Below are some of the most interesting things we heard on quarterly conference calls from Corporate America this week:

Supply Chain

In terms of days of supply, Ford has historically averaged 75 but ended Q3 with about 20. CFO John Lawler commented, “we are not going back there.”

In terms of the chip shortage, Ford’s Lawler added, “we’re doing everything we can to get our hands on as many chips as we can. But we do see that running through 2022. It could extend into 2023, although we do anticipate the scope and severity of that to reduce as we move through ’22 into ’23.”

In terms of plane production rates, Boeing CEO David Calhoun added, “Raw materials, logistics, and labor availability will also be key watch items for future rate increases.”

According to 3M CEO Mike Roman, “ocean freight costs have more than doubled over the last year, and the number of containers on the water is up 70% because of port congestion.”

Apple CEO Tim Cook stated, “We estimate these constraints had around a $6 billion revenue dollar impact, driven primarily by industrywide silicon shortages and COVID-related manufacturing disruptions.”

Amazon CEO Andy Jassy revealed, “In the fourth quarter, we expect to incur several billion dollars of additional costs in our consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs.”


Automatic Data Processing CEO Carlos Rodriguez stated, “Our clients are eager to hire, and we are seeing workers return to the labor force, even if it’s gradual.”

According to McDonald’s CEO Chris Kempczinski, “Our US franchisees have never been better positioned to weather the labor and inflation pressures while still investing in growth.”

Microsoft CEO Satya Nedalla stated, “as more people change jobs than ever before, we saw record engagement as they increasingly turn to LinkedIn to connect, learn, grow and get hired.”

COVID related

In Q3, the airline industry saw “global departures increase slightly to an average of 67% of 2019 levels, up from 59% the previous quarter,” according to Calhoun.

Alphabet CFO Ruth Porat commented, “people increasingly are embracing a hybrid work model.” Porat added that the consumer shift to digital is “real and will continue.”

Alphabet CEO Sundar Pichai explained, “as consumers, businesses and schools continue their shift towards hybrid work… customers are turning to Google workspace and our cyber security platform.”

Broader Economy

Evercore CEO John Weinberg stated, “momentum in capital raising for financial sponsors continues and secondary market activity remains high.”

In terms of secular changes, Evercore management believes, “there is clearly a great deal of liquidity in the system that it’s not going to go away soon… we see real opportunity on corporate balance sheets as there is a lot of leverage available.”

According to Baker Hughes CEO Lorenzo Simonelli, “the oil field services market is in the early stages of a broad-based multi-year recovery.”

Johnson & Johnson CFO Joe Wolk stated, “Cost of products sold improved by 200 basis points, driven by recovery from prior year COVID-19 related impacts and favorable enterprise mix [in pharmaceuticals.]”

Wolk added, “in the United States, they are ramping up again and resuming elective procedures.” However, the CFO referenced, “the growing impact from reduced medical staffing on constraining procedure volumes” as a possible headwind.

United Rentals CEO Michael Flannery commented “virtually all key indicators point to a sustained recovery,” adding, “We’re also seeing work build across the entire easy supply chain. Plant maintenance is another big driver for us. We’re seeing that work start up again after being paused for COVID.”

In summary, although the broader economy has largely recovered from the COVID recession, we are still dealing with multiple repercussions, including the global chip and labor shortage. COVID and resulting policies have significantly altered the way in which people work and engage in commerce.

The quotes above are from our detailed Conference Calls publications.  Throughout earnings season, we publish Conference Call summaries for select companies.  These summaries include information regarding each company’s financial results, growth by segment, as well as some aspects of the business that management expects to impact future results.  As always, none of these summaries should be construed as recommendations to buy or sell any securities, and investors should do their own research and/or consult with a financial professional before making any investment decisions.

Our Conference Calls reports are available to Bespoke Institutional subscribers only.  If you’re not currently a Bespoke Institutional subscriber, click here to sign-up for or upgrade to Bespoke Institutional now.

Conference Calls Reports So Far This Earnings Season:

Apple (AAPL)
Amazon (AMZN)
Merck (MRK)
United Rentals (URI)
Ford (F)
Automatic Data Processing (ADP)
Boeing (BA)
Evercore (EVR)
McDonald’s (MCD)
Alphabet (GOOGL)
Microsoft (MSFT)
Digital Realty (DLR)
3M (MMM)
Facebook (FB)
Olin (OLN)
Tesla (TSLA)
Equifax (EFX)
Baker Hughes (BKR)
Netflix (NFLX)
Intuitive Surgical (ISRG)
Johnson & Johnson (JNJ)
NextEra Energy (NEE)

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