgery, of course, our business was impacted by what has taken place in women's health and our decision to exit some of those businesses. That had negative. If we look at suture and some of those basic platforms, we are seeing very consistent growth with the overall market that we think is basically up about a percent or two. Gorsky: I think there's a couple of forces and dynamics that will be impacting it *growth+. First of all you've got the significant increase in the middle class populations in those countries. For example in China, I think most of the recent statistics would suggest you have about 150 million people in that middle class. That could go as high as north of 500 million to close to 800 million people over the next 10 years. What we also know is that as people move up the economic ladder, they generally consume more healthcare. So we think that the urbanization trend, the trend towards an increasing middle class, does offer a significant growth opportunity. Now of course, offsetting that will be pressure put on governments on how they are going to control overall healthcare spending. But if you look at the healthcare spending levels in places like Brazil, Russia, India and China, it is very low single digits. We think that it's an opportunity for them to invest in their society, even have a more stable society as well as a more productive society. And so we think that the growth opportunities there will continue.
Abbott
[ABT] Earnings Call 7/17/13 Miles White, CEO: Our earnings performance was strong despite a more negative impact from foreign currency than we had forecasted in April. As you know, the yen depreciated further over the last few months and was the primary driver of unfavorable exchange. Several emerging market currencies also weakened late in the second quarter. This resulted in an unfavorable exchange impact on sales of 1.7%, more than our forecast of 1%. The underlying fundamentals are good, however; especially around gross margin improvement and expense management, which all are progressing ahead of schedule. White: While we can't perfectly predict the macro environment, we can manage our business to deliver durable and reliable results for shareholders. And we have done that consistently for years and we're able to CLICK HERE TO RETURN TO INDEX
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do that because we have flexibility, we plan for contingencies, and we oftentimes drive out performance in other areas of our business. White: Despite currency headwinds, our performance exceeded expectations. We're executing on our strategic priorities and confirmed our double-digit EPS growth target for the full year. Brian Yoor, Vice President, Investor Relations: As expected, growth in other markets, which include Western Europe and Japan, was negatively impacted by overall macroeconomic conditions in these countries, including European austerity measures. In the third quarter, we expect low single-digit operational sales growth from our Established Pharmaceuticals business, as we see improved growth in emerging markets due to portfolio expansion and execution of recent tender wins. White: I think whenever the economies of the world, wherever they may be, go into some recession or phase into some kind of adversity at least as businesses and investors look at it, I think the natural tendency is to always forecast they're going to recover faster than they do. They recover gradually, and I think that's what we're going to see here. I think if you look back over the last few years and listen to all the pundits and analysts and everybody else talk about the macro environment and the pace of recovery and so forth, it really I think optimism and hope and so forth have driven a lot of wishful thinking that it's going to happen faster than it does, but frankly, the problems of Europe or even the U.S. have been more serious and deep; they don't recover that fast. So, that rolls through to markets, and it obviously rolls through to emerging markets too, because they're so integral now to the global economy. White: So, this year, the yen has been a significant driver of negative currency, as I think is understood by all of our investors and shareholders and analysts and yourself and so on. And in addition, some of the more larger emerging markets like the BRICs have also contributed lately to that; but I have to say this year it's pretty much dominated by the yen. So, in any given year, it's a different currency that could impact our sales, and because the company is 70% or more international, that's something that we have to expect to manage and navigate all the time. And I would tell you that our shareholders and investors don't expect to ride that curve with us, they expect us to manage that for them and manage the overall global performance of the company, and we do -as we are this year. White: I think China is an unbelievably impressive country and I think it's an impressive government that's managed its economic development incredibly well. I think this is a small piece of that. And in fact, in almost any way, you kind of look at it and say, geez, of all things you'd think that the government would pay attention to infant formula; wouldn't make the top of most industries or businesses or lists, but in this case, along with pharmaceuticals, packaging and a number of other industry segments, it did. So, I think we can manage this, I guess is the way I'd put it. My sense of prospects for the Chinese market haven't changed. Opportunity remains strong. Opportunity remains robust. I think all the companies that have been mentioned as part of this investigation have all responded very cooperatively to the Chinese government. I don't know that from talking to anybody, but I've read the press reports and so forth. I know that we've cooperated with their investigation. And this too shall pass; and I think the market dynamics remain robust. Fortunately for us, China doesn't represent a disproportionately large portion of our Nutrition business or even our pediatric nutrition business. It's a big business for us there, and we are big there. White: Europe in particular is tougher with generic products, whether branded or commodity or otherwise, and so we're certainly experiencing that too. If there's any part of this I'm most disappointed about it's our performance in the emerging side. I expect what's happening in the developed side to keep being that way for a while, but the and I think we can mitigate that to some degree too, but the bigger issue here for us is how CLICK HERE TO RETURN TO INDEX
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we are doing in the emerging markets. White: On vascular, the sequential improvement here is pretty good and our share positions in our core market is pretty good. We've got leadership share positions in the core stent businesses and so forth. I think, as has been pointed out a number of times, our ambitions here are frankly to expand product lines in areas and geographies and so forth, and drive a little better growth profile in that business in what is clearly an austere market. However, that still isn't going to be some high double-digit rate or something as you know. So, I'm pleased with the progress there, but it's not going to look like it did five, six years ago. So, we look at expanding and growing in new segments there and you saw a little bit of that earlier in the week with the acquisitions admittedly modest in size.
Eli Lilly
[LLY] Earnings Call 7/24/13 Philip Johnson, Vice President of Investor Relations: From a commercial perspective, we were disappointed with the Centers for Medicare and Medicaid Service's draft decision that proposed Coverage with Evidence Development for the use of beta-amyloid positron emission tomography imaging agents, which includes our approved product, Amyvid. We believe that insufficient Medicare coverage would be a significant setback for patients in the Alzheimer's disease community. Ilissa Rassner, Investor Relations: Japan, our revenues were once again significantly impacted by the weakening of the yen. The 18% decline from foreign exchange and 3% price decline were partially offset by strong double-digit volume growth of 10%. Volume growth was primarily driven Forteo, Strattera, Tradjenta and Evista.
Bristol-Meyers
[BMY] Earnings Call 7/25/13 Lamberto Andreotti, CEO: I'm increasingly happy about the strength and diversity of our portfolio. A number of things can and will be improved, but we are moving in the right direction with the right products. Charles Bancroft, CFO: In the U.S., we continue to do well in the hospital setting, and we are seeing strong growth with community-based oncologists. Yervoy also completed its best quarter in Europe and had a strong quarter in South America and Australia as well. Bancroft: Our diabetes portfolio had sales of $415 million in the quarter. Clearly, the diabetes market has become increasingly competitive. And we along with our partner AstraZeneca recognize the need to adequately resource this business and execute better to drive growth, and therefore plan to increase our commercial investment in the second half of the year. Giovanni Caforio, President: The biggest hurdle in primary care has really been so far the entrenchment of Warfarin. If you compare primary care to cardiology, in cardiology about two-thirds of new patients today have already started on a new agent. In primary care two-thirds of patients are still started on Warfarin. And there, clearly a differentiated profile like the profile of Eliquis has the potential to accelerate over time that transition. We don't see the breadth of indications as a major factor there. But of course, as you know, we are working to broaden our indication set as well.
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Pfizer
[PFE] Earnings Call 7/30/13 Ian Read, CEO: We continue to expect that the second half of this year will be stronger than the first half for emerging markets. Although on a full year basis we now expect to see operational revenue growth of midsingle digits rather than high single digits. This is mainly due to a slowdown in growth in Brazil and Russia and the impact of cost containment measures in Colombia, Poland, Thailand and Turkey. Frank D'Amelio, CFO: We expect full-year operational revenue growth in our Emerging Markets business to be in the mid-single digits percentage due to continued slowing growth in some markets as pricing pressures continue to build and governments take additional steps to contain rising healthcare expenditures. And because of the continued volatility in emerging markets, we anticipate our performance in that business to fluctuate from quarter to quarter. Read: We've always said that EM will be volatile and we'll see swings in quarter-on-quarter and even year-toyear. I think we'd all agree that sectorally that that's where we're seeing the vast majority of volume growth is coming from in the foreseeable future as these economies continue to spend more on healthcare. And the growth rates are going fluctuate depending on how the volume's doing and what pricing pressures you're getting in the quarter. So I would say it's really too early to tell or to reset expectations for where we think long-term growth in emerging markets are going to go. But overall, we are we continue to be very bullish on the underlying demand for healthcare in emerging markets. Read: Look, the pricing squeeze that Europe has applied to the industry over the last few years, which has accelerated from low single-digits to mid-single-digits, is, of course, pushing companies to look at what their infrastructure is, how they deliver the educational messages to physicians and their investment in general. Part of our restructuring into the innovative one, innovative two and the value business is a response to that in the sense that we effectively are merging our primary care and our specialty BU into one. So I expect in Europe you'll continue to see pharmaceutical companies look for more cost-efficient ways to deliver their message to physicians. And on the EM issue, I think if you look at it, Turkey. You can see Turkey's gone to a full reimbursement model more like Europe. There's out-of-pocket has now become less important in Turkey. The government is more influential, so they tend to be more dominant in the way they make acquisitions of pharmaceuticals and their pricing requests.
Merck
[MRK] Earnings Call 7/30/13 Adam Schechter, President of Global Human Health: Human Health sales declined 12% in the second quarter. Our top-line results continued to reflect the loss of exclusivity of SINGULAIR, PROPECIA, CLARINEX, and MAXALT, and weakness in the yen. Peter Kellogg, CFO: During the second quarter, the U.S. dollar continued to strengthen against many global currencies. If today's foreign exchange rates persist, we would expect full-year 2013 sales to be negatively affected by about three percentage points, which is greater than we had previously anticipated. Schechter: I believe the environment in Europe is tough and I think it will continue to be tough. But I also believe that the value that physicians and patients see in a product like JANUVIA is very strong. And also when you talk to the governments, I do believe that they see the value that a product like JANUVIA can bring into the marketplace. And the marketplace tends to show you the value of the product based upon the utilization. CLICK HERE TO RETURN TO INDEX
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Becton Dickinson and Co.

[BDX] Earnings Call 8/1/13 Vincent Forlenza, CEO: Our solid results against the backdrop of a challenging environment demonstrate that we are executing on our strategy and delivering on our commitments. Revenue and EPS growth in the third quarter were in line with our expectations. Revenue growth in the third quarter was driven by our Medical and Diagnostics segments. We experienced the decrease in our Biosciences segment. Strong international growth overcame slower U.S. sales growth in the quarter. Growth in the U.S. was impacted by ongoing softness in our Women's Health and Cancer business, and the timing of orders in Advanced Bioprocessing. We also saw continued strong growth in international safety sales and emerging markets, and we continue to deliver on our strategy of improving patient and healthcare worker safety. Based on our third quarter and year-to-date results, we feel confident in our previously communicated guidance ranges. Suky Upadhyay, Senior Vice President-Finance: The diversity of our portfolio in tandem with strong execution helped deliver solid performance in a challenging environment. From a macro perspective, we continue to view developed markets as stable, but constrained, and emerging markets as a continued source of growth. Revenue growth in the third quarter was in line with our expectations, driven by new product sales, acquisitions, safety products, and geographic expansion. In addition, the quarter benefited as a result of the reversal of some negative timing matters from the second quarter. We also experienced a better-thanexpected price and mix profile. Upadhyay: As we expected, softer growth in the U.S. was offset by continued strong international growth. BD's reported U.S. revenues increased 1.3% versus the prior year. Revenue in our U.S. Medical segment increased by 4.4%. As expected, this was partially driven by the reversal of unfavorable timing in both our Pharmaceutical Systems and Diabetes Care businesses, in addition to the positive contribution from our acquisition of SSI. Upadhyay: We still do continue to see the environment as challenging both from a pricing and reimbursement perspective, and year-to-date we are still seeing erosion overall on year-over-year pricing. But we're very optimistic with these results but we're taking it one quarter at a time. William Kozy, COO: We do expect a normalized fourth quarter, meaning that we'll recover in that timing mode in the fourth quarter with BD AB. And this business because of the kind of the big pharma relationships, it just tends to be lumpy. So we had a softer than expected third quarter. We're expecting that to recover in the fourth quarter and be very much in line with our FY 2013 expectation.
Financials, Insurance, Real Estate

Wells Fargo
[WFC] Earnings Call 7/12/13 John Stumpf, CEO: Wells Fargo had a terrific quarter and has now generated 14 consecutive quarters of earnings per share growth with record earnings in the second quarter. This consistent strong performance during a dynamic economic and interest rate environment again demonstrates the benefit of our diversified business model.
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Stumpf: Our credit performance was outstanding, benefiting from our conservative underwriting and improving economic conditions, especially in housing, with net charge-offs down to 58 basis points and our total net charge-offs down 48% from just a year ago. Stumpf: We continue to be optimistic about the improvements we're seeing throughout the economy. While commercial loan demand is still modest, jobs are being created, consumer confidence is increasing and the housing market continues to demonstrate strong momentum. In fact, in the second quarter the housing market improvement was stronger and more broad-based that it has been since before 2008. Sales were up and residential property prices increased by 13% across the country. Yet affordability still remains attractive, even with the increased prices and higher interest rates. The strength in the housing market was a positive catalyst to our results in the second quarter in a number of ways, including higher originations for home purchases, lower environmental costs, reduced repurchased reserves and improved credit quality. Assuming the housing market stayed remains strong, we currently believe it will and we currently believe it will, our overall results should continue to reflect these benefits. While the economy continues its slow but steady improvement, the current rate environment is obviously very different than it was just 90 days ago when we last announced our earnings. We knew rates would eventually rise, and we've been planning for a rising rate environment for some time. The benefit of our diversified business model is that it provides opportunities to generate earnings growth over a variety of rate environments. Some of our businesses naturally do better in a lower rate environment and others benefit from rising rates. Timothy Sloan, CFO: The rate environment this quarter was very different from last quarter. In fact, the economic, housing and rate environment has differed significantly over the past 14 quarters of our earnings growth. While the drivers of our growth have varied, our consistent risk discipline and diversified business model have remained the same. Our results this quarter compared to the first quarter clearly showed the advantage of our diversity, with our bottom line results benefiting from strong broad-based trends, including: net interest income growth as we grew loans and invested in securities, fee growth across a variety of our businesses, reduced expenses generating positive operating leverage and improved credit and capital levels. Sloan: Noninterest income was down slightly from the first quarter on lower gains from deferred compensation plan investment income, which is P&L neutral, weaker customer accommodation trading and lower fees including a lower gain on sale of PCI loans. Our mortgage business continued to generate strong results for the second quarter with revenue up modestly for the first quarter. Mortgage originations were $112 billion, our seventh consecutive quarter of more than $100 billion in originations, reflecting the benefit of the housing market improvement and low interest rates. As rates rose late in the quarter, applications for home purchases remained strong but refi application volumes declined as expected. Sloan: The recovery in the housing market is driving significant improvement in a number of areas including some of our environmentally elevated costs. In the second quarter most of these costs were significantly below where they had been over the past few years. We had a nominal amount of costs associated with the independent foreclosure review this quarter from customer call volumes following the distribution of remediation checks. The improvement in real estate values helped reduce foreclosed asset expenses by $49 million compared to the first quarter and by $143 million from a year ago. Sloan: We've had especially strong improvement in our commercial and residential real estate portfolios. These portfolios are now providing a tailwind for our credit performance compared to the headwind they provided when the real estate market was weaker. Stumpf: I think that there is some balance in the business on the revenue side because of the fact that CLICK HERE TO RETURN TO INDEX
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servicing income tends to be a little bit less volatile. We should see some benefit in terms of servicing income increasing as the housing industry continues to improve. We did reduce the value of the servicing for some elongation of some foreclosure timelines. Over time that will dissipate. And then we'll continue to get the carry in the underlying servicing income. Our hedge ratio is pretty high, so it's not like we're betting the farm or the stagecoach on an increase in rates in the servicing portfolio. We'll see some benefit there. Stumpf: The three important issues to a home purchase, what you make, what the house costs and with the financing costs. One of those is still at close to 40, 50-year record lows compared to rental. Owning a home makes economic sense. Sure, it depends on where you want to live and how long you want to live there and so forth. So there is just strength there and it improves customer confidence. The thing I hear most about when I'm out in the marketplace is the lack of inventory. So we are expecting that prices will continue to improve. Probably not the level they have in the past but housing sure has strength to it. So I don't know what's going to happen to rates over time but when housing improves it's good for Americans, it's good for confidence, which in turn is good for financial services industry and Wells Fargo. Sloan: I think we've continued to be surprised by how housing has positively impacted our results. I think it's also important to remember that particularly when you think about the reserve release that there were some overriding factors that impacted the reserve release over the last few quarters including the fact that we had the Occupancy guidance that impacted the third and fourth quarter of last year. And also the potential for the impact from the damage of Hurricane Sandy that's been working it's way through the system. Sloan: Housing is uniquely different than any other consumer asset class. When housing improves people feel better. I mean two thirds of Americans or so own a home. When housing improves it improves confidence, people spend more, the multiplier effect on buying washers and dryers and other consumer goods, its just very special around housing. So when housing gets better, it really lifts all bolt-on the consumer side. Stumpf: When housing gets better, it's better for Americans, it's better for the country, and that includes us. We have a commitment to residential real estate and commercial real estate for that matter in this company because that's what our customers want to buy. I can't tell you what's going to happen in the next quarter, but I tell you this: an improving housing market will benefit customers and us because we're at the end of the day a reflection of our customers. So the benefits are yet to come. It may come in different line items. If rates rise, there'll be less refinances. We've been there before but it also means improved credit. It means improved confidence. Customers start small businesses. We're a big small business bank. Environmental costs go away. So I would take that trade all day long. An improving housing market, even if it means less refinances because rates are rising at the same time, that's fine. Stumpf: This is America. People are free to express their opinions and that's one of the beauties of this country. And from my perspective, we are solidly in the real economy. What we do is to serve customers, small business, large business, Commercial Real Estate customers, consumers, and virtually everything we do has a customer on the other side of it. When we take a deposit in, we don't put it into a vault that sits there, we put it to work. We make consumer loans, commercial loans, small business loans, loans to ranchers and farmers and energy companies; that's what we do. And that's proprietary and that's putting because we have to manage those kinds of risks, I understand that. I don't understand how serving customers broadly and deeply, including helping them with a public offering whether it be debt or equity, somehow makes us riskier, or weaker or puts depositors at risks more so than making a loan. But I understand that the dialogue. You've got to realize the capital that's been raised; the discipline around risk of all kinds is far different than it was just a few years ago. I'm proud of this company and proud of what we do and I know that we are the helping this CLICK HERE TO RETURN TO INDEX
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economy to cover, to heal and we'll do all we can to do that.
JPMorgan
[JPM] Earnings Call 7/12/13 Marianne Lake, CFO: Rising long-term rates and higher levels of volatility in June had an impact both on the quarter as well as in terms of our mortgage outlook guidance. Our markets businesses held up well in June and our asset management platform outperformed during the backup. And importantly, remember that given the firm's positioning, rising rates will drive significant benefit in higher NNI over time. However, in the near term, higher long-term rates and wider spreads drove a significant reduction in the unrealized gains in our securities portfolio, or a reduction in AOCI, which did impact Basel III capital negatively. Despite that impact, we were able to add to our capital and improve capital ratios as we began to realize some of the run off and model benefits that we previously guided you to. And finally, higher rates will have a significant impact on mortgage refi volumes and margins in the second half of the year. Lake: Customer attrition levels remain historically low and our active mobile customer base grew by 32% year on year. So we're adding customers, we're retaining them through superior customer experience and we're deepening our relationships with them. Lake: The numbers for the first half of 2013, continue to make great progress in the international space and had particular strength in Asia during this quarter. Lake: As we look forward, we expect continued strong growth in the real estate business given our competitive position, and for C&I loans, pipeline are up in the first quarter and deal activity feels like it may be turning. We expect a more constructive second half and therefore should see some growth but the environment remains competitive. Lake: So June was a bit more challenging and so it wasn't as strong as April and May. But it really comes down to the fact that we really do have a client driven business model and the client slows, they held up. And so if you surround that with robust and strong trading risk discipline that's pretty m uch how it panned out. Lake: I think revenue margins will be down on competitive pressures, volumes are down and expenses may go up because volumes are down for a couple of quarters. Lake: There's no reason to think that we're not going to have any good trading going forward because if the economy is strengthening and we believe our view is that it is, and that capital markets is going to open up again and people get adjusted to slightly new higher rates and you have volatility helps certain trading areas. It hurts high interest rates hurt mortgages but again they can help other areas. So it's a whole potpourri. It's impossible almost to separate it out and we try to do that for you but I think it's a little bit of a mistake when you look at the whole company. Lake: You should think about mortgages having some more releases because we continue to see delinquencies and severities improve particularly HPI improvement so you should expect that to continue, maybe not at the level we saw this quarter because we had a big revision to HPI, as you know, during the last several months. And in card, we've had 1.050 billion of reserve releases in the first half. Given what we're seeing, we expect more releases in the second half but not at that level. Jamie Dimon, CEO: We're growing loans in Asset Management, we're growing loans in Auto, we're adding more mortgage loans, we're expecting some growth in commercial. Our commercial real estate is already CLICK HERE TO RETURN TO INDEX
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growing strongly. We're expecting some growth in middle market and proper [ph] client banking space, although we've seen loan reduction in CIB. We're expecting that to remain relatively flat so all other things being equal that's net growth. And Card, has hit that inflection point. So that will stop contributing to run off net.
Citigroup
[C] Earnings Call 7/15/13 Michael Corbat, CEO: Although volatility did increase in June, we had good performance across our Securities and Banking businesses during the quarter. Our Transaction Service business continues to be impacted by spread compression, as does our Global Consumer Bank. However, we did grow our loans and our core businesses in a disciplined manner, particularly in the emerging markets, and we did so while maintaining a high quality portfolio. Corbat: Low short-term rates continue to be a headwind against our deposit taking and accrual businesses, such as Consumer Banking and Transaction Services. And in the U.S., although the housing market is gaining strength, lower volume of mortgage refinancing will impact our Consumer business. We're already taking steps to make sure the mortgage business is sized correctly. While still outpacing developed markets, emerging market growth slowed, but we remain very disciplined about to whom we'll offer credit. In light of our targeted segments, as the Brazil credit card transaction indicates, we manage our risk profile carefully in every country we do business, and our target clients are stable, whether they be multinational corporates or high-credit-quality consumers. John Gerspach, CFO: While in certain markets, including North America, Korea and Australia, loan growth has been hampered by the economic or regulatory environment, in other countries, we continue to expand, reflecting the quality of our franchise and the growing population of high quality borrowers in these markets. Importantly, we are growing our loans with a disciplined focus on credit quality. Gerspach: Our results for the second quarter reflected a continued challenging operating environment with spread compression, slowing global growth and elevated legal and related costs remaining as headwinds. However, even with Gerspach: In North America Consumer, the environment remains challenging with a combination of spread compression, consumer deleveraging, and a slowdown in mortgage refinancing activity expected to continue to put pressure on revenues for the remainder of the year. In the mortgage business, we are beginning to take actions to reduce our expense base with the decline in activity, but we would expect there to be some lag as we continue to fulfill our backlog through the third quarter. We may face additional pressure if not only volumes but also margins decline further as we look to the back half of the year. Gerspach: Korea is still going through some issues. I don't think that we're going to be completely out of the regulatory headwinds in Korea until sometime next year, maybe even to the end of next year. And so that's going to continue to be a drag on us. That's why, when we look at Asia Korea certainly is a weight on us, but Asia overall, we still have some good loan growth.
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Bank of America
[BAC] Earnings Call 7/17/13 Brian Moynihan, CEO: We've built our company over the last several quarters to maintain stability while continuing to make progress, to withstand the volatility that we saw at the end of this quarter, while delivering for our customers and shareholders, andthat came through. Even as mortgage demand has decreased, we still had a 40% increases in retail production over the last year and an increases over last quarter. Even as interest rates rose, we were able to add to our capital ratios. And keep in mind, with our trillion-dollar deposit book, rising rates will continue to increases the value of those over time. We have leading capabilities in the areas where our customers want us to be. We do more business with them. We're gaining momentum across every customer group we serve. And while we're doing that, our balance sheet continues to strengthen, our capital ratios again move higher, and just as importantly, we've begun the process of returning capital to our shareholders. Moynihan: Our loans and our deposits continue to grow. All the businesses produced solid, stable revenues, and in the focused areas where we are growing, they grew their revenues, and we're seeing growing activity levels across all our customer and client groups. Moynihan: The good news is that we're seeing in our business is reflective of an improving economy. The economy continues to improve across all areas. That benefits our company across multiple fronts. But most importantly, with an improving economy, it strengthens and creates opportunity for the people, companies, and investors that we serve, and that opportunity will continue to provide opportunity for to us capture as we connect all our capabilities to help those that we serve realize their financial goals. Bruce Thompson, CFO: Consumer activity levels were solid, as mortgage production increased, credit card loan balances stabilized, and both deposits and brokerage flows increased from the previous quarter. Global Wealth & Investment Management reported another quarter of record revenues as well as earnings. Global Banking revenue showed continued strength, driven by increased lending in both our commercial as well as our corporate bank, and Investment Banking performance remained strong and close to record levels. Thompson: Where we had weakness in the second quarter of this year was in three areas. The first is that we continue to run off the structured credit trading book, and you had a pretty significant decline during the second quarter of 2013 relative with the prior year from the continued runoff of that book. From a P&L perspective, it's largely run off at this point, so we're not going to have to discuss that much going forward. The other two areas on a relative basis that were weaker, we have a very significant business that's got number-one market shares in the municipal finance space, and if you look at the prices and the spread widening, it was very dramatic during the month of June in the muni space. That negatively affected us. And then in the mortgage space, obviously the market widened out significantly there, and we had some lumpy items in the second quarter of 2012 as well.
Blackstone Group LP
[BX] Earnings Call 7/18/13 Steve Schwarzman, CEO: It appears that markets predictably overreacted initially to the Fed's indication on when and how it might start tapering its bond purchase program. Stock markets in the U.S. which initially declined up to 8%, have now recovered in only three weeks to regain record levels. Interest rates have started to decline slowly as market peaks, as investors recognize that the Fed will act with prudence, not to stifle the CLICK HERE TO RETURN TO INDEX
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economic recovery. Higher rate, are not per se negative for Blackstone as investors may have initially believed. Historically, we've performed well in periods of rising rates and we are well positioned today given our mix of businesses and investments. When rates rise in tandem with better economic activity, the result is higher cash flows for most of our Private Equity and Real Estate assets and higher returns for our Hedge Fund Solutions businesses. Our Credit operations benefit because they tend to invest in floating rate, not fixed rate assets, and they obtain higher yields on their mezzanine and rescue-lending assets. Laurence Tosi, CFO: By almost any measure, it has been a record start to 2013. Blackstone continues on a steady trend of industry-leading growth as total AUM reached a record $230 billion Tosi: Over the past five years, Blackstone has nearly doubled assets. We've increased earnings nine-fold at a 56% compound annual growth rate and distributed $3.5 billion of cash to investors, including $1.3 billion in the last 12 months alone. Looking forward, the key drivers of future performance demonstrate the momentum behind our positioning against a dynamic market backdrop. We now have $95 billion in performance fee earning assets, up 63% year-over-year across 100 different funds and vehicles, providing a broad base of earnings power for future value creation . Tosi: My view is companies are uncertain about their futures and I think they are uncertain of and I think a lot of that uncertainty emanates from regulatory on Washington, frankly, and if we're talking about the U.S., and the rules are changing, they're not sure what that does to the economy. Are we going to have another crisis over the debt ceiling in the fall? What's that going to do, one thing another? So I think companies in the U.S. are sitting on the sidelines, they're happy to be in cash, they're happy to be secure, and I think that's one factor. Then I think some of the exciting markets that people are all hot about, generally speaking, the BRIC markets are all showing issues right now, all four of the BRICs are. Tony James, COO: Higher rates are connected to a stronger economic activity. I think it's a net positive across our businesses, both for the portfolio and for new investing. If higher rates come in a weak economic environment that would be I don't see that happening, but that would be I might give a different answer to that. And so and then part of it is, what happens to the equity market? So are higher rates associated with a much lower stock market that would negatively impact realizations, if higher rates are associated rates go up gradually and associate with stronger economies and a strong stock market, then that wouldn't.
Goldman Sachs
[GS] Earnings Call 7/16/13 Harvey Schwartz, CFO: Varying economic data and substantial central bank actions during the quarter caused our clients to continually reassess their expectations for global growth. As a result, our clients' risk appetites and activity levels fluctuated over the course of the quarter. At the beginning of the quarter, our clients remained focused on the European economic outlook. As the quarter progressed, solid economic data out of the U.S. began to moderate economic concerns. Client activity, risk appetite, and asset prices improved as a result of the increased confidence in the U.S. economy. Macro concerns emerged again toward the end of the quarter and were reflected in lower activity levels and risk appetite in certain businesses. In addition, the market volatility created more challenging periods within the capital markets for managing client flows. Schwartz: The marketplace tried to weigh the potential near-term benefits for the Japanese economy against the relative headwinds for other parts of the world. In the U.S., commentary from the Federal Reserve about potentially tapering its bond buying program led to a significant rise in interest rates. Market participants CLICK HERE TO RETURN TO INDEX
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continued to debate the timing and impact of tapering on both the market and economic activity. Clients were also concerned with the potential slowdown in China during the quarter. Ultimately, our clients are assessing the broader global economy, specifically whether a recovering U.S. will offset potentially slower growth in other economic regions. Schwartz: While activity levels in our currency business remained strong as clients reacted to increased volatility, particularly in Asia, results in other businesses were lower than the first quarter. As you would expect during a period of increasing interest rates and widening credit spreads, client risk appetite declined in rates, credit, and mortgages, and inventory management was a bit more challenging during the latter part of the quarter. Commodity results decreased relative to the first quarter, as volatility remained low in many of our core products and client activity was lower as a result. Schwartz: We are cautiously optimistic about the outlook for the operating environment. Nevertheless, we remain vigilant regarding expenses and risks. Given the dynamic nature of the marketplace, it's natural for people to become somewhat short-term focused. However, everyone at Goldman Sachs remains keenly aware that our success will be measured over years as opposed to weeks or months. To that end, we are going to continue to invest in deepening and expanding our client franchise, building relationships that will pass the test of time. Schwartz: What I would say is that now its a very information-centric environment. What I mean by that is people all of our clients are going to be very keenly watching data, economic data, whether it's non-farm payrolls in the United States, GDP growth in Europe, Japan, China, really trying to form their view, because for a very long period of time, I think there was an expectation that this unusual low-rate environment would persist. And to some extent, people could build expectations around that. And now that we might be entering a different regime, you'll see people probably respond more to data. But again, it's hard to [ph] say. (15:55) But, it does feel like people have recalibrated this stage. Schwartz: People are going to form their impressions over the next several months, and certainly everybody will be watching. Clients are basically sitting on the edge of their seat for every communiqu out of the Federal Reserve. And so there will be some sensitivity, but it feels like we're tracking more back to a period of normalcy. Schwartz: Goldman Sachs people are always in high demand, and our competitors are always looking to take them over to their firms. I will say over the past several months, we've always felt like we're well positioned to recruit. I will say it felt like we've had some recruiting tailwinds this year. Whether they're sustainable, we'll see. Schwartz: Certainly the activity levels in Japan, and when I say Japan, I don't necessarily mean specifically Japan geographically, but activity that's driven around Japan. So one of the given the global nature of our clients, one of the most important things that we need to do across the entire firm is make sure that we connect geographically in a way to deliver content. So it might be clients in Europe that are very focused on events in Japan the same as the U.S. So a lot of the capturing that is making sure that the content mechanism works and the transmission mechanism works. And so I would say Japan was a driver certainly of increased activity, but not just isolated to Japan as knock-on benefits.
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American Express
[AXP] Earnings Call 7/17/13 Daniel Henry, CFO: We continue to invest in our business despite the slow growth economy. Henry: We continue to feel positive about our performance, especially given the relatively slow growth in the economic environment. In the quarter, our spending growth continued to be healthy and was relatively consistent with the past several quarters. In addition, we did see some improvement in our growth rate internationally. We also saw our average loans continue to grow modestly year-over-year and outpace the industry. Loan growth and slightly lower funding costs led to a 7% increase in net interest income. At the same time, lending losses loss rates remain near all-time lows. Revenue growth was 4%. We continued to consistently row revenues despite the slow growth environment, and in this quarter, the negative impact of cardmember reimbursements. In the quarter, operating expense decreased by 4% versus prior year, reflecting strong expense control, as well as higher cardmember reimbursement costs in the prior year. Henry: I think historically, our growth in billed business has come from both a combination of a growth in cards-in-force as well as a growth in average spend. The growth in average spend comes from really two things in recent history. That is just greater engagement on the part of our current customers who are spending at higher levels, but it's also coming from our premium strategy. So we're bringing on higher spending customers compared to what we were doing several years ago and I think that shift to a more premium mix is influencing as well. However, let's face it, the broad economy has an impact here as well and certainly just consumer confidence is a factor in terms of how much people spend. Now, that's been shifting a little bit recently. Certainly things like housing prices firming, the stock market doing better are all things that can influence that.
CIT Group Inc

[CIT] Earnings Call 7/23/13 John Thain, CEO: Our credit metrics remained at economic cycle lows. Our capital and liquidity remain str ong, and we began the process of returning capital to our shareholders. Overall, our view of the U.S. economy is that it continues to grow at a modest rate. If you look across our businesses, we see that in our railcar business, 98% of our railcars are on lease. In our Corporate Finance business, we funded $1.3 billion of volume in the quarter. In our factoring business, our volumes were up from a year ago. And in our Vendor financing and leasing, assets grew 11% from a year ago. When we look globally, our commercial aircraft business, our planes were 100% leased. And in our Vendor business internationally, we saw volume growth in China and Mexico. So overall good solid quarter. Scott Parker, CFO: The two biggest drivers of our kind of commitments are both the rail and aircraft orders, as well as the unfunded commitments on our asset base lending product. So we haven't seen, a big change in the utilization rates on our revolvers for the since I've been here. So it's been some more pretty steady, and with economic growth and people's confidence that's usually the first indicator of kind of people drawing that down. But right now, we haven't seen a lot of movement there, so that's the unfunded out there on the that you're seeing in the financial statements. Parker: I think the broadly syndicated market is much more competitive. And as we talk about the plain vanilla ABL is kind of something that doesn't meet our risk return. Just to clarify, we did $1.3 billion of funded volume in our core finance Corporate Finance business. So we are finding transactions and your general CLICK HERE TO RETURN TO INDEX
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assessment of the middle market is correct. I think, in general, there's the discipline has been pretty well. And so our viewpoint is it becomes more of a transaction by transaction where there could be pockets of players that are in that that are not mainstream in all the overall. Parker: Tanks are a relatively small portion of our fleet. But actually tank cars have been in high demand right now. A lot of the fracking activity has led to the need to move natural gas liquids. And so if anything right now, the tank car market is good. Thain: In regards to the overall profitability of the rail business it has been one where the overall business has been doing very well. As we kind of came out of the cycle of 2009 with high utilization and also upward trajectory on lease rates both for the new equipment that we have, but also some of the equipment that was renewing and pricing at higher rates. So the business is performing very well for us.
Visa
[V] Earnings Call 7/24/13 Byron Pollitt, CFO: The slowing growth in July is most pronounced outside the U.S. and, we believe, is due in large part to the timing of Ramadan versus last year. Based on historical travel patterns, we estimate the Ramadan impact to be in the 250 basis points to 300 basis points range for the month, and, if past is prologue, we should see a bounce back in August. Charles Scharf, CEO: There's very little new news in the underlying revenue trends, which means that we continue to see broad-based growth geographically and also by product, and these are at growth rates consistent with what we've seen in prior quarters. People often ask us about what we see in the economy and what I guess we can say is we don't see meaningful changes to the path of the economic recovery. And while an accelerating and certainly a more broad-based recovery would be beneficial to us and our clients, we do continue to feel very good about our business and our ability to deliver strong results in the current economic environment. Scharf: The macro trends have and will continue to provide tailwinds. The opportunity to move transactions from cash to electronic means is still huge, and we believe will be there for years to come. This is true in both the developed and the developing parts of the world. Scharf: I think we're blessed with just an outstanding U.S. credit franchise, which has been built -up through the years through terrific relationships for sure. We look at the partners that we have and look at their performance and certainly our performance has been helped by their strong performance. And that's true both on the issuer side as well as on the cobrand side. We've also been certainly beneficiaries in the United States credit market as the affluent customer has recovered more quickly than the non-affluent customers, and as we look forward, a more broad-based recovery is something, which should be additive to the affluent business that we have today.
Simon Property
[SPG] Earnings Call 7/29/13 David Simon, CEO: I think the big effort generally in the mall industry is we're all investing in Wi -Fi networks throughout our malls. We're doing that as well. We're starting at the bigger ones first and that's really primarily for the benefit of our consumer, but to the extent that it can help facilitate our retailers, we're happy
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for them to participate. But again, I would tell you, on the privacy front, we're not doing anything. We're treading very, very carefully. Simon: there's nothing more than buying something cheap that excites me and the team here. So we love to buy things really cheap. And if that can be done on a distressed basis, we like it as long as ultimately we've got to believe in the real estate because we're not, well, I wouldn't say we're traders. So at the end of the day we've got to have a long-term view that we like the cash flow that's being generated from the real estate. But to some extent, if you go to the Klpierre deal and look, Europe is still squishy to put it mildly. That was a I wouldn't call it a distress situation, but it was certainly at a pretty decent discount to NAV and an uncertain future. And not many people are investing in Europe when we talk about McArthurGlen. There are not many people that are at this point taking the position that Europe is a good place to invest in. So to some extent both of those transactions are somewhat contrarian. And if we see those as capital ebbs and flows throughout the world, I mean I would hope that we would be able to take advantage of it. Simon: core business sponsorship, et cetera, is all trending up this year compared to Q2 of last year and year to date. Simon: Brazil's a great country with a lot of dynamic growth to it. But we're very cautious on a market like that. And we haven't found the right deal, and thankfully in hindsight our decision not to invest aggressively there has been the appropriate one. So we'll wait to see. I've always worried about the cash flows from the buildings that have been built there and whether that was sustainable with all the new supply, the fact that a lot of the cash flow comes from parking. There's a whole host of things. The cost of the goods down there is significant. The high-end malls there, whether they're profitable for the retailers or not, still is a question mark. So there's a lot there to underwrite. And essentially, you should assume that those questions have been factored into the fact that we have not made an investment in Braz il. Richard Sokolov, COO: The stronger regions for us were New England, the Mountain states, Southwest and South Atlantic, a little weaker over the Plains, Mid-Atlantic, Great Lakes. Our stronger categories were juniors, women's specialty, accessories, men's shoes and women's better, and the weaker areas were women's popular, home furniture and women's special size. Stephen Sterrett, CFO: I think one of the things we should have all learned coming out of 2008, 2009 is that the world changes, it's a volatile place. The price we pay for being a REIT is that we don't fund self-fund our debt from cash flow. So we should all run with a fair bit of liquidity and I think we should all run with relatively conservative balance sheets. Sterrett: Despite the fact that LIBOR is at 20 bps and hasn't moved and there would be a temptation to float, the fact is 90%-plus of our debt is fixed rate debt. We've done the math with long-lived assets and long-term fixed rate debt. I think rates are likely to rise. Having said that, they've already moved 75 to 100 bps, and we don't have a lot of robust economic growth in the economy today. But I do think it's probably likely that we'll see a higher rate environment going forward. Sokolov: One of the components of occupancy costs are sales and rents. Frankly, we're only rolling a relatively small percentage of our square footage every year, and our sales have been growing pretty aggressively and our spreads have been growing right along with that. So as we pointed out earlier, given that we're 11.3%, we think we still have considerable room to grow our rents even in a moderating sales environment. Simon: We will not blame an early Easter, a late Easter, an early Halloween or a late Halloween. But there are CLICK HERE TO RETURN TO INDEX
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lots of things, out of our control, tenant bankruptcies, lousy sales, lousy weather, whatever, international politics, U.S. politics, whatever changes the consumer mindset. So we're still in an uncertain environment; that's why we try to be very cautious in how we look at things. Sterrett: Bonds are like mortgages in that there is the equivalent of yield maintenance. There's a make whole. So to some extent, you are trading dollars. But having said that much like we did in December of 2012, we went to the bond market to prefund, if you will, our 2013 maturities because we knew what they were. If you look at our debt maturity schedule, we've got about $900 million of bonds coming due in 2014. So, we do look at the market. We monitor the market. One of the great things about the bond market is that you can go relatively quickly. And so we do have that option to prefund that at some point in time.
Western Union
[WU] Earnings Call 7/30/13 Hikmet Ersek, CEO: As we expected our second quarter Consumer Money Transfer transacti on growth rates accelerated compared to the first quarter, as our pricing actions continued to build momentum with consumers. Electronic channels growth also increased with strong contributions from both westernunion.com and electronic account based money transferred through banks. Western Union Business Solutions delivered a second consecutive quarter of solid growth and more importantly initiated new services, partnerships, and markets to drive future performance. And additionally Consumer Bill Payments improved with strong constant currency revenue growth in the quarter. Ersek: In Mexico Western Union brand transactions increased 22% in the quarter. This was an improvement from the 9% growth in the first quarter and 2% in last year's fourth quarter when we first implemented the price reductions. We are regaining momentum in Mexico, which should also be aided by activating new agent locations over the next several quarters. The price actions in other corridors are also performing well. And overall we are meeting our transactions objectives for the price corridors. Ersek: Electronic channels are growing very fast. We have 115,000 ATMs. So being everywhere, anywhere, and serving the customers, it does work. So I am pleased with the progress we made. Ersek: I believe that we did a big investment in 2012, which affects 2013 numbers. Generally, I would say that it's not only pricing. I think we really build a strategy here which we are our focus is revving up profit growth for 2014. And to achieve that there are many factors and pricing is one of them. And I don't see that we going to have a big investment as we did it in from today's point of view, as we did it in end of 2012. Ersek: U.S. originated transactions last quarter grow by 75%. The biggest advantage of Western Union is that online, we serve from one point 200 countries. If you have our Germany online transfer, we serve from Germany 200 countries. So that's the biggest advantage. And yeah that's our pricing corridor by corridor. If you pick up corridors and we do price promotions on that.
Boston Properties
[BXP] Earnings Call 7/31/13 Mortimer Zuckerman, Executive Chairman: We are not, of course, happy to be a part of a national economy that is so weak, the basic theories that we in a sense and strategies that we undertook years and years ago have been borne out in this: the worst of the recessions that we have all experienced since Boston Properties
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was started over 40 years ago. So, that in the markets that we are in, primarily, San Francisco, and Washington, and Boston, and Cambridge in the Boston area these markets are not just the downtown areas, but markets in general, and of course, New York have all been performing relatively better than the overall national economy. In fact, these are perhaps the four best cities or among the four best cities these four markets and the cities in general have done better than the overall economy. And so, we are doing relatively well in relation to the cities and the cities are doing relatively well to the whole economy. Zuckerman: We're going to continue to watch the economy very carefully. We're going to watch the individual markets very carefully. We will continue to focus a lot on our financial resources, so that we can not only not be in any danger, but in fact would be in a position to take advantage of opportunities that often come up in these kinds of markets just as we did in 2007 and 2008 and 2009, when those companies which had liquidity and have the ability to raise money through financing were able to do things that a lot of other companies were not. And we were able to add particularly buildings of the highest quality in several of our markets, because of the fact that we were viable, we were in good shape, we were not distracted by troubles and we were able to raise the money. And that gave us the credibility to make a number of acquisitions as well as initiate some developments. Owen Thomas, CEO: We are experiencing a sluggish recovery in the overall U.S. economy. However, this recovery is multi-speed depending on industry and specific location. We are focused on four primary geographic areas. And fortunately, in most, though not in all, the markets we serve, we're experiencing reasonably sustained economic recovery and leasing activity. Industries such as technology, life sciences, healthcare and even smaller scale financial services firms are performing well and creating demand for our properties. Thomas: In terms of capital strategy, we're experiencing what I would describe as an atypical economic and real estate capital markets cycle. What I mean by this is interest rates have been at historic lows, creating strong capital flows into the property markets well ahead of an underlying property market recovery. Cap rates are very low, while rent growth is still in early stages. This is particularly true for the quality of assets and markets that are central to our strategy. What this means for us from a capital allocation perspective is that we are finding new acquisitions challenging. We continue to aggressively pursue acquisition opportunities, but we will also remain disciplined. Thomas: The most significant economic news for the quarter was a nearly 100 basis point rise in the 10-year U.S. Treasury. We were able to complete a $700 million financing on attractive terms before the full effect of the rate rise. Also despite the rate rise, interest by investors in purchasing real estate remains robust, though pricing at the margin for leveraged buyers has likely been negatively impacted to some degree. Douglas Linde, President: In general terms, I think I would characterize the way we're feeling is cautiously optimistic about our markets. Remember, as everyone has previously said, we are concentrated in markets and submarkets that are concentrated from a tenancy perspective, businesses that are into new ideas, be they in technology or media or information distribution or mobility or life sciences or pharmaceuticals or medical devices and those are the types of businesses that are in fact flourishing and increasing their headcounts. There are clusters of businesses in these markets and they all coexist with a large pool of talented labor and this is really where the economy in the United States is expanding. There do continue to be headwinds against more rapid improvements in the office business and the strongest force of that is densification. I guess you could also refer to that as a productivity improvement or productivity enhancements. One way or another, businesses are finding ways to fit more people into less space. Organizations are moving from offices and CLICK HERE TO RETURN TO INDEX
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cubes to trading desks; and offices and cubes are getting smaller; and traditional support functions are either being eliminated or consolidated. Linde: Current demand from tech companies as a percentage of demand has actually gone down from about two-thirds of the demand in 2012 to about 50% of what's going on today. And the real reason for that are there are more traditional users in the market as the wave of leases that we've talked about that are going to be expiring between 2014 and 2017 have started to hit the market. Linde: In D.C., the sequestration, which people really aren't writing about, is still very much a factor. And while it may not be on the front page, it creates an overly of uncertainty, particularly in the district itself. The absence of incremental demand from the GSA and changes in space utilization in the legal industry, in particular, and the lack of any significant new demand generators that we do in fact see in places like Boston and San Francisco and New York, are creating additional headwinds that the district is simply facing today. Second-generation space is plentiful, and in some cases landlords have expanded tenant improvement packages to encourage tenants to relocate. Nonetheless, tenants are going to migrate to newer and more efficient buildings in the CBD, which is our sweet spot. Michael LaBelle, CFO: The credit markets have been extremely volatile over the last couple of months with the 10-year treasury climbing from a low of 1.63% in early May, up to 2.17% when we did our deal in June, and now at 2.68% today. In connection with the rate moves our credit spreads also gapped out by over 40 basis points, before settling back in a little bit today in the mid-$140s. Despite the volatility, the markets are open and we believe we could issue 10-year bonds today at an all-in yield of approximately 4.25%. Borrowing rates borrowing costs in the mortgage markets have also increased with 10-year mortgages available at reasonable leverage in the mid-to-upper 4% range. And the CMBS market also continues to originate deals, despite the spread wagging that we saw in June. Thomas: I think that over time, as interest rates increase, the returns that we would expect from development should have some incremental increase over time. That being said, I think if interest rates go up it's going to be because the economy is improving and, therefore, demand for real estate will go up and rents will go up. So, there would likely be some offset in terms of rental increase. But yes, I think required returns will go up. Zuckerman: I think the fact that Ben Bernanke was the Chairman of the Fede ral Reserve at this particular time was almost a gift, because he had had all of the great experience as an academic and understanding what happened during the Great Depression. He was a great authority on what happened during the Great Depression and he understood how critical it was that we keep the financial system well lubricated and he did more than almost anybody else in the world, in fact not almost, than anybody else in the world. In fact, he was a leader in trying to get other countries to open their particular financial channels as well, but the net result of it was that instead of getting a financial system that could have gotten completely clogged, we ended up with a financial world that remained open and the banks did not fail. And the whatchamacallit, the economy did not suffer from a huge contraction of the availability of credit, which, frankly, when there was those few moments of panic in the world back in 2008 and 2009, could very well have been one of the outcomes. So, I have the greatest of respect for him. My concern about the way he was handled, as I try to indicate was that he should have been given the chance to announce his own departure in a slightly more dignified way, given the extraordinary contribution he made. And I thought it was really unbecoming of the way to treat somebody who had made such a major contribution to the economy and to the financial system of the United States and indeed to in fact, since he led a lot of other countries and influenced a lot of other countries and just helped CLICK HERE TO RETURN TO INDEX
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the global economy to function properly. So, I felt that that was just not the way to deal with somebody who had made such a remarkable contribution to the United States, to its economy and to our ability to go forward without having a major crash. Zuckerman: I'm sure that the Federal Reserve will continue to pay play the kind of role that Bernanke paved for his successors, including allowing Federal Reserve not only to buy short-term paper to help the liquidity of the financial system and to keep the short-term rates down, but to continue to buy long-term paper. This is sort of another version of QE3 or it'll be QE4. And I do think that the Federal government the Federal Reserve, in fact, will no longer just be a policy maker, but they will be an active participant in the capital markets, in order to make sure that their goals in terms of interest rates and capital availability will be met, because they don't want the economy to get any weaker than it is now. And, so far, despite there's a huge deficit spending on the part of the Federal government and huge monetary stimulus on the part of the Federal Reserve, we still have not had a general economy that has moved up to the levels of growth that we are accustomed to.
ADP
[ADP] Earnings Call 8/1/13 Carlos Rodriguez, CEO: I view results as good, given the slow pace of the global economic recovery and the negative impact on revenues and earnings from the decline in client funds interest. I'm particularly pleased with our worldwide new business bookings growth of 14% for the quarter and 11% for the year. This beat our 8% to 10% expectations for the year, and is particularly noteworthy, given the tough grow-over comp we had in last year's fourth quarter growth of 20%. As a result of the strong new bookings growth, the new business expense was also higher than anticipated, and negatively impacted fiscal 2013 earnings per share about $0.02, or 1%. As we have said over many years, strong bookings growth adding some incremental selling expense is a good problem to have. The most significant economic headwind we continue to face is the low market interest rate environment. Jan Siegmund, CFO: Our business segments performed well, achieving good revenue growth and pre-tax margin expansion. Importantly, organic revenue growth has improved each quarter during the year. As I mentioned a moment ago, I'm also very pleased with the execution of our sales force in Employer Services and PEO Services during the fourth quarter. Siegmund: The largest negative impact to our result, is the continued impact from low interest rates. ADP's revenue growth was muted, at four percentage points, due to the decline in client interest revenues that resulted from low interest rates, more than offsetting the benefit from the healthy 7% growth in balances for the year. This continues to be the most significant drag on ADP's earnings and margins as well, negatively impacting growth in pre-tax and net earnings, and diluted earnings per share, six percentage points for the fourth quarter and four percentage points for the year. As anticipated, the negative impact to the pre-tax margin was 120 basis points in the fourth quarter and 110 basis points this year. Excluding these impacts, you can clearly see that leverage in ADP's business model is strong and intact. Additionally, we had a small drag from unfavorable foreign exchange rates as well as from lost revenue and earnings associated with the prior year's asset sale and the expirations of certain tax credits in our Tax Credit Services business. Rodriguez: We have a good step-off heading into fiscal 2014, though there are reasons to be somewhat cautious. The continued low market interest rates, coupled with historically low amounts of maturities in our client funds portfolio in fiscal 2014, results in diminished reinvestment opportunities. The economic indicators CLICK HERE TO RETURN TO INDEX
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remain mixed in the U.S., and the economic backdrop in Continental Europe is still soft. Rodriguez: If you look historically at our new bookings and how they relate to the economy, and you look at it kind of in the rearview mirror, it does get harder in a more difficult economy to sell. It helps a lot to have great products, to have a great sales force, and to execute well, but it does get a little harder. So I have to believe that some of the strength of our new bookings is as a result of some of better decision-making environment out in the economy, both in the U.S. and also outside of the U.S.
MasterCard
[MA] Earnings Call 7/31/13 Ajaypal Banga, CEO: We are very pleased to report EPS growth of 23% for the second quarter. Our net revenue growth was 15%. Operating expenses grew 5%, and we continued to execute on our global strategy and navigate through what we all know is a somewhat uncertain economic environment. U.S. Consumer spending was up last quarter. Retail sales growth was better than expected. Housing indicators continued to show signs of recovery. Our SpendingPulse data for the second quarter showed that growth in U.S. retail sales ex-auto was 4%. That is over the same quarter of the prior year. And that is up from 2.6% as the same number for the first quarter. So contributing to the growth was a steady improvement in consumer confidence and some stabilization in the employment levels in the country. Our own U.S. business reflected these improving trends, with 6% volume growth, up from last quarter's 4% growth. Banga: In Europe, the environment is somewhat similar to what we saw over the last several quarters. There are a few upbeat notes there. Economic trends were similar for the UK and for parts of continental Europe during the second quarter. Consumer confidence increased there. Business sentiment was a little weak in the second quarter there, although recent PMI [Purchasing Managers Index] surveys indicate that business sentiment now may also be turning up. In spite of those mixed economic signals, we're still seeing opportunities to expand our business and take advantage of that secular shift from cash to electronic, and that shows up in our solid second quarter volume growth of 14% in Europe. Banga: In Asia, consumer spending in the second quarter was on the rise. In the majority of markets, consumer confidence levels are doing well across the region, with key markets like Korea and Japan seeing marked improvement. Business sentiment across the region was mixed, and that's due to the lingering concerns about the effect of the sluggish Chinese and European markets may have on the broader Asian export dependent economy. Our business in the region has and continues to do well. We had volume growth of 21% in Asia. In Latin America, consumer confidence in both Brazil and Mexico is somewhat challenged, for all the reasons you read about. And expectations for GDP growth in Mexico have recently been lowered. We're still growing our volume in Latin America at almost 17%, but clearly we are watching the wider economic trends there very carefully. Banga: We partner with governments around the world in many areas related to electronic payments, but there will be times when the interests of some of our stakeholders require us to raise concerns about proposed actions. This is one of those times. We support the European Commission's goals of a secure, efficient, competitive, innovative European payments industry. We believe that they've made a good start towards recognizing the importance of a level playing field. It also appears that there's actually potential to further open up and get competition in place for domestic processing. However, we remain concerned that some of the proposed legislation could have unintended consequences of hindering competition and innovation. And we remain concerned that this could be harmful to consumers and small merchants in CLICK HERE TO RETURN TO INDEX
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Europe. And so in the upcoming debate as this legislation, the proposed legislation winds its way through the process, we're going to engage with all participants in the process. We will try and ensure the best possible outcome in the best possible way. Banga: In Europe, Danske Bank, the largest bank in Denmark, will be issuing MasterCard consumer debit, credit, and commercial cards in ten countries. And together with what we did with Swedbank and Nordea in the wins there, we expect to grow our total market share by 50% in the Nordic and Baltic regions over the next five years. In Korea, we have two new debit wins to help lock in our debit market position. First is the Woori Card, a recent spinoff of the card division of one of Korea's largest retail banks, and they're now issuing Platinum debit cards with us. We also recently signed an agreement with Hana SK that will further increase our dominant share of their debit portfolio. In the U.S., we continued to aggressively pursue all opportunities in the consumer credit and co-branded space as they arise. We're pretty confident we're showing regular progress as they come up and we can announce them. Martina Hund-Mejean, CFO: Globally, our cross-border volumes grew about 15%, so that's just slightly below of what we saw in the second quarter. And this was primarily driven by slower growth outside the U.S. due to the timing of Ramadan. In the U.S., our processed volume grew 9%, up from our second quarter growth due to improvements in both credit and debit. Mejean: So given our stronger than expected second quarter net revenue growth and what we see for rebates and incentives for the balance of the year, we now believe that second half net revenue growth will be similar to what we saw in the first half. We continue to anticipate total 2013 operating expenses to grow a bit below the 8% currency adjusted growth rate that we saw in 2012, as we continue to spend on the right things to support our growth initiatives while keeping an eye on more discretionary spending. We also continue to foresee some operating margin expansion in 2013. The amount of any improvement, as you know, will depend on both top line growth and the investment opportunities that may surface during the year. And for your modeling purposes, we now think that you could see a full-year tax rate of about 31%. Banga: We know that U.S. consumer credit is what we have to work on. We've got a series of things that we've been doing over the last period of time to try and improve the trajectory of our U.S. consumer credit spend growth. Some of it is caused by deals we're winning, whether it be all the things we've announced over time. You've talked to Bank of America doing things with us, but there's a series of other deals from Bass Pro and Intercontinental Hotel Group to other banks like KeyBank and [ph] Suffrington (31:15) and Huntington and SunTrust and all that that's going on. So all those things take a certain time to begin accumulating in the book, just as losses take a certain time to reflect in the book, as you know, in the past; so we're working our way through it. Banga: Has there been a move from debit to credit, not identifiably so. Do people talk about in the banking industry and the merchant business, do they talk about expecting changes? Yes, but it's been about a year now and it hasn't really delivered great change. And I think finally it's not about the bank and the merchant. It's about the consumer and what they want to do. I think the consumer is unimpacted by this dialogue in most ways other than seeing indirect impact caused by an increase in checking fees or a drop in free checking accounts and so on. They don't in their minds necessarily connect one to the other. And I think they're still behaving the way they choose to behave, which is to use their debit when they want and their credit when they want. They're impacted more by overall trends in the economy. So I think as the U.S. economy continues to recover, generate jobs and the like, you will probably see an increase in credit spending that may be faster than debit, but that still is out there to be seen. This is past cycles I'm talking about. So I'd say nothing much CLICK HERE TO RETURN TO INDEX
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right now.
Kimco Realty Corp.

[KIM] Earnings Call 7/31/13 Dave Henry, CEO: Overall, our industry maintains its quarter-by-quarter recovery. Retailers continue to grow their expansion plans and coupled with a 35-year low in new supply, effective rents are moving up materially. Consumer spending and retail sales are also doing well, despite the sequester and the beginning of rising interest rates. Henry: The biggest asset we have in South America remains our multi-storey mall in Vina del Mar, and we have intended to deal on that and that should happen over the next couple of months. So that will essentially clean-up South America. Mexico, the market continues to be wide open in terms of the acquisition appetite by the Fibras or the Mexican REITs, both existing Fibras and Fibra want to be, I guess, I would say. And we continue to get some nice offers on the remaining properties we have which are roughly depending on how you count maybe 35 shopping centers plus some net lease properties, plus we have our Kimco land fund. Henry: So the east hills of the world have seen no real slow down in the competitive bidding for the very high quality assets in primary markets. Those cap rates have definitely continued to be less than six for many of those high quality assets. Also the general trend towards favorable pricing for even the B assets continue, there is just more money chasing these B assets because there has been frustration out there that people can't acquire the A assets, so the cap rates have continued to drift down into the B category. Henry: So we're optimistic that the industry is healthy. We're definitely on the recovery track. We're, of course, subject to sort of very high-level macro events, because we're all about consumer spending and consumer confidence. But that said, the fundamental supply versus demand is shifting back in our favor, after a very rough three or years.
Tanger Factory Outlet

[SKT] Earnings Call 7/31/13 Steven Tanger, CEO: High tenant demand for outlet space has again resulted in positive Tanger metrics for the second quarter of 2013. As of June 30, average occupancy within our consolidated portfolio was 98.3%. Same center net operating income growth of 4.5% during the quarter extends our streak to 34 consecutive quarters dating back to when we began measuring it in the first quarter of 2005. This internal growth combined with the incremental growth from four properties added to the portfolio late last year resulted in FFO per share growth of 13.3% during the first half of 2013. This double digit growth did not come at the expense of our balance sheet. Tanger: We are still very optimistic about Columbus. We think it's a terrific market, and there is no outlet center presence there as of yet. And we're convinced we have the best site in the market, which is on the north going towards Cleveland. There will be a we are totally approved by the local community and the township. The local community has a kind of quirk that, if 100 citizens sign a referendum sign a petition, that the challenge to the government's permits that we've received will go to referendum in November. There were more than 100 signatures on a petition, and we will go to referendum, which we expect to win .
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H&R Block
[HRB] Earnings Call 9/3/13 William Cobb, CEO: I want to be very clear: we remain focused on exiting the Bank and continue to believe it is in the best interest of our company and our shareholders to do so. Exiting the Bank allows us to cease being regulated as a savings and loan holding company and allows greater flexibility with our capital structure strategy and our ability to return capital to shareholders. Cobb: We continue to believe that healthcare reform will not result in a material ly positive impact to our business in fiscal year 2014. And while we haven't received any additional updates on what new forms the IRS may employ or how some aspects of the law will be implemented, we believe Americans will need help and that H&R Block is best suited to assist them in this process. Greg Macfarlane, CFO: We're very excited by the Emerald Card. Last December we shared a lot of the features and functions that we've been beefing up. We had a tax season where we sold a lot of those cards. We continue to believe that selling more cards is an opportunity, but the real magic, the financial magic for H&R Block, is convincing clients that that card, that Emerald Card product, is fully functioning and can be used as a year-round debit card solution. And I think early results are positive, Thomas, but truthfully, I think that we still have a long room for improvement to get to the [ph] grade (20:25) we sort of expect entitlement to be
Energy
Baker Hughes
[BHI] Earnings Call 7/19/13 Martin Craighead, CEO: Baker Hughes performed well in North America and across the eastern hemisphere this quarter. In fact, the eastern hemisphere posted record revenues on strong growth in both Europe/ Africa/Russia Caspian and Middle East/Asia Pacific business segments, while North American revenue increased 3% sequentially despite Canadian activity reaching its lowest level in four years. Unfortunately, that performance was more than offset by profit erosion in our Latin American business segment. Craighead: Our Gulf of Mexico business recorded its historical best revenue with strong incremental margins while our U.S. pressure pumping business posted its second consecutive quarter of improved revenue, share and margins as it executed more stages with more 24-hour fleets than at any point in our history. Peter Ragauss, CFO: In the U.S., despite a flat onshore rig count, our pressure -pumping product line delivered improved revenue, operating profit and operating profit margin for the second consecutive quarter. Improved fleet utilization and record stages per day resulting from increased 24-hour operations, market share gains, and growing well count contributed favorably. These gains were partially offset by continued pricing declines. Ragauss: Despite record revenue, our international profits were negatively impacted by our Latin America segment where revenues and operating profits declined significantly during the quarter. The revenue decline is primarily related to Brazil where our activity and share both declined during the quarter as we transitioned to a new drilling services contract at lower prices. Operating margins in Brazil were further reduced by stranded costs such as severance and obsolete inventory charges. In Mexico, performance dropped due to the CLICK HERE TO RETURN TO INDEX
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well-publicized shutdown of activity in Chicontepec.
Schlumberger
[SLB] Earnings Call 7/19/13 Paal Kibsgaard, CEO: Our second quarter results were strong, as international activity recorded significant progress and North American results benefited from solid execution on land and increasing deployment of new technology in deepwater areas. Kibsgaard: Drilling activity remained soft in the north and east regions of the country following the budget shifts announced in the first quarter, while the business offshore continued to ramp up. Kibsgaard: In North Africa, rig activity in Algeria started to rebound following the security incident in the first quarter, while rig activity in Libya remained flat due to delays and ongoing security challenges. In sub-Saharan Africa, activity in the Gulf of Guinea as well as in East Africa was robust. On the other hand, activity in Angola was subdued in the second quarter due to project delays. However, the activity outlook for the second half of the year remains strong, driven by both exploration and development projects. Kibsgaard: The macro environment, where the business outlook for 2013 has remained largely unc hanged since April, as expansion in the global economy remains soft. In summary, the U.S. has shown little or no impact of the financial sequester. The Eurozone is still in a two-year recession, although the risk of any country to leave the monetary union appears reduced. And recent Chinese data have been mixed, with the outlook for a long and progressive soft landing remaining unchanged. The oil market picture is also largely unchanged. The market is more comfortably supplied than it was in 2012, but spare capacity remains below pre-Libya conflict levels. The year-on-year increase in North American supply is enough to face both increasing global demand and the production decline in other non-OPEC producing countries. The call on OPEC remains unchanged and is in line with the group's production target of 30 million barrels per day, although the market continues to support Brent prices over $100 per barrel. Kibsgaard: For natural gas, the apparent rebalancing of the U.S. market is still fragile, as gas produ ction remained steady and as the power sector has already switched back to coal in some regions on higher gas prices. Internationally, Asian LNG prices eased on weaker Chinese demand fronts, but remain close to oil parity; while in Europe, regional supply declines from the North Sea and very cold weather supported higher spot prices. Despite the overall slow progress in the economic environment, the latest releases of the thirdparty E&P spending surveys saw upward revisions of upstream CapEx estimates, making 2013 the fourth consecutive year of double-digit worldwide spending gains, driven by the international and offshore investments, noticeably in the Middle East and Asia regions, while North American spending remains flat to slightly up. These estimates are further confirmed by the rig count outlook that shows double-digit growth in a number of both shallow water and deepwater rigs active worldwide and a 6% growth in the international land rig count in 2013. Kibsgaard: I would say that over the past year when there's been significant struggles in the pressure pumping business, I think we've shown commendable margin resilience. And it's down to how we execute on land as well as the balance between land and offshore. So in terms of what the margin progression is going to be, the main uncertainty is still what is going to happen in terms of pricing on land. We still saw pricing pressure both in the drilling stimulation and wireline product lines in the second quarter, but that was slowing somewhat in pace. So assuming that the pricing is reasonably behaved and drilling efficiency continues to be CLICK HERE TO RETURN TO INDEX
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the main activity driver going forward, I would expect us to show continued margin resilience. And obviously, we're looking to drive up margins in any operating area. I can't promise you exactly how that's going to progress. But we have a lot of focus on margins in every part of our business, and we will continue to look to drive it up in North America.
Halliburton
[HAL] Earnings Call 7/22/13 David Lesar, CEO: We feel confident that revenue and margins in Latin America will improve in the second half of the year. We expect margins to improve in the third quarter and approach the mid-teens level and expect full year margins to be approximately the same. Our international outlook has not changed. We expect consistently solid year-over-year growth in several key markets. Although there is still uncertainty around Egypt, Libya, and northern Mexico activity for the near-term, our deepwater share gains coupled with increased rig count in Saudi Arabia and an anticipated rebound in Latin America during the second half provide us confidence that we will continue to outperform on a relative basis to our peers. Jeffrey Miller, COO: In Latin America, we had a disappointing start to the year. Revenues were flat compared to the first quarter, and operating income was down 7% as a result of reduced drilling activity in North Mexico, increased mobilization costs in both Brazil and Mexico, and lower vessel activity offshore Mexico. But moving into the second half of the year, we are confident that we will see an uptick in Latin American financial results. Let me touch on a few of the key drivers now. Miller: It's our view that the resulting increased well count and stage count could a bsorb a meaningful percentage of the excess horsepower and help drive service intensity across all product lines. Although we believe excess pressure pumping capacity has diminished since the first quarter due to rising demand, there is still an oversupply in the market. As a result, we anticipate the pricing pressure will persist to some degree across many North American basins in 2013. Additionally, as we gauge the utilization of our equipment on a 24/7 basis, we see a significant opportunity to improve and drive the white space, by that I mean the downtime, out of the schedule. Miller: North America, we are forecasting the rig count to remain stable for the year but believe that activity levels can improve as a result of drilling efficiencies and further adoption of pad well drilling. In a flat pricing and rig count environment, cost management is going to be more be extremely important, and we anticipate better cost optimization will result from our strategic initiatives. Mark McCollum, CFO: For North America, we anticipate a flat U.S. rig count for the third quarter. However, we expect to see the seasonal rebound from breakup in Canada along with stronger activity levels in the Gulf of Mexico and we anticipate the net result will be modestly higher sequential revenues and margins. Lesar: The North America based on improving activity levels in Canada and the Gulf and continued efficiency gains for U.S. land, we expect margins to continue to improve for the balance of the year. In Latin America, we feel confident that revenue and margins can improve in the second half with margins approaching the midteen in the third quarter. For the Eastern Hemisphere, our outlook remains unchanged. For the full year, we expect revenue growth in the mid-teens with margins in the upper-teens and our aggressive buybacks in the second quarter and the increase to our repurchase authorization clearly demonstrate our growing confidence we have in the strength of our entire business outlook.
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Peabody Energy
[BTU] Earnings Call 7/23/13 Gregory Boyce, CEO: Within global markets, both elements of the supply and demand equation have been at play during this period of market softness. Demand growth has been lower than originally expected, reflecting economic conditions both in Asia and Europe while, at the same time, the overhang in seaborne supply represents follow-through from projects that were initiated in recent years when prices were higher and projections of demand greater. Still, we've seen favorable changes to both the supply and demand picture globally, and we do not believe that current prices are sustainable in the long term. Now within the global coal demand, both China and India imports have risen year-to-date and are on a pace to increase 15% this year to new record levels as the trends to urbanize, industrialize and electrify continue. Japanese coal use is climbing. And in Germany, coal market share is back over 50% as nuclear use declines and natural gas prices remain high. Boyce: Within the U.S. coal markets, we continue to see improvement in both supply and demand fundamentals as we move through 2013. Natural gas generation is down 15% year-to-date, as natural gas prices are up 50% over year-ago levels. Meanwhile, U.S. coal generation is up 11% with industry shipments down 5% this year. These trends come despite a summer that has started in earnest only in July, with cooling degree days down almost 10% versus normal so far this season. What does that mean? It leaves customer inventories for Powder River Basin coal more than 25% below last year and a bit over 60 days of supply. Boyce: When you look at Europe, when you look at South America and even when you look at the U.S. steel demand, it is down. The only place it's been up is in China. Boyce: We're starting to see Australia come back into the competitive range that it always held in terms of the global seaborne market. So I think Australia is still a place that you want to have quality assets and that's why we're there. I think in the U.S., obviously in the Powder River Basin, Southern Powder River Basin, the Illinois Basin, we think that those strong assets and those assets are going to be the ones that are going to continue grow as the U.S. shifts its coal use, particularly as we go through the next five years of some of the utility changes that we're already forecasting and that already been announced. Now you look at places like Indonesia, a lot of volume out of Indonesia but it's a huge number of players, uncertainty as to what's going to happen both with their domestic demand as well as what happens into the China imports. So at the end of the day I still think Mid and Western U.S. and Australia are still the places to be.
Arch Coal
[ACI] Earnings Call 7/30/13 John Eaves, CEO: On the domestic thermal front, we believe that we're in early stages of a multi -year recovery for PRB. Natural gas prices are less of a headwind, weather has normalized to some extent and power demand is up. Eaves: While met coal demand remains relatively stable, driven in part by solid utilization rates at U.S. steel mills, prices are muted and supply rationalization to date has not been sufficient to balance the market. Late last year, we idled several met mines and during the second quarter of 2013, we shuttered two contract mines at Cumberland River. These curtailments have reduced our overall met coal capacity by approximately 2 million tons annualized. Paul Lang, COO: we're testing different blends of explosives in the Powder River Basin, and we've been CLICK HERE TO RETURN TO INDEX
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experimenting with our blasting techniques for several years now in order to save on raw material costs. The value of these types of programs is significant when you consider that explosives and diesel account for roughly 20% of our cash operating cost in the region. So far in 2013, our efforts have reduced our consumable cost by 5%. More importantly, we expect to maintain these cost savings during the next market rebound. Lang: In the Powder River Basin, sales were up slightly in the second quarter compared to the first quarter, as customer shipments increased against a backdrop of favorable spring weather and higher competing fuel prices. John Drexler, CFO: The second quarter was a strong one from a cost control and capital discipline perspective. As expected, our free cash flow was negative for the quarter because we had higher than normal cash outflows due to the timing of our annual $60 million payment for the South Hilight LBA. Additionally, we had our scheduled semi-annual interest payments of $110 million due in the quarter. Eaves: We continue to build out our international customer base. We 're pleased with the demand that we're seeing, particularly in Asia right now. Don't like the pricing, continue to evaluate those markets. We are still forecasting exports industry-wide plus 100 million tons. Our target for Arch for 2013 is about 12 million tons of exports. Eaves: As we look at the market and we see what's going on in the regulatory environment, the cost pressures, the inability to get permits in the East, over the next 3 years to 5 years, we see the winners being primarily PRB and secondarily the Illinois Basin. So, we're in both of those regions. Our loss Lost Prairie operation in Southern Illinois is permitted and ready to go. But if you look at the Illinois market today, there's too much volume coming out of that market. We don't think it's prudent, but as we see the market evolve more cost pressures on other regions, we think we've got a fantastic reserve there that we can bring on, put a big percentage of that to bed in the U.S. markets and also be very competitive in the internationa l market. Eaves: I think natural gas prices are just in the mid-$3s creates opportunities, particularly for the PRB basin. The fact that normalized weather continues to pull inventories creates opportunities. I mean, we're still paying for a couple winters ago when we had one of the mildest winters on record, and we're starting to dig out of that.
Anadarko
[APC] Earnings Call 7/30/13 Robert Walker, CEO: During the second quarter, we increased oil volumes from our U.S. onshore assets by 20,000 barrels per day over the second quarter of last year. We reached milestones at four high impact short to medium term oil projects, successfully drilled five more deepwater discoveries and again achieved excellent operating results, while generating substantial adjusted free cash flow. Charles Meloy, Executive Vice President, U.S. Onshore Exploration and Production: The wells have been performing very well. We're just now getting them on production. We feel good about them because we have a lot of offset activity going on in the same interval, which is we refer to it as the Beta and various industry partners had different names for the all the Wolfcamp ventures out there, but it's pretty exciting. They're a good piece apart, maybe 15 miles along that line and we have a number of offsets in and around our acreage position that also have good rates and have a little more production time on them. So they appear to be some pretty stout EURs based on the offsets. And we're looking at these and we're excited enough about it that we're moving in additional rigs and we'll be delineating the entire area over the next few months and getting CLICK HERE TO RETURN TO INDEX
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more production data and start sizing this thing up. Daniels: On Raptor, the reservoir quality was excellent. We were real pleased with what we saw there and the fluid quality was also excellent, very high quality oil.
Exxon
[XOM] Earnings Call 8/1/13 David Rosenthal, Vice President of Investor Relations: Global economic growth remained constrained in the second quarter. The US economy continues to be sluggish after first quarter GDP growth was revised downward. China's economic growth continues to lag expectations, while European economies remain weak. Energy markets delivered mixed results in the second quarter. The quarterly average Brent crude oil price declined more than $10 per barrel from the first quarter, narrowing the spread with WTI, while US natural gas prices increased. Global industry refining margins were essentially flat with increases in the US margins offset by weakness in Europe and Asia-Pacific. Chemical commodity product margins declined across the quarter.
ConocoPhillips
[COP] Earnings Call 8/1/13 Ryan Lance, CEO: For the second quarter in a row, organic volumes net of dispositions and planned downtime are growing. Margins are improving. We're maintaining our commitment to a compelling dividend, reflecting our confidence in our plans, and our financial position remains strong. Lance: Operationally, our business performed very well this quarter. We produced 1.552 million BOE per day on a total company basis and 1.51 million BOE per day on a continuing operations basis. Adjusted for dispositions and planned downtime, this represents 4% organic growth compared to a year ago. Last quarter, we grew 2% on the same basis, so the organic growth is showing up in our performance. This quarter's volume performance exceeded the high end of our guidance range, and this was primarily due to two things: better than expected performance at Eagle Ford and in our Europe and Asia-Pacific regions; and our seasonal maintenance and planned downtime was executed ahead of plan. Based on this quarter's stronger than expected volume performance, we're raising our third quarter and full-year volume guidance Matthew Fox, EVP of Exploration & Production: We expect third quarter volumes to be lower than second quarter, driven again by significant turnaround and maintenance activities, in this case dominated by Alaska and the UK. Fourth quarter volumes should ramp up from there as our planned downtime reduces and major projects start up. And we should see a strong exit rate going in to 2014.
Marathon Petroleum Corp

[MPC] Earnings Call 8/1/13 Gary Heminger, CEO: During the second quarter of 2013, the industry experienced refinery crude runs that were higher than both the last year and the five-year average, with much of the increase in Pad 3. This contributed to a drawdown of crude inventories to meet refining demand and a narrowing of crude spreads. In addition, gasoline inventories were higher than last year and the five-year average. As a result, the U.S. Gulf Coast market was weaker and cracks were lower compared to the second quarter of last year. The Chicago market experienced greater than usual volatility during the quarter, primarily due to significant maintenance
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at area refineries. When the Chicago area refineries came back online, a short supply situation in the Midwest quickly reversed into a long supply situation. Rapid movements in spot prices in a market are not always reflected immediately at wholesale racks or on the street. Michael Palmer, our Senior Vice President of Supply: We did hit a patch year where there were several production issues in Canada and it doesn't take a lot to move the differentials. But as we look out through the end of the year, we know that there is a significant additional Canadian heavy that's due to come online. The Exxon Kearl volume is one of the major pieces and it's been continually pushed back, but it will be available later in the year and that, coupled with several other projects, we believe that the differentials are probably going to widen out a bit from the point they're at today. Palmer: What we've been able to do up to this point, is pretty much displace the foreign sweet crude that had been coming into the plant with the domestic crudes that you had mentioned. I mean, we're running more West Texas sour, Eagle Ford, those types of domestic crudes. And frankly, what we do is we look at the markets every day to optimize those slates. So it's not to say we won't run the foreign cargo crude, but we are always looking for the best barrels.
Hess Corp
[HES] Earnings Call 7/31/13 John Rielly, CFO: We are well into the process obviously selling the terminal business in this current environment is a positive thing. It's a very good environment, the assets are strong, we've got a nice set of assets here on the East Coast and the interest has been keen in these assets so that's as far as I think that we want to go and just as John said earlier the sales progress is well underway and is going according to plan. Rielly: Changes in realized selling prices decreased earnings by $40 million. Lower cash cost improved earnings by $60 million. Lower depreciation, depletion and amortization improved earnings by $55 million. All other items net to a decrease in earnings of $8 million for an overall decrease in second quarter adjusted earnings of $98 million. Our E&P crude oil operations were over-lifted compared with production by approximately 550,000 barrels in the quarter which increased after-tax income by approximately $30 million. Based on our current crude oil lifting schedule, we expect this over-lift to reverse in the third quarter. The E&P effective income tax rate excluding items affecting comparability was 44% for the second quarter of 2013. Rielly: We are in a position that we are benefiting from the current RIN environment. Now just to point out, Hess does remain an obligated party for RINs because we do import transportation fuel to meet marketing's gasoline demand but our retail and terminal networks do generate more renewable credits than required to meet our supply needs. In the second quarter, our excess RINs generated a $17 million after-tax benefit so that's what it was in the second quarter. Gregory Hill, President: Completion costs, continue to come down this quarter. That was due to the efficiency as a result of pad drilling as well as some pricing concessions that we got from frac contract.
Chevron
[CVX] Earnings Call 8/2/13 George Kirkland, Vice Chairman: Overall in 2013, we expect to have a similar level of turnaround activity as we had in 2012 and relatively heavy for both these years. We continue to have confidence in meeting our
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2017 growth target as we bring on new projects and other key developments. Kirkland: We are not short of gas at all in the Kitimat development. Our issue is to get the foundation customers and the foundation project in place, and then find a way to the next step is to look at the expansions. I don't want to spend a lot of time on the expansions yet until we really get past having the first two trains, once again, sold from a market point of view and then get them post FID. Kirkland: Our appetite is driven by a couple of things. It's of course the amount of money we have to spend and also the scale and the quality of the opportunity. It starts very much with the quality of the rock. If the rock doesn't work, we don't view the risk and the scale of the opportunity to be attractive. We don't go there. So it's not about acreage, it's about quality. Preferentially, if possible, we like to be in a low-cost option situation; i.e., we like to get a nice piece of acreage with a seismic obligation and minimal or low numbers of wells to drill. And that's particularly the case in these test areas, these areas outside of our focus areas. We don't want to get saddled with a really large program and then drill a high-risk well and find out it's not very attractive. So we tend to try to do that everywhere around the world, and a lot of these opportunities that we've moved into recently are very much structured that way; not a large amount of costs on upfront entry, and they have seismic obligations and small drilling obligations. Patricia Yarrington, CFO: If I look at the first six months of this year and look at what our utilization rates were for our this will be worldwide, but it's obviously heavily influenced by the assets that we have in the U.S. If I look at our operated utilization rates for the first half, it's running a good 10 points or so below what you would have seen on average for the 2011 or 2012 time period, and that is a big penalty to absorb from an earnings standpoint. As we go forward and we look at the second half of the year, Richmond is up and fully operational. But as we look at the second half of the year, the vast majority of our downtime is already in the rearview window at this point. So I think going forward if we can run reliably, then you'll have a much better outcome.
Marathon Oil
[MRO] Earnings Call 8/7/13 Clarence Cazalot, Executive Chairman: Our international assets, particularly, in the North Sea, are declining, but our overall 5% to 7% growth rate incorporates that decline. So, indeed, we're managing that. These are assets that generate very significant cash flow that help fund, if you will, our domestic growth. So, I would simply say we've recognized those declines, they're built into our projections and our projections don't include any acceleration which indeed could enhance or increase even the 5% to 7% if we believe that's the right thing to do. Cazalot: With respect to Norway, I think the declines thus far this year have been less than we expected and that has really helped drive a stronger performance or stronger results out of our international production side. And, I would attribute it very strong reliability. But the reality is as we've talked about before, that asset is going to go into decline; it's a managed decline because we have a number of offsets, satellite fields we'll tie back. You know the Boyla project, which is under development currently, will come onstream in the fourth quarter 2014, all of which will begin to flatten that decline. But nonetheless, a decline. But again, as we've discussed many, many times, the Norwegian barrels are high revenue and very low cost, cash cost. And so, very high, strong cash margins despite a 78% tax rate.
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Type ORANGE <GO> or NI ORANGEBOOK <GO> to see other company anecdotes on economic conditions - Richard Yamarone
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