Below are some of the most interesting quotes pulled from our Conference Call Recaps since the start of the Q4 earnings season:

Supply Chain/Inflation

  • According to Apple CEO Tim Cook, the logistics environment “is very elevated in terms of the cost of moving things around. I would hope that at least a portion of that is transitory, but…the world has changed.”
  • In regards to supply chain issues, Intel CEO Pat Gelsinger added, “As we predicted, these ecosystem constraints are expected to persist through 2022 and into 2023, with incremental improvements over this period.”
  • Tesla CEO Elon Musk stated, “In 2022, [the] supply chain will continue to be the fundamental limiter of output across all factories. So, the chip shortage, while better than last year, is still an issue.”
  • Although Johnson & Johnson reported solid results, multiple segments were negatively impacted by “raw material availability” and “supply chain constraints,” according to CFO Joseph Wolk.
  • 3M CEO Mike Roman commented, “we’re going to see a volatile environment in the first half of 2022. Things should get better in the second half, but I would not expect a big snap back on stability of supply in 1Q of 2022.”
  • Procter & Gamble CEO Jon Moeller pointed out that “Higher commodity and freight cost impacts combined were a 460 basis points hit to gross margins.”
  • Moeller continued, “Transportation and labor markets remain tight, availability of materials remain stretched in some categories and in some markets, inflationary pressures are broad-based with little sign of near-term relief.”

COVID related

  • The Netflix management team blamed “COVID overhang and macro-economic hardships in several parts of the world like LATAM” as a factor hindering growth.
  • Intuitive Surgical reported that “COVID-19 has had, and will likely continue to have, an adverse impact on the company’s procedure volumes.”
  • United Health CFO John Rex commented, “In the most recent weeks inpatient hospitalization levels for our members are similar to the January 2021 levels, even with national COVID case rates about 4x higher.”

Technological Development

  • In terms of the metaverse, Microsoft CEO Satya Nadella commented, “And as the digital and physical worlds come together, we are seeing real enterprise metaverse usage, from smart factories to smart buildings to smart cities.”
  • Nadella continued, “As every company becomes a digital company, they will need a distributed computing fabric to build, manage, secure and deploy applications anywhere.”
  • American Express aims to stay at the “leading edge of technology and digital payment solutions to make American Express an essential part of our customers digital lives,” as per CEO Stephen Squeri.
  • In November, Netflix unveiled its mobile gaming experience globally, which allows members to “discover and launch games from within the Netflix mobile app.”
  • Tesla CEO Elon Musk believes that “over time, we think Full Self-Driving will become the most important source of profitability for Tesla”.

Broader Economy

  • American Express is forecasting “higher than long-term aspirational levels of revenue growth” through 2023 due to elevated levels of consumer spending, according to the investor presentation.
  • Union Pacific EVP Kenny Rocker stated that the company “will face continued challenges in our energy-related market.”
  • In regards to the energy market, Baker Hughes CEO Lorenzo Simonelli added, “As we look ahead to 2022, we expect the pace of global economic growth to remain strong although slightly moderate compared to 2021. We believe the broader macro recovery should translate into rising energy demand for 2022 and relatively tight supplies for oil and natural gas.”
  • Simonelli continued, “growth rates are likely to moderate from 2021 levels as central banks are expected to begin tightening monetary policy in order to reduce COVID-related stimulus plans and quell growing inflationary pressures.”
  • Automatic Data Processing CFO Don McGuire commented, “a gradual ongoing recovery in labor force participation will support job growth in the first half of the year.”
  • Boeing CEO David Calhoun referenced the international markets, stating, “Recovery continues broadening in Europe and South America [but] further lockdowns have stagnated recovery in China.”

In summary, management teams anticipate operating in a continued inflationary environment, but the supply chain constraints are expected to ease in the back half of 2022. Since COVID emerged, there has been an increased focus on digitization, which certain companies are attempting to capitalize on. In regards to the energy market, supply is expected to remain tight while demand strengthens, thus implying a higher price point for related commodities.

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