HI Quality Archives - 2021
Monday, Dec. 27, 2021
According to Mastercard-MA SpendingPulseTM, holiday retail sales excluding automotive increased 8.5% year-over-year this holiday season, running from November 1 through December 24. This was the highest holiday spending in 17 years. Notably, online sales grew 11.0% compared to the same period last year, the preliminary insights show. Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment.
FactSet-FDS announced that it has entered into a definitive agreement to acquire CUSIP Global Services (CGS) from S&P Global for $1.925 billion in cash. FactSet also expects to receive an estimated tax benefit of approximately $200 million as part of the transaction. The acquisition will significantly expand FactSet’s critical role in the global capital markets, advancing its open data strategy. CGS generates annual revenues of approximately $175 million with consistent revenue growth rates in the mid- to high-single digit range. It is expected to deliver robust margins and be immediately accretive to FactSet’s adjusted operating margins. The transaction is also expected to be accretive to FactSet’s adjusted diluted EPS in the first year of ownership, excluding purchase price amortization and one-time integration costs. FactSet will fund the transaction through a combination of cash-on-hand and committed financing and is expected to close during the first calendar quarter of 2022.
Roche-RHHBY announced that the U.S. Food and Drug Administration (FDA) has granted Emergency Use Authorization (EUA) for its COVID-19 At-Home Test. The test uses a simple anterior nasal swab sample that can be conveniently self-collected and self-tested by individuals aged 14 years and older, and by an adult for children aged 2-13 years old. The test is able to produce accurate, reliable and quick results in as few as 20 minutes for SARS-CoV-2 and all known variants of concern, including Omicron.
Wednesday, Dec. 22, 2021
Paychex-PAYX reported second quarter revenues rose 13% to $1.1 billion with net income up 22% to $332.1 million and EPS up 21% to $.21. These strong financial results were driven by growth in employees within the client base and continued strong sales growth and record client retention. Higher checks per payroll reflected the tight labor market’s impact on wages. Free cash flow in the first half of the fiscal year increased 30% to $490 million with Paychex paying $476 million in dividends. The company’s cash flow generation and financial position remain strong with the company ending the quarter with $1.1 billion in cash and investments, $798 million in long-term debt and $3.1 billion in stockholders’ equity. On a rolling 12 months, Paychex generated an impressive 43% return on equity. Paychex raised its outlook for sales and earnings for fiscal 2022 with revenue now anticipated to grow in the range of 10% to 11% and adjusted EPS expected to increase 18% to 20%. In the small business segment, restaurants continue to struggle the most. However, Paychex expects people to come back to the workforce in the next six months especially as rent and student loan payment deferrals abate.
Tuesday, Dec. 21, 2021
FactSet-FDS reported fiscal first quarter revenues rose 9.4% to $424.7 million with net income up 6.4% to $107.6 million and EPS up 6.5% to $2.79. The revenue increase was primarily due to higher sales of analytics and research and advisory solutions. Annual Subscription Value plus professional services was $1.7 billion at quarter end. The operating margin declined to 28.9% during the quarter compared to 31.2% in the prior year period due to increased infrastructure expenses and data costs. Client count increased by a net 306 during the quarter to 6,759 primarily driven by an increase in corporate clients. User count increased by 1,229 to 162,161 in the past quarter primarily driven by an increase in research and advisory users. Annual client retention was 92%. Free cash flow declined 9% to $64.3 million due to the timing of tax payments and higher employee bonuses. During the quarter, the company paid $30.7 million in dividends and repurchased 46,200 of its shares for $18.6 million at an average price of $403.44 per share. FactSet has $181.3 million remaining authorized for future share repurchases. For the full year fiscal 2022, FactSet expects revenues in the range of $1,705 to $1,720 million with EPS in the range of $11.60-$11.90.
According to Starbucks-SBUX, the company estimates Dec. 23 will be the busiest day for gift card purchases, as holiday shoppers scramble to find the final items on their lists for friends, family and co-workers. Starbucks said that nearly $3 billion dollars will be loaded onto Starbucks cards from October to December.
Monday, Dec. 20, 2021
NIKE-NKE reported fiscal 2022 second quarter revenues increased 1% to $11.4 billion with net earnings increasing 7% to $1.3 billion and EPS increasing 6% to $0.83. By geography, North America sales increased 12% to $4.5 billion, Europe, Middle East & Africa sales increased 6% to $3.1 billion, Greater China sales decreased 20% to $1.8 billion and Asia Pacific & Latin America sales declined 8% to $1.3 billion. Gross margin increased 280 basis points to 45.9%, led by margin expansion in the NIKE Direct business driven by lower markdowns, a higher mix of full-price sales and changes in foreign currency exchange rates, partially offset by lower full-price product margins largely due to increased freight and logistics costs. Despite inventory constraints and supply chain challenges, NIKE Direct sales were up 9% to $4.7 billion and Nike Brand digital sales increased 12%, led by 40% growth in North America. During the second quarter, NIKE paid dividends of $437 million to shareholders, up 14% from the prior year. The company repurchased $968 million of its common stock, reflecting 6 million shares retired as part of the four-year, $15 billion program approved by the Board of Directors in June 2018. As of November 30, 2021, a total of 60.8 million shares have been repurchased under the program for a total of approximately $6.4 billion. Nike ended the quarter with approximately $15.1 billion in cash and short-term investments, up approximately $3.3 billion from last year and $9.4 billion in long-term debt. Nike expects fiscal 2022 revenue to rise mid-single digits , which reflects the ongoing impact from lost production from COVID-related disruptions in Vietnam.
Oracle-ORCL plans to acquire Cerner through an all-cash tender offer for $95.00 per share, or approximately $28.3 billion. Cerner is a leading provider of digital information systems used within hospitals and health systems to enable medical professionals to deliver better healthcare to individual patients and communities. The acquisition is expected to be immediately accretive to Oracle's earnings on a non-GAAP basis in the first full fiscal year after closing—and contribute substantially more to earnings in the second fiscal year and thereafter. Oracle's revenue growth rate has already been increasing this year and Cerner will be a huge additional revenue growth engine for years to come as Oracle expands its business into many more countries throughout the world.
Thursday, Dec. 16, 2021
Genuine Parts-GPC entered into an agreement to acquire Kaman Distribution Group ("KDG"). The acquisition is valued at a total purchase price of approximately $1.3 billion in cash. Established in 1971, KDG is a power transmission, automation and fluid power industrial distributor and solutions provider with operations throughout the U.S., providing electro-mechanical products, bearings, power transmission, motion control and electrical and fluid power components to customers. KDG is expected to generate approximately $1.1 billion of revenue in 2022. Additionally, GPC expects the acquisition to be accretive to its adjusted earnings in the first year after closing. The transaction is expected to close in the first quarter of 2022.
Accenture-ACN reported strong fiscal first quarter results with revenues up 27% to $15 billion and net income up 19% to $1.8 billion and EPS up 20% to $2.78. Revenues grew at double-digit rates in all geographic markets and industry groups for the quarter. Operating margin expanded 20 basis points during the quarter to 16.3%. New bookings increased 30% to a record $16.8 billion with consulting bookings of $9.4 billion and outsourcing bookings of $7.4 billion. Free cash flow decreased 77% to $349 million mainly due to changes in receivables. The company paid $613 million in dividends (a 9% increase over last year) and repurchased 2.4 million of its common shares for $845 million at an average price of $352.08 per share. Accenture has $5.6 billion remaining authorized for future share repurchases. Given the strong start to the new fiscal year, Accenture increased its financial outlook for the full fiscal 2022 year. The company now expects revenue growth in the range of 19% to 22% in local currency with operating margin expected to expand 10 to 30 basis points to a range of 15.2% to 15.4%. GAAP EPS is expected in the range of $10.32 to $10.60 compared to previous guidance of $9.90 to $10.18. Free cash flow is expected in the range of $7.7 billion to $8.2 billion with the company planning to return at least $6.3 billion of the cash to shareholders in the form of dividends and share repurchases. Accenture has declared another quarterly cash dividend of $.97 per share, which is payable on Feb. 15, 2022 and represents a 10% increase over the quarterly dividend rate of $.88 per share in fiscal 2021.
Wednesday, Dec. 15, 2021
Visa-V announced its board has authorized a new $12 billion share repurchase program. Combined with funds left over from a previous authorization, funds available for future share repurchases total $13.2 billion.
Tuesday, Dec. 14, 2021
UPS-UPS announced that it surpassed the one billion COVID-19 vaccine doses delivered mark with near-perfect on-time accuracy, including nearly 50 million doses in Canada. Just one year after the first vaccine was delivered by UPS, this milestone was made possible through UPS’s innovative approaches, one-of-a-kind UPS Premier tracking technologies, industry-leading cold chain solutions, and an expansive, sophisticated, global network supporting UPS Healthcare customers and communities around the world.
3M-MMM plans to spin off its Food Safety business and simultaneously combine it with NEOGEN, which provides solutions dedicated to food and animal safety, in a transaction that is intended to be tax-efficient to 3M and its shareholders. The combination will create an innovative leader in the food safety sector with a comprehensive product range and a strategic focus on the category's long-term growth opportunities. 3M will receive approximately $1 billion in consideration. NEOGEN shareholders will continue to own approximately 49.9% of the combined company, and 3M shareholders will receive approximately 50.1% of the combined company. The transaction is expected to close by the end of the third quarter of 2022.
Monday, Dec. 13, 2021
The Board of Directors of SEI Investments-SEIC approved an increase in its stock repurchase program by an additional $200 million, increasing the available authorization under the program to approximately $261 million.
Friday, Dec. 10, 2021
T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.63 trillion as of November 30, 2021, representing a 10.7% increase since year end.
Thursday, Dec. 9, 2021
Oracle-ORCL reported second quarter revenue increased 6% to $10.4 billion, powered by sales of Fusion ERP and NetSuite ERP which grew 35% and 29%, respectively. Oracle’s total infrastructure and applications cloud revenue, now approaching $11 billion in annualized revenue, increased 22% to $2.7 billion. With cloud bookings growing faster than revenue, management expects acceleration in future cloud growth. A payment of a judgment related to a ten-year-old dispute surrounding former CEO Mark Hurd's employment, resulted in a third quarter loss of $1.2 million, or $0.46 per share, compared to a net income of $2.4 billion, or $0.80 per share, last year. Adjusted net income and EPS increased, 4% and 14%, respectively. Year-to-date, Oracle generated negative free cash flow of $278 million, compared to positive free cash flow of $6.3 billion last year, squeezed by the judgement. During the first half of fiscal 2022, Oracle returned nearly $17 billion to shareholders through dividend payments of $1.8 billion and share repurchases of $15 billion. The board expanded the share buyback authorization by an additional $10 billion. During the past 10 years, Oracle has reduced its share count by 47% at an average price per share that is about ½ the current stock price. Oracle ended the quarter with $23 billion in cash and investments and $73 billion in long-term debt. Given the strong first-half performance, Oracle expects full fiscal year 2022 revenues to grow in the mid-single digits range with operating margins of 44%, higher than pre-pandemic levels.
Hormel Foods-HRL reported record fourth quarter sales and earnings with double-digit sales growth from every business segment and channel. Fourth quarter sales rose 43% to $3.5 billion with organic sales up 32% and organic volume up 8%. Net earnings increased 20% in the fourth quarter to $281.7 million with EPS up 19% to $.51. This impressive growth was led by the strength of the company’s global brands including Applegate, Columbus, Fontanini, Hormel Bacon, Jennie-O, Planters and SPAM. Hormel continues to gain market share in the Hormel party trays, pepperoni, chili and SPAM categories. SPAM has enjoyed seven consecutive years of record growth. To support this growth, Hormel plans to expand capacity for its SPAM family of products and pepperoni operations with capital expenditures targeted at $310 million in fiscal 2022 compared to $232 million in 2021. For the full fiscal 2021 year, revenue rose 19% to $11.4 billion with earnings and EPS relatively flat at $908.8 million and $1.66, respectively. Return on equity for the year was 12.5%. Free cash flow increased 1% during the year to $771.7 million with the company repurchasing $20 million of its common stock and paying $523 million in dividends. Hormel recently increased its dividend 6% to an annual dividend of $1.04, representing the 56th consecutive year of dividend increases. While the operating environment remains complex, Hormel expects continued strong demand across all its business segment with improved production and pricing actions driving growth in all segments. In fiscal 2022, Hormel expects net sales in the range of $11.7 billion to $12.5 billion, representing 3% to 10% growth, with EPS expected in the range of $1.87 to $2.03, representing 13% to 22% growth.
Stryker-SYK announced that its Board of Directors has declared a quarterly dividend of $0.695 per share payable January 31, 2022 to shareholders of record at the close of business on December 31, 2021, representing an increase of 10.3% versus the prior year and previous quarter.
Wednesday, Dec. 8, 2021
Brown-Forman-BFB reported second quarter net sales increased 1% (+7% on an underlying basis) to $994 million with net income and EPS both down 2% to $236 million and $0.49, respectively. The United States and developed international markets grew underlying sales 6% and 12%, respectively, while underlying sales in emerging markets jumped 25%. Jack Daniel’s family of brands grew underlying net sales 11% powered by 15% underlying net sales from Jack Daniel’s Tennessee Whiskey. Premium bourbons grew underlying sales 18% driven by sustained double-digit growth across Woodford Reserve and Old Forester. The tequila portfolio grew underlying sales 16% led by double-digit growth from Herradura and el Jimador. During the first half of the year, free cash flow increased 19% to $302 million with the company paying $167 million in dividends during the same period. The company continues to face volatility and global supply chain disruptions in a rapidly evolving environment due to COVID-19. However, the company remains confident in their growth momentum and have revised their full-year underlying net sales outlook from mid-single digit to high-single digit growth. The company expects supply chain disruptions will become less significant in the second half of the year, but management is still expecting reported gross margin to be flat or slightly down for the full year due to the supply chain disruptions. The company continues to anticipate quarterly results will be volatile for the remainder of fiscal 2022, particularly underlying advertising expense and underlying operating income, as a result of the unusual comparisons to last year. Brown‑Forman’s Board of Directors approved a 5% increase in the regular quarterly cash dividend to $0.1885 per share on the Class A and Class B common stock. This marked the company’s 78th year of paying consecutive dividends and the 38th year of increases in its regular quarterly dividend. Brown‑Forman’s Board of Directors also declared a special dividend of approximately $480 million, or $1.00 per share, on its Class A and Class B common stock. This special cash dividend is payable on December 29, 2021 to stockholders of record on December 9, 2021.
Raytheon Technologies'-RTX Board of Directors authorized the repurchase of up to $6 billion of the company's outstanding common stock, which represents a 4.7% buyback yield based on the current market capitalization.
Tuesday, Dec. 7, 2021
Intel-INTC announced its intention to take Mobileye public in the United States in mid-2022 via an initial public offering (IPO) of newly issued Mobileye stock. Mobileye is a market leader in driver-assistance and autonomous driving solutions. It expects to deliver over 40% more revenue in 2021 compared with 2020, along with a record 41 new program wins with more than 30 leading automakers worldwide. Mobileye recently shipped its 100 millionth EyeQ® system-on-chip, unveiled its production robotaxi, and scaled its autonomous vehicle testing across multiple cities around the world covering the U.S., Europe and Asia. Intel will maintain majority ownership of Mobileye and will continue to fully consolidate Mobileye. The two companies will continue as strategic partners, collaborating on projects as they pursue the growth of computing in the automotive sector. The share of semiconductors is expected to be 20% of a premium vehicle’s total bill-of-materials by 2030. The Mobileye executive team will remain, with Prof. Amnon Shashua continuing as the company’s CEO. Recently acquired Moovit as well as Intel teams working on lidar and radar development and other Mobileye projects will be aligned as part of Mobileye.
Fastenal-FAST reported November sales jumped 18.9% to $524.2 million with average daily sales up 13.2% to $25 million. The company experienced double-digit growth in all regions of the world. By end market, manufacturing average daily sales increased 22.6% with non-residential construction up 16.6%. By product line, sales of fasteners increased 23.7% with other products up 11.7% as safety sales remained relatively unchanged. About 78% of the company’s top 100 national accounts experienced growth during the month with 71% of Fastenal’s branches also growing. Total personnel increased 0.8% to 20,523.
Thursday, Dec. 2, 2021
Ulta Beauty-ULTA reported record third quarter results with sales jumping 29% to $2.0 billion and net earnings and EPS up nearly three-fold to $215.3 million and $3.94, respectively. Comparable sales (sales for stores open at least 14 months, including stores temporarily closed due to COVID-19 and e-commerce sales) increased 25.8% compared to a decrease of 8.9% in the third quarter of fiscal 2020, driven by a 16.8% increase in transactions and a 7.7% increase in average ticket. Compared to the third quarter of fiscal 2019, comparable sales increased 14.3%. Ulta Beauty opened seven new stores during the quarter, ending the quarter with 1,302 stores totaling 13.7 million square feet. During the quarter, the company expanded its Ultamate Rewards loyalty program to nearly 36 million, up 13% from 2020 and 6% from 2019. During the quarter, Ulta repurchased common stock at a cost of $126.4 million, or $371.04 per share, with $759.8 million remaining under the $1.6 billion share repurchase program announced in March 2020. Free cash flow during the first nine months more than doubled from 2020 to $306 million and the company ended the quarter with $605 million in cash on its glamorous, debt-free balance sheet. Given the outstanding year-to-date results, management updated its guidance for the full fiscal year with sales now expected in the $8.5 billion to $8.6 billion range on 36% to 37% comp store growth. EPS are expected in the $16.70 to $17.10 range, up from previous guidance of $14.50 to $14.70. Longer term, management expects sales growth in the 5% to 7% range with EPS growing low-single-digits on operating margins of 13% to 14%.
Tuesday, Nov. 30, 2021
Mastercard-MA announced that its Board of Directors has declared a quarterly cash dividend of 49 cents per share, an 11 percent increase over the previous dividend of 44 cents per share. The Board of Directors also approved a new share repurchase program, authorizing the company to repurchase up to $8 billion of its Class A common stock. The new share repurchase program will become effective at the completion of the company’s previously announced $6 billion program. The company has approximately $4.4 billion remaining under the current program authorization.
UnitedHealth Group-UNH announced it expects revenues for 2021 to be approximately $287 billion with net earnings of $17.80 to $17.95 per share. In 2022, UnitedHealth Group expects revenues in the range of $317 billion to $320 billion, net earnings of $20.20 to $20.70 per share and cash flows from operations in the range of $23 billion to $24 billion.
Tuesday, Nov. 23, 2021
Booking Holdings-BKNG announced that it has entered into an agreement with funds managed by CVC Capital Partners ("CVC") to acquire global flight booking provider, Etraveli Group, for approximately $1.8 billion. "As international air travel rebounds from the impact of the pandemic, we look forward to building upon our existing relationship with Etraveli Group to make the travel booking experience easier and more seamless to support our partners and customers," said Booking Holdings' Chief Executive Officer, Glenn Fogel. Etraveli Group will remain headquartered in Sweden and operate as an independent business under Booking Holdings, led by their current management team.
Monday, Nov. 22, 2021
The Board of Directors of Hormel Foods Corporation-HRL announced a 6 percent increase to the annual dividend to shareholders, marking the 56th consecutive annual dividend increase. The Feb. 15 payment will be the 374th consecutive quarterly dividend paid by the company. Since becoming a public company in 1928, Hormel Foods Corporation has paid a regular quarterly dividend without interruption.
Thursday, Nov. 18, 2021
NIKE, Inc-NKE announced that its Board of Directors approved a quarterly cash dividend of $0.305 per share on the company’s outstanding Class A and Class B Common Stock. This represents an increase of 11 percent versus the prior quarterly dividend rate of $0.275 per share. "NIKE continues to fuel growth through our Consumer Direct Acceleration strategy, while generating strong cash flow and increasing returns to shareholders," said John Donahoe, President and CEO, NIKE. Inc. "This is now our 20th consecutive year of increasing dividend payouts, and reflects our strong track record and confidence in our ability to deliver sustainable, profitable, capital-efficient growth over the long-term."
Wed., Nov. 17, 2021
Ross Stores-ROST reported third quarter sales increased 22% to $4.5 billion with net earnings and EPS jumping approximately 190% to $385 million and $1.09, respectively. Comparable store sales were up 14% for the fiscal quarter. Year-to-date, Ross generated free cash flow of $1.1 billion, a 28% decrease over last year due to higher capital expenditures and inventories. During the quarter, the company repurchased $241 million of its common stock at an average price of $114.76 per share. The company remains on track to buy back a total of $560 million in common stock during fiscal 2021. Ross Stores ended the quarter with $5.2 billion in cash and cash equivalents, $2.4 billion in long-term debt and $3.9 billion in shareholders’ equity. “While we are encouraged by the ongoing strength of consumer demand, there remains significant uncertainty related to the worsening industry-wide supply chain congestion as we enter the important holiday season. As a result, and while we hope to do better, we are projecting fourth quarter comparable store sales gains of 7% to 9% and earnings per share in the range of $0.83 to $0.93, said Barbara Rentler, CEO.” Ms. Rentler added, “Based on our year-to-date results and our updated fourth quarter guidance, we are now planning earnings per share for fiscal 2021 to be in the range of $4.65 to $4.75 on a comparable store sales gain of 12% to 13%.”
Maximus-MMS reported fourth quarter revenues rose 20% to $1.1 billion with net income down 22% to $52 million and EPS down 22% to $.83. For the full fiscal year, revenues increased 23% to $4.25 billion with net income up 36% to $291.2 million and EPS up 38% to $4.67. Maximus generated a solid 20% return on shareholders’ equity for the year. Revenue growth was driven by approximately $1.1 billion of COVID-19 response work and $322.7 million of revenue contributions from the Attain Federal and Veterans Evaluation Services acquisitions and offset by the completed Census contract. Signed contract awards during the year totaled $5.62 billion with contracts pending (awarded but unsigned) of $.72 billion. Less than $1 billion of the $5.62 billion signed contract awards relate to COVID-19 response work. Remaining increases to signed contract awards were driven by wins in the U.S. Services and U.S. Federal Services Segments. The sales pipeline as of 9/30/21 was $33.9 billion (comprised of $8.8 billion in proposals pending, $1.42 billion in proposals in preparation and $23.69 billion in opportunities tracking). Free cash flow jumped 136% during 2021 to $480.8 million due to a decrease in investment in working capital and improved earnings as compared to fiscal year 2020. During the year, the company paid $68.8 million in dividends and repurchased $3.3 million of its common stock. For fiscal 2022, Maximus expects free cash flow to decrease to the range of $225 million to $275 million, reflecting increased investment in working capital as current liabilities normalize due to payroll tax deferrals, new work maturing and accruals returning to a more normal level. For fiscal 2022, Maximus expects revenues in the range of $4.4 billion to $4.6 billion and EPS in the range of $4-$4.30.
Cisco Systems-CSCO reported fiscal first quarter revenues increased 8% to $12.9 billion with net income and EPS jumping 37% to $3 billion and $.70, respectively. Revenues were up across all geographies, with product revenue growing 11% and service revenue up 1%. Order demand was the strongest in over a decade with three of four customer order groups experiencing order growth of more than 30% thanks to digital transformation and cloud computing. Supply constraints are preventing Cisco from fully turning product orders into revenues. Cisco is taking multiple steps to mitigate component shortages including paying substantially higher logistics costs, modifying designs and finding alternative suppliers. Free cash flow decreased 19% to $3.4 billion during the first quarter with the company paying $1.6 billion in dividends and repurchasing $256 million of its commons stock during the quarter at an average price of $56.49 per share. Cisco has $7.7 billion remaining authorized for future share repurchases. Cisco maintains a strong balance sheet and ended the quarter with $23.3 billion in cash and investments, $8.9 billion in long-term debt and $42.7 billion in shareholders’ equity. Cisco expects second quarter revenue growth of 4.5%-6.5% with EPS expected in the range of $.64 to $.68. Guidance for the full fiscal year 2022 is for revenue growth of 5%-7% and EPS in the range of $2.77 to $2.89.
The TJX Companies-TJX reported third quarter revenues rang up a 24% gain to $12.5 billion as overall open-only comparable store sales increased 14%, driven by a 34% comp store sales gain at HomeGoods. This is the third consecutive quarter that comp store sales increased mid-teens or better. Operating profit jumped 37% to $1.4 billion with net income and EPS each up 18% to $1.0 billion and $.84, respectively. These results were well above management’s plan thanks to robust sales trends throughout the quarter. The home businesses across all divisions continued their “phenomenal” performance while the apparel business rebounded with comp store sales increasing by mid-single digits. Fiscal year-to-date, the company generated $1.9 billion of operating cash flow and ended the quarter with $6.8 billion of cash. During the first nine months of the fiscal year, TJX paid $942 million in dividends and repurchased 16.3 million of its shares for $1.1 billion at an average price of about $67.48 per share. TJX expanded its share repurchase program by $500 million and now expects to repurchase $1.75 billion to $2.0 billion of its stock this fiscal year. Despite global supply challenges, TJX is well-positioned for the important holiday selling season with sales very strong as the company starts its fourth quarter with comp store sales up mid-teens. The company is in an excellent inventory position with most of the product needed for the holiday season either on hand or scheduled to arrive at its stores and online in time for the holidays. Shelves should be stocked full throughout the holiday season which TJX plans to advertise in their “Endless Selection and Low Prices All Season Long” campaign, including its first TV marketing campaign in Europe. TJX’s great values resonate well with its consumers around the world especially during inflationary times. Management is very confident in continuing to gain market share, improve profitability and reach its strategic vision of becoming a $60 billion revenue company.
Friday, Nov. 12, 2021
Regeneron Pharmaceuticals-REGN announced that its Board of Directors authorized a share repurchase program of up to $3 billion of the Company's outstanding common stock. "With the strength of our balance sheet and our business, we see this as an opportunity to continue to invest in Regeneron," said Robert E. Landry, Executive Vice President, Finance and Chief Financial Officer of Regeneron. "This share repurchase program is part of our broader capital allocation strategy to maximize shareholder value for years to come."
Johnson & Johnson-JNJ announced its intent to separate the Company's Consumer Health business, creating a new publicly traded company in 18-24 months in a tax-free transaction to shareholders. The planned separation would create two global leaders that are better positioned to deliver improved health outcomes for patients and consumers through innovation, pursue more targeted business strategies and accelerate growth. Following the planned separation, the new Johnson & Johnson would remain the world's largest and most diverse healthcare company and continue its commitment to lead in global healthcare R&D and innovation, with a portfolio that blends its strong Pharmaceutical and Medical Device capabilities focused on advancing the standard of care through innovation and technology. The new Johnson & Johnson would remain committed to maintaining a strong balance sheet and to its stated capital allocation priorities of R&D investment, competitive dividends and value-creating acquisitions. The overall shareholder dividend will remain at least at the same level following the completion of the transaction. The New Consumer Health Company would be a leading global consumer health company, touching the lives of over one billion consumers around the world every day through iconic brands such as Neutrogena, AVEENO®, Tylenol®, Listerine®, JOHNSON's®, and BAND-AID® and continuing its legacy of innovation. The New Consumer Health Company would be a global leader with a powerful portfolio of iconic brands — comprising four $1 billion megabrands and 20 brands over $150 million. The Consumer Health segment is expected to generate revenue of approximately $15 billion in Full-Year 2021.
Booking Holdings-BKNG announced that it has entered into an agreement to acquire B2B distributor of hotel rooms, Getaroom, from Court Square Capital Partners for approximately $1.2 billion. At closing, U.S.-based Getaroom will roll into Booking Holdings' Priceline brand.
Thursday, Nov. 11, 2021
Baxter International-BAX announced an approximately $100 million expansion of its sterile fill/finish manufacturing facility located in Halle/Westfalen, Germany. This facility specializes in partnering with leading pharmaceutical and biotech companies on the development and contract manufacturing of drug product for parenteral (injectable) pharmaceuticals. Construction on the new manufacturing building is expected to begin in 2022 and be completed in 2024.
Wednesday, Nov. 10. 2021
T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.67 trillionas of October 31, 2021, which reflects a 14% increase since year end.
The board of directors of Automatic Data Processing-ADP approved a 12% increase in the quarterly cash dividend to an annual rate of $4.16 per share, marking the 47th consecutive year in which ADP has raised its quarterly dividend.
Accenture Federal Services (AFS), a subsidiary of Accenture-ACN, has been awarded a $618 million cost plus award fee task order to enhance and modernize the United States Marshals Service’s (USMS) mission-critical IT systems. The USMS supports the federal justice system with protecting the federal judiciary, apprehending federal fugitives, transporting federal prisoners, and other law enforcement duties.
Mastercard-MA announced it expects to grow net revenue at a “high-teens” percentage compound annual rate from 2022 to 2024 and is also looking for a minimum annual operating margin of 50% over that span, resulting in a “low-twenties” compound annual growth rate on earnings per share. Mastercard will be looking to capture new growth avenues in payments, where it sees a $255 trillion total addressable market with “significant untapped opportunity.” The company also expects to grow its services business, which is expected to bring in more than $6.5 billion in revenue this year. Mastercard sees further growth opportunities in open banking, which makes it easier for consumers to link their financial data to other services, and “buy-now pay-later purchasing” with new partners, including American Airlines Group and Fiserv Inc.
Apple® -AAPL announced Apple Business Essentials, an all-new service that brings together device management, 24/7 Apple Support, and iCloud® storage into flexible subscription plans for small businesses with up to 500 employees. The company also unveiled a new Apple Business Essentials app that enables employees to install apps for work and request support.
Saturday, Nov. 6, 2021
Berkshire Hathaway-BRKB reported the company’s net worth during the first nine months of 2021 increased 6.6%, or $29.3 billion, to $472.5 billion with book value equal to about $316,463 per Class A share as of 9/30/21. Berkshire earned $10.3 billion in the third quarter, including $6.5 billion of operating earnings and $3.9 billion of investment and derivate gains.
Berkshire’s four major equity investment holdings represent 70% of total equities, including American Express at $25.4 billion (which charged 39% higher during the first nine months or $7.1 billion), Apple at $128.4 billion (which gained 7% in the first nine months or $8.0 billion), Bank of America at $43.9 billion (which deposited a 40% gain in value through 9/30/21 or $12.6 billion), and Coca-Cola at $21.0 billion (fizzling 4% or down $900 million since year end).
Berkshire’s revenues increased 12% during the third quarter to $70.7 billion with operating earnings rising 18% to $6.5 billion as many of Berkshire’s businesses experienced a significant recovery in revenues and earnings following the pandemic. While some businesses have exceeded pre-pandemic levels in revenues and earnings, other business have been negatively impacted by ongoing global supply chain disruptions and Hurricane Ida.
During the third quarter, Berkshire’s insurance underwriting produced after-tax losses of $784 million which included incurred losses from significant catastrophe losses, including Hurricane Ida and floods in Europe, which approximated $1.7 billion. Underwriting results in 2021 also reflected the effects of the premium reductions from the GEICO Giveback program, higher private passenger automobile claims frequencies as people began to drive more following the pandemic and higher losses in the life reinsurance business due to the pandemic. Insurance investment income rose 14% during the third quarter to $1.2 billion, reflecting higher dividend income and a lower tax rate. Berkshire expects prevailing low interest rates to negatively affect earnings from fixed-income investments for the remainder of 2021. The float of the insurance operations approximated $145 billion as of 9/30/21, an increase of $7 billion since year end 2020. The average cost of float was negative during the first nine months of 2021 as the underwriting operations generated earnings of $356 million.
Burlington Northern Santa Fe’s (BNSF) revenues chugged 12% higher during the third quarter to $5.6 billion with net earnings rolling 14% higher to $1.5 billion reflecting overall higher freight volumes and lower costs due to improved productivity, partly offset by higher average fuel costs. Volume was up 4% during the quarter driven by a 14% gain in volume in industrial products, due to improvements in the construction and building sectors, and a 12% gain in volume in coal attributable to increased electricity generation, higher natural gas prices and improved export demand.
Berkshire Hathaway Energy reported revenues charged ahead 13% during the third quarter to $7.0 billion. Net earnings rose 7% during the quarter to $1.5 billion reflecting increased earnings from all the energy business units. However, the real estate brokerage business, included in this business segment due to an acquisition, reported earnings declined 42% during the quarter to $102 million due to a decrease in refinance activity.
Berkshire’s Manufacturing businesses reported third quarter revenues rose 15% to $17.5 billion with operating earnings up 8% to $2.4 billion. The Industrial Products segment led the way in this segment with revenues rising 17% and operating earnings gaining 20% from the prior year third quarter. Double-digit growth in revenues and earnings was generated by Marmon and IMC thanks to higher customer demand, improved manufacturing efficiencies and good operating cost management. The Building Products segment reported 12% growth in revenues but only a 1% increase in earnings due to persistent supply chain disruptions which limited sales and contributed to production delays and significant cost increases. Consumer Products revenues jumped 18% with pre-tax earnings relatively flat as strong growth at Forest River driven by a 38% year-to-date increase in unit sales of recreational vehicles was offset by lower earnings from Duracell and the apparel and footwear businesses.
Service and Retailing revenues increased 10% during the third quarter to $21.3 billion with pre-tax earnings up 26% to $1.1 billion. Service group revenue increased 35% with pre-tax earnings up 48% thanks to strong growth from TTI, reflecting accelerating demand across all electronic component markets, and the aviation business services due to higher training hours at FlightSafety and significantly higher customer flight hours at NetJets. Thanks to strong demand for home furnishings and new and pre-owned vehicle sales at Berkshire Hathaway Automotive, retailing operations reported an 8% increase in sales and a 34% jump in earnings during the third quarter. McLane’s revenues increased 5% during the quarter with the company reporting a slight loss due to higher personnel costs and fuel expenses. McLane’s operations have been adversely impacted by supply chain disruptions, including shortages of truck drivers, which is affecting inventory and customer deliveries.
Berkshire’s balance sheet continues to reflect very significant liquidity and a very strong capital base of $472 billion as of 9/30/21. Excluding railroad, energy and utility investments, Berkshire ended the third quarter with $489.9 billion in investments allocated approximately 63.4% to equities ($310.8 billion), 3.7% to fixed-income investments ($18.1 billion), 3.4% to equity method investments ($16.7 billion), and 29.5% in cash and equivalents ($144.4 billion).
Free cash flow rose 14% during the first nine months of 2021 to $22.4 billion. During the first nine months, capital expenditures approximated $9.2 billion. Berkshire expects capital expenditures for the remainder of 2021 to approximate an additional $3.1 billion for BNSF and Berkshire Hathaway Energy. During the first nine months, Berkshire sold or redeemed a net $12.8 billion in Treasury Bills and fixed-income investments and sold a net $7.0 billion of equity securities.
Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett and Charlie Munger. During the first nine months, Berkshire repurchased $20.2 billion of its common stock including $7.6 billion in the third quarter. These repurchases included 9,580,995 Class B shares acquired at an average price of $277.74 per share and 1,323 Class A shares purchased at an average price of $419,237 per share during September 2021. After quarter end, it appears Berkshire has acquired about $1.8 billion in additional shares of its common stock based on its lower share count as of 10/27/21 reported on the 10-Q.
Thursday, Nov. 4, 2021
Roche Holdings-RHHBY announced it will repurchase 53.3 million Roche shares held by Novartis. The aggregate transaction value is approximately CHF 19 billion and will be debt-financed. All shareholders of Roche benefit from the earnings accretion resulting from the transaction. The percentage of shares held by the public (so-called "free float") will increase from currently 16.6% to 24.9% with the cancellation of the equity stake held by Novartis. This will allow the shares to be included in the Swiss Performance Index (SPI) and possibly in other indices. Roche confirms the outlook for the full year and expects a mid-single-digit sales growth at constant exchange rates. Core EPS growth at constant exchange rates is targeted to be broadly in line with sales growth. Furthermore, Roche is aiming at increasing the dividend in Swiss francs also for 2021.
Regeneron-REGN reported third quarter revenues increased a healthy 51% to $3.45 billion with net income and EPS increasing 94% to $1.6 billion and $14.33 per share, respectively. Top and bottom-line growth were driven by an increasingly diversified core business. With over 30 product candidates in clinical development, Regeneron is well-positioned for future profitable growth. By product line, EYLEA extended its leadership during the third quarter with sales up 15% to $2.4 billion. Despite new competition, EYLEA remains the number one prescribed anti-VEGF treatment for retinal diseases with 40 million plus doses administered globally since launch. Worldwide Dupixent sales, which are recorded by Sanofi, jumped 55% to $1.66 billion with broad-based growth across all approved indications. Advancing clinical development across eight Type 2 diseases provide significant market opportunities to secure Dupixent’s future growth. Sales of REGEN-COV, the first COVID-19 combination antibody therapy to receive emergency use authorization (EUA), increased to $1.2 billion, up from $40.2 million last year. During the quarter, Regeneron secured a new U.S. government supply agreement for an additional 1.4 million doses of the COVID therapy, a lifeline for people who are immuno-compromised. Sales of Libtayo, Regeneron’s immunotherapy cancer treatment currently approved for non-small cell lung cancer, basal cell carcinoma and advanced CSSC, increased 24% to $119.5 million. Regeneron’s clinical development pipeline of 12+ candidates has the potential to address unmet needs surrounding the most prevalent cancer types. Year-to-date, the company generated $4.3 billion in free cash flow, up from $934 million last year, reflecting the collection of receivables from the U.S. government in connection with REGEN-COV sales. During the first three quarters of 2021, Regeneron returned $612.1 million to shareholders through share repurchases, including $191 million during the third quarter. Regeneron ended the quarter with $11.4 billion in cash, $2.0 billion in long-term debt and $17.3 billion in shareholders’ equity on its healthy balance sheet. During the quarterly earnings conference call, management was asked how discussions on Capitol Hill are expected to impact its business promting the CEO to express how surprised he was that the industry most responsible for pulling the world out from under COVID is under such attack from legislators. Luckily, according to Leonard Schleifer, M.D., Ph.D and Regeneron CEO, "The most draconian ideas were written in disappearing ink."
Wednesday, Nov. 3, 2021
Booking Holdings-BKNG booked a 77% increase in third quarter revenues to $4.7 billion with net earnings and EPS decreasing 4% to $769 million and $18.60, respectively. Adjusting for changes in unrealized gains and losses on investments and goodwill charges, earnings more than tripled during the third quarter. Gross bookings soared 77% to $23.7 billion with the company booking 183 million room nights, up 44% year-over-year, primarily driven by better results in Europe. The company saw further improvement in room night trends in October, including in Asia. However, rising virus cases in Asian countries is adding uncertainty. The company's results for the three and nine months ended September 30, 2021 and 2020 have been materially and negatively impacted due to the COVID-19 pandemic and the resulting economic conditions and government restrictions on travel. Year-to-date, Booking Holdings generated $2.5 billion in cash flow from operations and $2.3 billion in free cash flow which was up substantially from last year. Booking is using the strong cash flow to pay down debt taken on during the pandemic to tidy up its balance sheet. Booking Holdings ended the quarter with $15.4 billion in cash and investments and $9.9 billion in long-term debt on its sturdy balance sheet.
NVR, Inc.-NVR announced that its Board of Directors has authorized the repurchase of $500 million of its outstanding common stock.
Thursday, Oct. 28, 2021
Starbucks-SBUX served up record fourth quarter and 2021 fiscal year results with fourth quarter sales percolating up 31% to $8.1 billion, net income jolting ahead to $1.76 billion from $392.6 million reported last year and EPS up $1.49 from $0.33 in fiscal 2021. Global comparable store sales increased 17%, driven by a 15% increase in transactions and a 2% increase in average ticket. U.S. same store comps increased 22% as consumers returned to coffee shops at record levels while China comp store sales slumped 7%, pressured by COVID-related restrictions that impacted 80% of stores in China during the quarter. For fiscal 2021, sales increased 24% to a record $29.1 billion with net income and EPS up more than three-fold to $4.2 billion and $3.54, respectively. During the fiscal year, Starbucks generated a 13.4% return on assets and $4.5 billion in free cash flow, representing a strong 108% of net earnings. The company returned $2.1 billion to shareholders through dividend payments during fiscal 2021. No share were repurchased during the fiscal year. Starbucks ended the quarter with $6.9 billion in cash and investments and $13.6 billion of long-term debt. To attract and retain high-quality talent needed to expand its U.S. store footprint, leadership announced a major investment in wages with the expectation that, by the summer of 2022, all U.S. hourly retail workers who have been with the company for two years or more will make an average of nearly $17 an hour with barista hourly rates ranging from $15 to $23 dollars an hour across the country. As a tangible expression of leadership’s confidence that this investment in its partners will lead to sustainable long-term growth for shareholders, Starbucks announced a new commitment to return $20 billion to shareholders over the next three years. Share repurchases will represent about two-thirds of the $20 billion and dividend payments the other third with a targeted 50% dividend payout ratio. The company expects to fund the shareholder distributions with additional debt while maintaining its BBB rating. Looking ahead to fiscal 2022, Starbucks expects sales to grow in the low-single-digits. Given investments in its labor force, commodity inflation, supply chain challenges and the reduction in government subsidies, Starbucks expects operating margins of 17% during fiscal 2022. However, higher prices, high-quality talent, new automation in stores, speedier cooking equipment and other investments will help push its operating margin to its ongoing target of 18% to 19% in fiscal 2023 and beyond.
Stryker-SYK reported third quarter sales increased 11.3% to $4.2 billion with net income and EPS decreasing 30% to $438 million and $1.14, respectively. Adjusted net earnings and EPS increased 3% to $842 million and $2.20, respectively. By business segment, Orthopedics sales increased 16.1% to $1.5 billion, driven by a 49% gain in the Extremities business. MedSurg net sales increased 9.4% to $1.8 billion, led by the instruments and Endoscopy businesses. Neuro technology and spine sales grew 7.3% to $.9 billion, bolstered by a 15% increase in Neurotechnology. During the first nine months, Stryker generated $2.3 billion in cash from operations and $1.9 billion in free cash flow with the company returning $713 million to shareholders through dividend payments. Stryker ended the quarter with $2.6 billion in cash and investments, $12.6 billion in debt and $14 billion in shareholders’ equity. Due to the volatility experienced as a result of COVID as well as the labor and staffing environment in healthcare potentially hindering an accelerated recovery, the company updated its fiscal 2021 outlook. Stryker now expects sales growth in the range of 7% to 8% from 2019, and now expects EPS to be in the range of $9.08 to $9.15.
Apple-AAPL reported record fourth quarter results despite supply constraint headwinds of $6 billion. During the fourth quarter, revenues rose 29% to $83.4 billion with net income soaring 62% to $20.6 billion and EPS jumping nearly 70% to $1.24. Service and Mac revenues reached new all-time highs in the fourth quarter. For the full year, Apple’s Services, including Cloud, Music, Video, Apple Pay, and the App Store, topped $68 billion with Services revenues more than tripling in the past six years. Apple ended the year with more than 745 million paid subscriptions to its services, which was up 160 million from last year. For the full year, revenues rose 33% to a record $365.8 billion with net income advancing 65% to $94.7 billion and EPS growing 71% to $5.61. Apple set new revenue records in all their geographic segments and product categories as well as in its active installed base of devices thanks to its unmatched customer loyalty and strength of its ecosystem. Return on shareholders’ equity was an amazing 150% for the year. Free cash flow for the year rose 27% to $93 billion with the company paying $14.5 billion in dividends and repurchasing $86 billion of its common shares. The company ended the year with $191 billion in cash and investments, $109 billion in long-term debt and $63 billion in shareholders’ equity on its shiny balance sheet. During the first fiscal quarter of 2022 which includes the important holiday season, Apple continues to see robust demand for all its products with record sales expected in all product categories except the iPad, which will face supply constraints. Supply constraints, notably chip shortages, are expected to exceed $6 billion during the first fiscal quarter. Gross margin during the first quarter is expected in the range of 41.5%-42.5% with operating expenses expected in the range of $12.4 billion to $12.6 billion.
T. Rowe Price-TROW reported third quarter revenues rose 22% to nearly $2 billion with net income and EPS up 21% to $757.7 million and $3.31, respectively. Thanks to strong market appreciation during the quarter, assets under management rose 23%, or $301.9 billion, from the prior year period to end the quarter at $1.6 trillion. Long-term investment performance remains strong although there were $6.4 billion in outflows during the quarter as some investors continue to reposition away from growth. The company recently announced an acquisition of Oak Hill Advisors (OHA), a leading alternative credit manager with $53 billion of capital under management. Under the terms of the transaction, T. Rowe Price will acquire 100% of the equity of OHA and certain other entities that have common ownership for a purchase price of up to approximately $4.2 billion, with $3.3 billion payable at closing, approximately 74% in cash and 26% in T. Rowe Price common stock, and up to an additional $900 million in cash upon the achievement of certain business milestones beginning in 2025. The purchase price includes the retirement of OHA debt outstanding at closing. Excluding amortization of intangibles and the expense impact of the earnout, the transaction is expected to be accretive to T. Rowe Price diluted earnings per share by a low-to-mid single digit percentage in 2022. OHA, a leading alternative credit manager, will become T. Rowe Price's private markets platform, accelerating T. Rowe Price's expansion into alternative investment markets and complementing T. Rowe Price's existing global platform and ongoing strategic investments in its core investments and distribution capabilities. The company’s balance sheet remains strong with more than $7.3 billion in cash and investments and no long-term debt. During the first nine months, T. Rowe Price has repurchased 2.9 million shares, or 1.3% of its outstanding common stock, for $526.6 million at an average price of $182.27 per share.
Facebook-FB announced a name change to "Meta", to trade under new ticker "MVRS" starting Dec. 1. Meta brings together Facebook’s apps and technologies under one new company brand. Meta's focus will be to bring the metaverse to life and help people connect, find communities and grow businesses. The company’s structure is not changing. However, the company will now report its financial results on two operating segments: Family of Apps, including Facebook, Instagram and WhatsApp, and Reality Labs, its virtual reality products and services used for social connection, entertainment, gaming, fitness, work, education and commerce.
Mastercard-MA reported third quarter revenues rose 30% to $5 billion with net income charging 59% higher to $2.4 billion and EPS up 62% to $2.44. This strong performance was driven by healthy domestic spending and solid growth in cross-border spending which has recently returned to pre-pandemic levels as borders have reopened for travel. Gross dollar volume growth in the third quarter was 20% on a local currency basis to $2.0 trillion. Cross-border volume growth traveled 52% higher while switched transactions increased 25%. Mastercard is extending the scale and power of its trusted network through innovations like the new Mastercard Installments program along with acquisitions to further its efforts in cryptocurrency services and open banking. Free cash flow increased 28% year-to-date to nearly $6 billion with the company paying $1.3 billion in dividends and repurchasing $4.6 billion of its common stock, including 4.3 million shares in the third quarter for $1.6 billion at an average cost of $372.09 per share. The company has approximately $4.8 billion remaining authorized for future share repurchases. For the fourth quarter, Mastercard expects 23% revenue growth and expanding operating margins given the strength in domestic spending as people get out more while e-commerce remains strong, the resurgence in international travel and new products and services. As of Sept. 30, 2021, the company’s customers had issued 2.9 billion Mastercard and Maestro-branded cars.
Baxter International-BAX reported third quarter revenue increased a healthy 9% to $3.2 billion with net income increasing 26% to $450 million and EPS increasing 29% to $0.89. Adjusted net income and EPS increased 20% and 23%, respectively. U.S. revenue totaled $1.3 billion, up 6%, and international sales of $1.9 billion increased 10%. All three of Baxter’s geographic segments – Americas, EMEA and APAC – contributed to positive performance for the quarter, reflecting the steady impact of pandemic recovery in many global markets compared to last year. Additionally, all of Baxter’s product categories contributed to positive year-over-year global growth in the third quarter, led by increased sales in BioPharma Solutions, which benefitted from multiple collaborations to help manufacture COVID-19 vaccines on a contract basis. Medication Delivery sales growth advanced low-double-digits, driven by strength in the U.S. for the company’s IV therapies and infusion systems product. Strong international performance in Pharmaceuticals helped offset lower U.S. sales. Clinical Nutrition, Acute Therapies and Advanced Surgery all delivered mid-single-digit growth during the quarter, driven by ongoing demand for the company’s products, particularly outside the U.S. Year-to-date, Baxter generated $1.0 billion in free cash flow with the company returning $990 million to shareholders through dividends of $390 million, up 14% from last year, and share repurchases of $600 million. Although $1.3 billion remains under the current repurchase authorization, the company expects moderate near-term share repurchases on the heels of its $12.4 billion acquisition of Hillrom, a leading global provider of medical technology, which is expected to close in early 2022. Baxter ended the quarter with $3.26 billion in cash, $5.45 billion in long-term debt and $8.8 billion in shareholders’ equity. Given uncertainty surrounding raw materials inflation, supply chain disruptions, labor shortages (especially in healthcare) and difficulties in predicting the course of the pandemic, Baxter updated its guidance with full year 2021 sales growth now expected in the 7% to 8% range and EPS expected in the $2.82 to $2.86 range, up 32% to 34% from 2020. Adjusted EPS are expected to increase 16% to 17%.
Check Point Software-CHKP reported third quarter revenue rose 5% to $534 million with net income declining 7% to $187 million and EPS decreasing 1% to $1.40. Subscription revenue increased 13% to $190 million, driven by triple-digit growth in Infinity platform sales and double-digit growth in Harmony and CloudGuard. Deferred revenue increased 12% over the prior year period to $1.5 billion. Free cash flow increased 4% during the first nine months to $877 million with the company repurchasing 2.64 million shares of its common stock for approximately $325 million at an average cost of $123.11 per share. During the quarter, the company announced a $2 billion expansion to the share repurchase program with authorization to repurchase up to $325 million each quarter. Check Point Software Technologies acquired Avanan, the fastest growing cloud email and collaboration security company with plans to tightly integrate Avanan into the Check Point Infinity consolidated architecture to deliver the world’s most secure email security offering. For the fourth quarter, Check Point expects revenue in the range of $560 million to $605 million with EPS in the range of $2.02-$2.22.
Wednesday, Oct. 27, 2021
Cognizant Technology Solutions-CTSH reported third revenue increased 12% to $4.74 billion with net income jumping 56% to $544 million and EPS surging 61% to $1.03 on fewer shares outstanding. Excluding litigation expense, restructuring and COVID-19-related charges, EPS increased 9.2% to $1.06. Digital revenue grew 18% and now represent 44% of total revenues. Bookings, a key leading indicator for future growth, increased 24%, bringing the year-to-date bookings growth to 13%. By business segment, Communications, Media & Technology revenue increased 20% to $739 million, Financial Services increased 5% to $1.54 billion, Products & Resources increased 19.4% to $1.11 billion and Healthcare increased 10% to $1.35 billion. By geography, North American revenues increased 10% to $3.5 billion, Europe increased 17% to $914 million and Rest of World revenues increased 22% to $344 million. Despite “unprecedented” competition for talent and 37% annualized attrition during the quarter, headcount increased 17,000 in the third quarter to 318,400. Cognizant generated $897 million in free cash flow during the third quarter with the company returning $227 million during the quarter through dividend payments of $127 million and share repurchases of $100 million at an average price per share of $76.10. At quarter end, $2.2 billion remained under the current share repurchase program. The company ended the quarter with $2.4 billion in unrestricted cash and short-term investments, $636 million in long-term debt and $11.55 billion in shareholders’ equity on its clean balance sheet. Given the year-to date results, management updated its guidance with revenues expected to reach about $18.5 billion, up 11% from last year, with adjusted EPS of $4.02 to $4.06, up from $3.42 last year.
General Dynamics-GD reported third quarter revenues rose 1.5% to $9.6 billion with net earnings up 3.1% to $860 million and EPS up 5.9% to $3.07. Aerospace revenues rose 4.6% to $2.1 billion as aircraft deliveries ramped up as planned with significant 11% growth in services revenues. Aerospace saw “spectacular” order activity with the highest third quarter orders since 2008. The Aerospace book-to-bill ratio was 1.6 times with the Gulfstream book- to- bill ratio 1.7 times. Total backlog increased 23% over the prior year period to $14.7 billion with the Gulfstream backlog the highest in six years. Marine Systems revenue increased 9.6% during the quarter to $2.6 billion with total backlog up 12.8% over the prior year period. The ship repair business is especially strong. Combat Systems revenues declined 3.1% to $1.7 billion although margins expanded resulting in a 2.2% increase in operating earnings. Technologies revenues declined 4% to $3.1 billion impacted by supply chain delays and chip shortages. Despite the revenue pressure, margins expanded resulting in a 4.1% increase in operating earnings. Year-to-date, free cash flow nearly doubled to $2.6 billion with the company paying $983 million in dividends and repurchasing $1.5 billion of its common shares. Backlog at the end of the quarter was up 8.1% to $88.1 billion.
Automatic Data Processing-ADP reported fiscal first quarter sales increased 10% to $3.8 billion with net income up 16% to $701 million and EPS up 18% to $1.65, reflecting improving demand across all business segments. Employer Services revenues increased 8% as sales productivity surpassed pre-pandemic levels and PEO Services revenues increased 15% as retention levels remained favorable. Free cash flow during the first quarter dropped to $86 million as the company reduced its accounts payable and accrued expenses. During the first quarter, the company repurchased $528 million of its common stock and paid $393 million in dividends. With a strong start to fiscal 2022, ADP has raised its financial outlook expecting revenue growth of 7%-8%, new business bookings of 12%-16%, operating margin expansion of 50 to 75 basis points and EPS growth of 10% to 12%.
Tuesday, Oct. 26, 2021
Microsoft-MSFT reported first quarter revenue increased 22% to $45.3 billion with net income increasing 48% to $20.5 billion and EPS increasing 49% to $2.71. Revenue in Productivity and Business Processes was $15 billion, up 22%. Office Commercial Products and cloud services revenue increased 18% driven by a 23% increase in Office 365 Commercial revenue. Dynamics products and cloud services revenue increased 31%, due to a 48% jump in Dynamics 365 revenue. Revenue in Intelligent Cloud was $17 billion, up 31%, driven by Azure and other cloud services revenue growth of 50%. Revenue in More Personal Computing was $13.3 billion, up 12%, highlighted by a 40% increase in Search and news advertising revenue, excluding traffic acquisition costs. Surface revenue was down 17%, due to chip shortages. During the quarter, Microsoft generated $18.7 billion in free cash flow, up 30% from last year, with the company returning $10.9 billion to shareholders through dividend payments of $4.7 billion and share repurchases of $6.2 billion, a 14% increase year-over-year.
F5 Networks-FFIV reported fourth quarter revenues increased 11% to $682 million with net income and EPS up more than 40% to $110.7 million and $1.80, respectively. Adjusted EPS increased 24% to $3.01. Revenue growth, which has increased at double-digit rates for four consecutive quarters, was driven by escalating demand for applications and heightened security awareness on the heels of high-profile ransomware attacks. Product revenues increased 21% to $339.9 million on a 35% jump in software growth and 12% in systems growth. Subscription revenue now accounts for 80% of total software sales, up from 76% last year, with recurring revenue now accounting for 67% of F5’s total revenues. Global services revenue rose 2% to $342.1 million. By geography, Americas grew by 11% and accounted for 59% of total sales, EMEA also grew by 11% and accounted for 24% of total sales and APAC grew by 9% and accounted for 17% of the total. For fiscal year 2021, revenues increased 11% to $2.35 billion with net income increasing 8% to $331.2 million and EPS up 7% to $5.34. App security, which accounted for 35% of total revenue in fiscal 2021, represents and large and growing piece of F5’s business with its 38% 3-year compound average growth rate. During fiscal 2021, F5 Networks generated a 14% return on shareholders’ equity and free cash flow of $614.5 million, up 2.3% from last year, with the company returning $500 million to shareholders through share repurchases. F5 ended the quarter with more than $1.0 billion in cash and investments, $350 million in long-term debt taken on for the Shape acquisition and $2.4 billion in shareholders’ equity on its weather-proof balance sheet. Looking ahead to the first quarter of fiscal 2022, F5 Networks expects revenues to increase by about 8% from last year’s first quarter with adjusted EPS increasing 7% at the midpoint of its guidance. Share-based compensation is expected to increase 12% to about $65 million, representing nearly 10% of sales. For the full fiscal year, F5 expects to deliver revenue growth of 8% to 9%, including software revenue growth of 35% to 40%. During fiscal 2022, F5 expects to repurchase $500 million of its shares and beginning in fiscal 2023, F5 intends to return 50% of free cash flow to shareholders through share repurchases.
UPS-UPS reported third quarter revenues rose 9% to $23.2 billion with net income advancing 19% to $2.3 billion and EPS up 18% to $2.65. Performance was better than anticipated across all three business segments thanks to strong expense control resulting in double-digit operating margins in all segments. Higher labor costs are being mitigated by improved productivity. U.S. Domestic revenue growth rose 7% to $14.2 billion and was driven by a 12% increase in revenue per piece. International revenues increased 15% to $4.7 billion with strong growth from all regions. Supply Chain Solutions revenues increased 8% to $4.3 billion led by Forwarding and Logistics sales which jumped 35%. In response to strong customer demand, UPS is expanding weekend service to 90% of the United States population. The company’s healthcare logistics is on track to deliver one billion doses of COVID-19 vaccines this year with 99.9% on-time delivery. Free cash flow increased 52% year-to-date to a record $9.2 billion with the company paying $2.6 billion in dividends and repurchasing $500 million of its common stock as part of its new $5 billion share repurchase program. The company is on track to generate $10.5 billion in free cash flow for the full year while significantly expanding its return on invested capital to 29% for the year. Despite the Delta variant and supply chain disruptions, UPS expects fourth quarter global GDP to grow 3.8% with U.S. GDP up 4.9%. UPS is well positioned for the peak holiday shipping season and raised its outlook to 13.8% revenue growth for the full year with the adjusted operating margin outlook raised to 13%. UPS announced it expects to increase rates 5.9% in 2022.
Alphabet-GOOGL reported third quarter revenue jumped 41% to $65.1 billion with net income advancing 68% to $18.9 billion and EPS up 72% to $28.44. These strong financial results were driven by 43% growth in Google advertising with particular strength in retail advertising spending. YouTube ads increased 43% to $7.2 billion in the quarter with only a modest impact from Apple’s new privacy policies. Music and premium subscribers for YouTube have surpassed 50 million. Google other revenues increased 23% to $6.8 billion thanks to hardware and Fitbit sales. Android 12 is receiving great reviews. Google Cloud sales rose 45% to $5 billion during the quarter as the digital transformation and shift to hybrid work continues and the company announced 20 new and expanded partnerships. Google’s Cloud services are helping organizations collaborate and stay secure. Other Bets generated modest revenue of $182 million while incurring $1.3 billion in losses as the company continues to invest in ventures such as Waymo, with its autonomous vehicle service expanding to San Francisco from Phoenix. Year-to-date, Alphabet’s free cash flow increased 89% to $48.5 billion with the company repurchasing $36.8 billion of its common shares. As of quarte r end, Alphabet boasted a strong balance sheet with $168.1 billion in cash and investments, $14.2 billion in long-term debt and $244.6 billion in shareholders’ equity. Alphabet sees a lot unevenness in global growth as economic recovery rates differ among geographies. While uncertainty looks like the “new normal,” businesses need as much help today as they did at the beginning of the pandemic. Alphabet expects growth in the fourth quarter will moderate.
Raytheon Technologies-RTX reported third quarter revenues rose 10% to $16.2 billion with net income flying 827% higher to $1.4 billion and EPS up 830% to $.93. Net income during the quarter included $496 million of acquisition accounting adjustments and net significant charges. Free cash flow increased 56% through the first nine months to $2.8 billion. Raytheon ended the quarter with approximately $7.5 billion in cash and investments, $30.7 billion in long-term debt and $71.3 billion in shareholders’ equity. Raytheon’s defense business remains strong with a robust defense backlog of $65 billion. Total backlog at the end of the third quarter was $156.1 billion, including $91.1 billion from commercial aerospace. During the quarter, Raytheon paid $751 million in dividends and repurchased $1 billion of its common stock. Management expects some disruption to the supply chain due to the vaccine mandate, which comes into effect in December. However, the company has an intense focus on cost reduction and operational execution and has the confidence to raise guidance due to its strong performance during the year. The updated full 2021-year outlook anticipates sales of $64.5 billion, adjusted EPS of $4.10 to $4.20 and free cash flow of $5.0 billion.
3M-MMM posted a 7.1% increase in third quarter sales to $8.35 billion with net income and EPS flat at $1.4 billion and $2.45, respectively. Overall end market demand remained strong across all business groups and geographies. Safety and Industrial sales grew 7.2% to $3.2 billion, led by industrial demand for adhesives and tapes and abrasives, partially offset by declines in roofing granules and respirators on difficult COVID-related comps. Transportation and Electronics increased 5.8% to $2.45 billion, driven by advanced materials and transportation safety. Electronic sales declined, squeezed by the continued impact of semiconductor constraints on 3M customers. Health Care grew by 4.1% to $2.25 billion, led by food safety, oral care and health information systems, partially offset by a dramatic drop in disposable respirator sales. Consumer sales increased 8.1% to $1.4 billion on continued strength in home improvement and home cleaning and improving office and stationary demand driven by the reopening of schools. Operating margins declined 290 basis points from last year as higher raw material cost more than offset price increases of 1.4%. During the third quarter, 3M generated operating cash flow of $1.9 billion with adjusted free cash flow of $1.5 billion, representing free cash flow conversion of 107 percent. 3M returned $1.4 billion to shareholders in the third quarter, including $856 million in cash dividends and $527 million of share repurchases. 3M ended the quarter with $5.7 billion in cash and investments, $16.2 billion in long-term debt and $14.5 billion in shareholders’ equity. Given ongoing supply chain disruptions, inflationary pressures and logistics challenges coupled with strong end market demand, 3M updated its 2021 guidance. Total sales are expected to increase 9% to 10% from prior guidance of 7% to 10% with EPS in the range of $9.70 to $9.90 from prior guidance of $9.70 to $10.10.
Monday, Oct. 25, 2021
Facebook-FB reported third quarter revenues jumped 35% to $29 billion with net income up 17% to $9.2 billion and EPS rising 19% to $3.22. Facebook’s daily and monthly active users each increased 6% to 1.93 billion and 2.91 billion, respectively. Family daily active people increased 11% to 2.81 billion with family monthly active people up 12% to 3.58 billion. The strong revenue results occurred despite headwinds including a change in Apple’s platform related to privacy, moderating e-commerce growth from the heights of the pandemic and renewed lockdowns in Asia as COVID resurged. Profit margins were lower during the quarter due primarily to increased legal and employee costs. Headcount increased 20% year-over-year to 68,177 as of quarter end. Free cash flow increased 86% through the first nine months to $26.4 billion with the company repurchasing $24.5 billion of its common stock. With a fortress balance sheet as of quarter end that boasted $58 billion in cash and investments, no long-term debt and $133 billion in shareholders’ equity, Facebook announced it was increasing its share repurchase program by $50 billion. Starting next quarter, Facebook plans to break out Facebook Reality Labs (FRL) as a separate reporting segment. Facebook is investing significant resources toward augmented and virtual reality products and services as part of the metaverse. The FRL investment is expected to reduce overall operating profit by $10 billion in 2021. Facebook expects to make significant investments in FRL and artificial intelligence and machine-learning over the next three years with this segment of the business not turning profitable until later in the decade when Facebook expects to have 1 billion users spending $100s of billions on digital commerce in this groundbreaking technology. For the fourth quarter of 2021, Facebook expects revenues in the range of $31.5 billion to $34 billion. Revenue growth is expected to moderate in 2022. Expenses for the full year 2021 are expected in the range of $70-$71 billion with 2022 expenses for the full year expected in the range of $91-$97 billion, driven by investments in technical and product talent and infrastructure-related costs. Capital expenditures in 2021 are expected to approximate $19 billion and jump to $29-$34 billion in 2022, driven by investments in data centers, servers, network infrastructure and office facilities.
Bank of Hawaii-BOH reported third quarter revenues increased 1.4% to $168.2 million with net income and EPS rebounding 60% to $62.1 million and $1.52, respectively. Net interest income increased 2.1% to $126.8 million and net interest margin dipped 35 basis points to 2.32%, largely due to continued strong deposit growth and lower interest rates that were partially offset by higher fees from the Paycheck Protection Program, excess liquidity deployment and core loan growth which increased 2.4% to $12.1 billion. Non-interest income of $41.4 million dipped 0.9% from last year. Management expects non-interest income of $42 million during the fourth quarter from increasing deposit fees, service charges and other transaction fees as it emerges from the negative impact of the delta variant and the economy continues to reopen. Return on average assets increased to 1.07% from 0.76% last year and return on average common equity was 17.06%, up from 11.01% last year. Bank of Hawaii’s efficiency ratio increased to 57.38% from 54.22% last year on a 7.3% jump in noninterest expense, driven higher by incentive and share-based compensation and other expenses. Bank of Hawaii’s loan portfolio remains solid with 78% of its portfolio (excluding PPP loans) secured with quality real estate with a combined weighted average loan to value of 56%. Total deposits increased 15.5% to $20.5 billion and the investment securities portfolio increased 9.2% to $9.3 billion as growth in deposits continued to outpace loan growth. The company’s strong and stable deposit base remains a readily available source of liquidity for continued income growth and asset sensitivity of the balance sheet well-positions the bank for rising interest rates. Capital levels remain strong with a healthy excess over capital requirements further positioning the bank for continued growth. During the third quarter, Bank of Hawaii repurchased 241,300 shares for a total cost of $20 million, or $82.89 per average share, with $93.1 million remaining under the current authorization.
Friday, Oct. 22, 2021
Genentech, a member of the Roche Group-RHHBY, announced the FDA has approved Susvimo, previously called Port Delivery System with ranibizumab. Susvimo is the first wet age-related macular degeneration (AMD) treatment in 15 years to provide an alternative to standard-of-care eye injections needed as often as once a month. By continuously delivering medicine into the eye through a refillable implant, Susvimo may help people with wet AMD maintain their vision with as few as two treatments per year. Wet AMD impacts approximately 1.1 million people in the United States and is a leading cause of blindness in people aged 60 and older.
Gentex-GNTX reported third quarter net sales dropped 19% to $399.6 million with net income down 53% to $76.7 million and EPS decreasing 50% to $.32. Gross margin was 35.3% compared to 39.7% for the third quarter of 2020. Gross margin was primarily impacted by the lower sales levels stemming from the 23% quarter-over-quarter decline in light vehicle production and gross margin was also impacted by lower-than-expected price reductions on raw materials and increases in freight and other supply chain related costs. During the third quarter, the company repurchased 2.83 million shares of its common stock at an average price of $32 per share with 25.4 million shares remaining authorized for future share repurchases. The company maintains a strong balance sheet with more than $482 million in cash and investments, no long-term debt and $1.8 billion in shareholders’ equity. Based on the lower vehicle production forecast and the actual results of the third quarter, management updated the second half sales and gross margin outlook for 2021 to a range of revenues of $770 million to $840 million from the previous guidance of $970 million to $1.07 billion with gross margins now expected to range between 35% to 36% from previous expectations of 37.5% to 38.5%. Based on the mid-October 2021 light vehicle production estimates for 2022, the company estimates that revenue for calendar year 2022 will be approximately 15% - 20% higher than the updated 2021 revenue estimates of $1.68 - $1.75 billion. “On a positive note, overall vehicle inventory levels are at historic lows, demand from our customers continues to remain strong, and interest from our customers in our core products and new technology areas for future projects is very high. So, despite the incredibly turbulent last 18 months and the next few quarters, which we expect to continue to be challenging due to supply chain constraints, our long-term growth prospects remain very strong, and we continue to believe that the next several years will produce above market growth rates that should provide us the opportunity to achieve excellent shareholder returns,” said President and CEO, Steve Downing.
Thursday, Oct. 21, 2021
NVR, Inc.-NVR reported third quarter revenues increased 20% to $2.4 billion with net income increasing 29% to $332.1 million and EPS increasing 33% to $86.44. New orders decreased by 22% during the quarter to 5,201 units. However, the average sales price of new orders increased by 15% to $442,000. The cancellation rate in the third quarter was 9% compared to 12% in the prior year period. Settlements increased 10% during the quarter to 5,683 units. The backlog of homes sold but not settled as of September 30, 2021 was flat on a unit basis at 12,145 units and increased on a dollar basis by 15% to $5.37 billion year-over-year. Mortgage loan closings increased 17% to $1.62 billion during the quarter. During the first nine months, the company repurchased 244 million shares for an average price of $4,713 per share and ended the quarter with $2.6 billion in cash, $1.5 billion in long-term debt and $3 billion in shareholders’ equity on its sturdy balance sheet.
Intel-INTC reported third quarter revenue increased 5% to $19.2 billion with operating income increasing 3.3% to $5.2 billion, net income surging 60% to $6.8 billion and EPS up 64% to $1.67. Net income jumped on a $1.7 billion gain on equity investments, up from $56 million last year and lower taxes. By business segment, Client Computing Group revenue declined 2% to $9.7 billion on notebook ecosystem constraints and modem ramp down, partially offset by higher desktop demand. Data Center Group revenue increased 10% to $6.5 billion on strong enterprise recovery, gated by supply challenges in the semiconductor industry. Internet of Things Group revenue increased 54% to $1.0 billion, a third quarter record, driven by COVID recovery and Mobileye revenue motored ahead 39% to $326 million on improvement in global vehicle production and strong design win momentum. Year-to-date, Intel generated $12.6 billion in free cash flow, down 16.5% from last year on working capital changes and increased capital expenditures. Intel returned $6.6 billion to shareholders during the first nine months of 2021 through dividend payments of $4.2 billion and share repurchases of $2.4 billion. Intel ended the quarter with $11.9 billion in cash and short-term investments, $22.8 billion in trading assets, $35.6 billion in long-term debt and $90.1 billion in shareholders’ equity. Looking ahead to the full year, management expects revenue of $77.7 billion with EPS of $4.50. Capital expenditures are expected in the $18.0 billion to $19.0 billion range and free cash flow is expected to reach $12.5 billion. For 2022, Intel expects revenue of $74 billion. During the next several years, Intel plans to invest heavily--$25 billion to $28 billion in 2022 and higher in subsequent years--to regain its competitive position. Margins are likely to be between 51% and 53% during the next two to three years, below the 55% projected for 2021.
Accenture-ACN CEO Julie Sweet, the head of a consulting giant that works with more than three-quarters of Global Fortune 500 companies, told Yahoo Finance that businesses worldwide are worried about persistent inflation as snarled supply chains cause product delays and demand imbalances. In response to the disruption, many companies have sought to bolster their supply chains and improve their capacity to anticipate further problems, she said.
"There's absolutely concern really around the globe," Sweet says. "It's been a long time before this, since there was pressure — many of us are old enough that we remember when inflation was something that we talked about."
Tractor Supply-TSCO reported third quarter sales increased 15.8% to $3.02 billion with net income plowing ahead 17.7% to $224.4 million and EPS increasing 20.4% to $1.95. Comparable store sales increased 13.1%, versus a 26.8% increase last year, driven by comparable average transaction count and ticket growth of 3.6% and 9.5%, respectively. Robust comparable store sales growth reflects strong demand for everyday merchandise, including consumable, usable and edible products, and strong growth for summer seasonal categories. All geographic regions of the Company had strong comparable store sales growth. In addition, Tractor Supply’s e-commerce sales experienced strong double-digit growth for the 37th consecutive quarter. Tractor Supply opened 12 new Tractor Supply stores and three new Petsense stores in the third quarter of 2021. Year-to-date, Tractor Supply generated $489 million in free cash flow, down from $844 million last year, due to higher capital expenditures and operating expenses. Year-to-date, Tractor Supply returned $777.8 million to shareholders through dividend payments of $179.8 million and share repurchases of $598 million at an average cost per share of $170.86. Tractor Supply ended the quarter with $1.1 billion in cash, $3.5 billion in long-term debt and operating lease liabilities and $2 billion in shareholders’ equity. Despite unprecedented pressures across the company’s supply chain, management raised their fiscal 2021 outlook. The company now expects net sales of $12.6 billion, 16% comparable store sales growth, net income in the range of $972 to $985 million and EPS in the range of $8.40 to $8.50. In addition, the company expects capital expenditures between $550 to $600 million and share repurchases of $750 to $800 million.
Genuine Parts-GPC reported third quarter sales motored ahead 10.3% to $4.8 billion with net income declining 1.9% to $228.6 million and EPS dipping 1.2% to $1.59. Excluding one-time items, most notably a $42 million (or $0.29 per share) after-tax loss on internally developed software, adjusted EPS increased 15% to $1.88. Despite global supply chain challenges, gross margins increased for the 16th consecutive quarter and operating margins expanded 30 basis points to 9.3%, the strongest in two decades. Sales for the Automotive Group, representing 66% of total sales, increased 8.2% to $3.2 billion, driven by a 4.8% global increase in comparable sales. Industrial Parts Group Sales, representing 34% of total sales, powered ahead 14.5% to $1.6 billion, reflecting a 13.4% increase in comparable sales. Year-to-date, Genuine Parts generated $870 million in free cash flow, representing a robust 135% of reported earnings, with the company returning $633 million to shareholders through dividend payments of $349 million and share repurchases of $284 million at an average cost per share of $129.09. The company has paid a dividend every year since it became a publicly traded company in 1948 and has increased its dividend for 65 consecutive years. Genuine Parts ended the quarter with $919 million in cash, $2.4 billion in long-term debt and $3.2 billion in shareholders’ equity. Given the strong year-to-date results, management raised its 2021 guidance with sales now expected to increase 12% to 13%, up from previous guidance of 10% to 12%, and EPS expected in the range of $5.92 to $5.97, up from previous guidance of $5.81 to $5.96. Free cash flow is expected in the $950 million to $1.15 billion range, up from previous guidance of $900 million to $1.1 billion.
SEI Investments-SEIC reported third quarter revenues rose 14% to $485.3 million with net income increasing 24% to $138 million and EPS increasing 29% to $.97. Revenues from asset management, administration and distribution fees increased primarily due to market appreciation and higher assets under management due to positive cash flows from new and existing clients. The average assets under administration increased 16% to $855.7 billion during the quarter. The average assets under management, excluding LSV, increased 22% to $300 billion. The increase in operational expenses was primarily due to increased direct costs related to increased revenues, as well as increased personnel costs due to business growth and competitive labor markets. Earnings from LSV increased 24% to $35 million due to higher assets under management from market appreciation. During the third quarter, the company capitalized $7.2 million of software development costs with amortization expense of $12 million. The tax rate increased to 21.7% in the third quarter compared to 21.4% in the prior year period. During the third quarter, the company generated free cash flow of $144.6 million and repurchased 2 million shares of its common stock for $119.9 million at an average price of $59.95 per share. The company maintains a strong balance sheet with more than $854 million in cash and investments and no long-term debt.
Wednesday, Oct. 20, 2021
Roche Holdings-RHHBY provided a 9-month trading update as the company reported Group sales increased 6% to CHF46.68 billion due to strong demand for coronavirus tests, recently launched drugs and diagnostic platforms. The company raised its outlook for the full 2021 year with sales are now expected to grow in the mid-single digit range, at constant exchange rates compared to previous guidance of low to mid-single digit growth. Core earnings per share are targeted to grow broadly in line with sales, at constant exchange rates. Roche expects to increase its dividend in Swiss francs further.
Tuesday, Oct. 19, 2021
Canadian National Railway-CNI reported third quarter revenues chugged ahead 5% to C$3.6 billion with net income and EPS steaming up more than 70% to C$1.69 billion and C$2.37, respectively. Stripping away one-time items including a C$886 million termination payment made by Kansas City Southern (KCS) in the wake of its merger agreement with Canadian Pacific, adjusted EPS increased 10% to $1.52. Double-digit declines in grain and auto shipments were more than offset by a 40%+ jump in coal shipments and double-digit increases in Petroleum & Chemicals and Metals & Minerals. Revenue ton miles (RTMs) dipped 1% to 55.9 billion while freight revenue per RTMs increased 6% to 6.13 cents, driven by a significant decrease in the average length of haul, freight rate increases and higher fuel surcharge rates. Canadian National’s adjusted operating ratio declined by 90 basis points to 59.0%, reflecting operating improvements including a 4% decline in fuel costs. During the first nine months of 2021, Canadian National generated free cash flow of C$2.034 billion with the company returning nearly C$1.8 billion to shareholders through dividends of C$1.3 billion and share repurchases of C$486 million. Canadian National resumed its share repurchase program after the KCS merger was terminated and expects to complete the remaining C$1.1 billion of share repurchases authorized by the end of January 2022. Canadian National ended the quarter with C$2.2 billion in cash, C$12.3 billion in long-term debt and C$21.7 billion in shareholders’ equity. For the full year, Canadian National now assumes total revenue ton miles (RTMs) will increase in the low single-digit range (versus its prior estimate in the mid single-digit range). Canadian National expects to deliver an operating ratio of 57% and 10% adjusted diluted EPS growth. Management still targets free cash flow in the range of C$3.0 billion to C$3.3 billion in 2021 compared to C$3.2 billion in 2020. The company also announced its CEO, JJ Ruest, will retire as president and chief executive officer and as a member of the Board of Directors, effective the end of January 2022.
Johnson & Johnson-JNJ reported third quarter sales increased 11% to $23.3 billion with net earnings up 3% to $3.7 billion and EPS up 3% to $1.37. Adjusted EPS increased 18% to $2.60. This solid performance was driven by robust results across the company’s business units. Pharmaceuticals led the growth with revenues growing a robust 14% to $13 billion driven by double-digit growth in key products in oncology, immunology, infectious diseases and pulmonary hypertension. Worldwide Medical Devices sales increase 8% to $6.6 billion with growth driven by COVID-19 related market recovery and innovation. Worldwide Consumer Health sales increased 5% during the quarter to $3.7 billion with strong growth drive by over-the-counter products. Year-to-date, JNJ generated $15 billion in free cash flow and ended the quarter with net debt of $3 billion, including $31 billion in cash and investments and $34 billion in long-term debt. The company invested $3.4 billion in research and development to advance its promising innovative pipeline during the quarter and paid $2.8 billion in dividends. The company recently established a $2 billion settlement fund regarding talc litigation. JNJ increased its 2021 full-year guidance with sales expected to increase 13.9% -14.5% for the year to a range of $94.1 billion to $94.6 billion with adjusted EPS expected to increase a healthy 21.7% to 22.3% to a range of $9.77-$9.82.
Ulta Beauty-ULTA announced long-term financial targets for fiscal 2022-2024. The company expects total sale growth to compound at a 5% to 7% annual rate with 50 new stores expected to be opened annually. Comparable store sales growth of 3% to 5% is expected annually with operating profit margins in the 13%-14% range resulting in double-digit growth in EPS. Capital expenditures are expected to approximate 4%-5% of sales.
Friday, Oct. 15, 2021
Roche-RHHBY announced that the US Food and Drug Administration (FDA) has approved Tecentriq® (atezolizumab) as adjuvant treatment, following surgery and platinum-based chemotherapy, for adults with Stage II-IIIA non-small cell lung cancer (NSCLC). “Tecentriq is now the first and only cancer immunotherapy available for adjuvant treatment of NSCLC, introducing a new era where people diagnosed with early lung cancer may have the opportunity to receive immunotherapy to increase their chances for cure,” said Levi Garraway, M.D., Ph.D., Roche’s Chief Medical Officer and Head of Global Product Development. “Today’s landmark approval gives physicians and patients a new way to treat early lung cancer that has the potential to significantly reduce risk of cancer recurrence, after more than a decade with limited treatment advances in this setting.”
Thursday, Oct. 14, 2021
Walgreens Boots Alliance-WBA reported fourth quarter revenues rose 13% to $34.3 billion with net earnings from continuing operations increasing 6% to $358 million and EPS up 5% to $.41. For the full fiscal 2021 year, revenues rose 9% to $132.5 billion with earnings from continuing operations and EPS up significantly to $2.0 billion and $2.30, respectively. Return on shareholders’ equity for the year was 8.4%. The fourth quarter results exceeded expectations across business segments, reflecting strong operational performance. Comparable U.S. pharmacy and retail sales both saw robust growth and recovery continued in the UK business as COVID-19 restrictions eased in the quarter. Walgreens surpassed its COVID-19 vaccination goal, providing 13.5 million vaccinations in the quarter and 34.6 million in fiscal 2021. The company’s Transformational Cost Management Program delivered in excess of $2 billion in annual cost savings by fiscal 2021, a year ahead of schedule. As a result, Walgreens is raising its saving goal to $3.3 billion by fiscal 2024. Free cash flow increased 2% during the year to $4.2 billion with the company paying $1.6 billion in dividends. In line with the company’s long-term capital policy to maintain a strong balance sheet and financial flexibility, Walgreen reduced its leverage by paying down about $6.5 billion in debt during the year. Walgreens Boots Alliance announced its new consumer-centric healthcare strategy to drive sustainable, long-term profitable growth. The plan features the launch of Walgreens Health, a new business segment enabled by investments in VillageMD and CareCentrix, accelerating the company's capabilities in primary care, post-acute care, and home care. WBA announced that the company has agreed to make an additional $5.2 billion investment in VillageMD. The investment increases WBA's ownership stake in VillageMD to 63% from 30%. WBA has also agreed to purchase a majority investment in CareCentrix to support the company's new healthcare strategy, expanding reach into the growing home care sector for Walgreens. The investment provides a new platform to coordinate home care for patients transitioning from hospital to home for health plans, patients, and providers, while further integrating Walgreens pharmacies into a patient's journey. The investment of $330 million gives WBA about 55% ownership of CareCentrix with an option to acquire the remaining equity interests in the future. The company's new Walgreens Health segment will be in investment mode, which should drive significant future revenue and adjusted operating income growth. However for fiscal 2022, the company anticipates flat adjusted EPS as core growth of 4% is expected to be offset by investments in Walgreens Health. WBA also confirmed that over the next three years, it expects annual adjusted EPS core growth of around 4%, with flat growth in fiscal 2022 and acceleration each year thereafter, as Walgreens Health generates increasing returns. Beyond fiscal 2024, the company's long-term growth algorithm leads to adjusted EPS growth of 11-13%, as the faster growing and higher margin Walgreens Health achieves scale.
UnitedHealth Group-UNH reported third quarter revenues rose 11% to $72.3 billion with net income and EPS each jumping 29% to $4.1 billion and $4.28, respectively. The strong revenue growth during the quarter included double-digit growth at both Optum and UnitedHealthcare. Cash flows from operations in the third quarter were $7.6 billion or 1.8 times net income. Free cash flow increased a healthy 19% during the first nine months to $17.3 billion. The company returned $1.4 billion to shareholders in the third quarter via dividends, an increase of 16% in the annual dividend rate from the year ago quarter. In addition, the company repurchased 2.5 million shares for $1.1 billion and ended the quarter with a strong balance sheet. Return on equity of 23.5% during the quarter reflected the company’s strong overall operating performance and efficient capital structure. Management raised their full year 2021 EPS outlook to a range of $17.70 to $17.95.
Tuesday, Oct. 12, 2021
Fastenal-FAST reported third quarter sales increased 10% to $1.5 billion with earnings increasing 9.9% to $244 million and EPS increasing 9.7% to $0.42, approximately. Third quarter sales growth was driven by underlying demand for manufacturing and construction equipment and supplies. Despite the strong growth, Fastenal continues to experience pressure related to material and transportation cost inflation. The company will continue to take action as necessary to mitigate the impact of inflation for the fourth quarter of 2021. Safety products sales decreased year-over-year as the current increase in infections and hospitalizations is significantly reduced from what was experienced in the year earlier period. However, sales trends, signings and activity levels for Fastenal’s growth drivers all gradually improved sequentially during the quarter. Fastenal generated $506.7 million in free cash flow during the first nine months, decreasing 24% from last year, due to an increased need for working capital to support customer growth as business activity improves. During the first nine months, the company returned $482.6 million to shareholders through dividend payments. Fastenal ended the quarter with $250.5 million in cash, $330 million in long-term debt and nearly $3 billion in shareholders’ equity on its strong balance sheet.
Friday, Oct. 8, 2021
Genentech, a member of the Roche Group-RHHBY, announced that gantenerumab, an anti-amyloid beta antibody developed for subcutaneous administration, has been granted Breakthrough Therapy Designation by the FDA for the treatment of people living with Alzheimer's disease (AD). This designation is based on data showing that gantenerumab significantly reduced brain amyloid plaque, a pathological hallmark of AD, in the ongoing SCarlet RoAD and Marguerite RoAD open-label extension trials, as well as other studies. Learnings from these studies have been incorporated into the optimized design of two ongoing parallel, global, placebo-controlled and randomized Phase III trials, GRADUATE 1 and 2. The pivotal trials are evaluating gantenerumab in more than 2,000 participants for more than two years and are expected to be completed in the second half of 2022. "This Breakthrough Therapy Designation reinforces our confidence in gantenerumab, which would be the first subcutaneous medicine for the treatment of Alzheimer's disease with the potential for at-home administration," said Levi Garraway, M.D., Ph.D., chief medical officer and head of Global Product Development.
Wednesday, Oct. 6, 2021
Total retail sales have been growing every month, year-over-year, since September 2020 as consumer spending shows positive signs of recovery heading into the highly anticipated holiday season. According to Mastercard SpendingPulseTM, U.S. retail sales excluding automotive and gasoline increased 5.4% year-over-year in September and increased +11.5% compared to September 2019. E-commerce sales continue to grow even as consumers return to physical stores—+11.5% year-over-year—reflecting the ongoing demand for the convenience of digital commerce. Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment. Specifically, discretionary spending is seeing strong growth. Restaurants, Department Stores, Apparel, and Jewelry sectors are up as consumers increasingly venture out to refresh their looks for events, occasions and vacations.
Tuesday, Oct. 5, 2021
PepsiCo-PEP reported third quarter revenues rose 12% to $20.2 billion with net income down 3% to $2.2 billion and EPS decreasing 3% to $1.60, primarily due to higher taxes. Core operating profits increased 6% during the quarter and reflected the impacts of supply disruptions and the adverse impacts of inflation within the transportation, labor and commodity markets. These results reflect the continued strength of the company’s global snacks and food businesses, which delivered 4% organic revenue growth, and a significant improvement in the global beverages business with 8% organic revenue growth. Growth was broad-based across geographies and key categories. Free cash flow increased 8% during the first nine months of the year to $4.4 billion with the company paying $4.3 billion in dividends and repurchasing $106 million of its common shares year-to-date. The company’s capital allocation in 2021 is focused on increasing capital spending to fuel future growth and returning at least $5.9 billion to shareholders primarily through dividends. For the balance of the year, PepsiCo’s North America snacks and beverage businesses is expected o remain resilient with international markets expected to perform well despite an uneven recovery across geographies. PepsiCo is focused on implementing targeted management tools by using rate, mix and assortment solutions to mitigate the impact of inflation. For the full 2021 year, management raised their revenue and earnings outlook with organic revenue growth expected to be about 8% with core EPS of at least $6.20, representing 11% growth. PepsiCo completed their share repurchase activity and does not expect to repurchase any additional shares for the balance of 2021.
Thursday, Sept. 30, 2021
Paychex-PAYX reported first quarter sales increased 16% to $1.1 billion with net income jumping 58% to $333.6 million and EPS increasing 56% to $.92. By segment, Management solutions revenue increased 17% to $805.5 million due to increases in client base and penetration of Paychex’s suite of solutions, PEO and Insurance Solutions revenue increased 14% to $262.9 million due to the increase in number of worksite employees and Interest on funds held for clients decreased 3% to $14.5 million due to lower average interest rates. Paychex’s financial position remains strong with cash and corporate investments of $1.1 billion, long-term debt of $797.4 million and shareholders’ equity of $3.0 billion. Free cash flow increased 83% during the quarter to $355.2 million. During the quarter, the company paid $238.1 million in dividends. Management increased its outlook for fiscal 2022 with total revenue expected to grow approximately 8%, adjusted operating margin anticipated to increase to a range of 38% to 39% and adjusted EPS expected to grow in the range of 12% to 14%. Management noted changes in the macroeconomic environment could alter guidance.
Wednesday, Sept. 29, 2021
Starbucks-SBUX announced that its Board of Directors has approved a 9% increase in the company’s quarterly cash dividend from $0.45 to $0.49 per share. This increase will be effective with the dividend payment to be distributed on November 26, 2021, to shareholders of record on November 12, 2021, and raises the company’s annual dividend to $1.96 per share. Starbucks initiated its dividend in 2010 and has increased it in each of the past 11 years.
Tuesday, Sept. 28, 2021
FactSet-FDS reported fourth quarter revenues rose 7% to $411.9 million with net income up 13% to $101.1 million and EPS increasing 15% to $2.63. For the full fiscal 2021 year, revenues rose 6.5% to nearly $1.6 billion with net income and EPS each up 7% to $399.6 million and $10.36, respectively. FactSet has reported 41 straight years of revenue growth with adjusted earnings growth up for 25 consecutive years. Return on shareholders’ equity for fiscal 2021 was a superb 39%. Free cash flow increased 15% during the year to $493 million with the company paying nearly $118 million in dividends and repurchasing $264.7 million of its common shares during the year at an average price of $348.34 per share. Annual Subscription Value (ASV) plus professional services was $1.7 billion at year end, which represented 7.2% organic growth due to higher sales in FactSet’s wealth and analytics workflow solutions. Annual ASV retention was greater than 95%. When expressed as a percentage of clients, retention was 91%. Client count increased by 9.8% or 578 during the year, while users grew by 14% or 19,796 from the prior year. For fiscal 2022, organic ASV plus professional services is expected to increase in the range of $105-$130 million with revenue expected in the range of $1.71 billion to $1.72 billion and EPS expected in the range of $11.60-$11.90, representing 11%-15% growth.
Thursday, Sept. 23, 2021
NIKE-NKE rang up a 16% increase in fiscal 2022 first quarter sales to $12.2 billion with net earnings sprinting ahead 23% to $1.9 billion and EPS jumping 22% to $1.16. Sales grew across all channels, led by NIKE Direct growth of 25%, thanks to the steady normalization of owned physical retail, which grew 24% and now exceeds pre-pandemic levels. NIKE Brand Digital business continued strong growth, increasing by 25%, led by North America growth of 43%. Gross margin increased 170 basis points to 46.5%, led by margin expansion in the NIKE Direct business, a higher mix of full-price sales (65% of total sales) and favorable changes in foreign currency exchange rates, partially offset by higher product costs primarily due to increased freight costs. Nike ended the quarter with $13.7 billion in cash and investments, up $4.2 billion from last year, due to strong free cash flow generation, $9.4 billion in long-term debt and $14.3 billion in shareholders’ equity. Company leadership views NIKE’s super strong balance sheet as a competitive advantage. During the first quarter, NIKE returned $1.2 billion to shareholders, including dividends of $435 million, up 13% from last year, and share repurchases of $742 million, reflecting 4.8 million shares retired as part of the four-year, $15 billion program approved by the Board in June 2018. As of August 31, 2021, a total of 54.8 million shares have been repurchased under the program for a total of $5.4 billion at an average cost per share of $98.54. NIKE continues to have a strong track record of investing to fuel growth and innovation while consistently increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts. The pandemic, which depressed demand during the past 18 months, is now wreaking havoc on the supply chain. As a result, second quarter sales are expected to increase in the mid-single-digits versus low double-digits previously expected. Factories in Indonesia and in Vietnam abruptly shut down in July due to COVID outbreaks. While plants in Indonesia have reopened, plants in Vietnam, where 50% of NIKE’s footwear and 30% of its apparel is manufactured, are not expected to open until October. This 10-week loss of production that will reduce inventories during the crucial holiday season, comes on the heels of a doubling of in-transit freight times from 40 days pre-pandemic to 80 days during the current quarter. Container and labor shortages along with congested port and rail hubs contributed to increased transit times of inventory that will be out-of-season when delivered. Global supply chain challenges, expected to weigh on NIKE’s sales through the end of fiscal 2022, will gradually improve in fiscal 2023. During the earnings conference call management stated that like a winning sports team, NIKE has emerged stronger after agilely managing through the first 18 months of the pandemic and expressed confidence it will emerge stronger after navigating through the next 18 months of the pandemic.
Accenture-ACN reported fourth quarter revenues increased 24% to $13.4 billion with net income increasing 10% to $1.44 billion and EPS up 11% to $2.20, respectively. For the full year, revenues rose 14% to a record $50.5 billion with net income increasing 15% to $5.99 billion and EPS up 16% to $9.16, respectively. Full year results included $.36 per share of gains on investments. Excluding these gains, adjusted EPS increased 18% for the year to $8.80. Return on shareholders’ equity was a strong 30% in fiscal 2021. Free cash flow increased 11% during the year to $8.4 billion thanks to stellar billing and collection of receivables. During the year, new bookings reached a record $59.3 billion, due to strong demand for the company’s digital, cloud and security services. During the year, the company returned $5.94 billion to shareholders through $2.24 billion in dividends and $3.70 billion in share repurchases and ended the year with more than $8.1 billion in cash and investments on its strong balance sheet. For fiscal 2022, Accenture expects revenue growth of 12% to 15% in local currency with EPS expected in the range of $9.90 to $10.18, reflecting an 8% to 11% increase from adjusted fiscal 2021 EPS. Free cash flow is expected in the range of $7.5 billion to $8.0 billion for fiscal 2022 with the company planning to return at least $6.3 billion to shareholders through dividends and share repurchases.
Tuesday, Sept. 21, 2021
Walgreens Boots Alliance-WBA is making a $970 million majority investment in Shields, an industry leader in integrated, health system-owned specialty pharmacy care. WBA’s investment signifies another step the company is taking to accelerate innovative healthcare models for future growth, providing a platform to further develop health system partnerships and coordinate care for those with complex, chronic conditions. The new investment gives WBA approximately 71 percent ownership of Shields, with an option to acquire the remaining equity interests in the future. The transaction is expected to close by the end of the second quarter of WBA's 2022 fiscal year. Shields’ financials will be consolidated by WBA, with the transaction projected to be modestly accretive in its first full year after completion.
Monday, Sept. 20, 2021
F5-FFIV announced a definitive agreement to acquire privately held Threat Stack, a leader in cloud security and workload protection for $68 million in cash. The transaction is expected to be immaterial to F5’s financial results, adding approximately $15 million in revenue for fiscal year 2022 with no change to F5’s previously stated operating margin targets for fiscal year 2022.
Friday, Sept. 17, 2021
Walgreens-WBA announced new bonuses and rewards for pharmacy teams including a one-time bonus of $1,250.00 to full-time pharmacists and a $1,000.00 payment to part-time pharmacists that will be paid in September 2021. Pharmacy technicians who are certified or become certified to administer flu and COVID-19 vaccines will receive a $1,000.00 reward throughout a six-month retention period. These new offerings build on recent steps to support and recognize team members. For example, in August, Walgreens announced that the starting hourly wage for all team members will be increased to $15.00 an hour, taking effect in phases beginning in October of this year through November 2022. Walgreens is also providing an incentive of $200 myWalgreens cash to any team member who has been fully vaccinated against COVID-19 by Nov. 30, 2021. Kevin Ban, Chief Medical Officer, Walgreens said, “A majority of Walgreens team members have already received their COVID-19 vaccinations, and all our support office team members are required to be vaccinated or be enrolled in a regular testing program. This new incentive is one more way we are building on our progress to ensure team members are vaccinated, and complying fully with government guidance.” Walgreens has administered more than 30 million COVID-19 vaccines and continues to be a safe and convenient location for communities to meet all their flu and COVID-19 vaccination needs. As communities return to in-person activities during an unpredictable flu season, Walgreens is prepared to co-administer flu and COVID-19 vaccines in a single visit to help reduce community spread of illnesses.
Roche-RHHBY announced that the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) has recommended the approval of Gavreto® (pralsetinib) as a monotherapy for the treatment of adult patients with rearranged during transfection (RET) fusion-positive advanced non-small cell lung cancer (NSCLC). RET alterations are key disease drivers in many cancer types, including NSCLC and multiple types of thyroid cancer. RET fusion-positive NSCLC affects about 37,500 people worldwide each year and the disease often affects those who least expect it, younger people with a minimal to no history of smoking. These cancers also typically represent a high unmet need, due to limitations associated with standard therapies. Biomarker testing for these fusions is the most effective way to identify people with advanced NSCLC who are eligible for treatment with Gavreto. Gavreto is a highly selective, potent, and CNS-penetrant RET inhibitor and, together with Alecensa® (alectinib) and Rozlytrek® (entrectinib), is part of Roche’s portfolio of targeted treatments for NSCLC. Together, they offer personalized treatment options for almost one in ten people with advanced NSCLC. Gavreto has also shown activity across multiple solid tumor types, reflecting tumor-agnostic potential. In September 2020, the U.S. FDA approved Gavreto for the treatment of adults with metastatic RET fusion-positive NSCLC, and in December 2020 it was approved for the treatment of adult and pediatric patients 12 years of age and older with advanced RET-altered thyroid cancers. Gavreto has since been approved in Canada, mainland China and Switzerland. In the European Union, the MAA for Gavreto for the treatment of adults with RET fusion-positive NSCLC is ongoing, and a submission for RET-altered thyroid cancers is planned. Regulatory submissions for these indications are underway in multiple countries worldwide. “This positive CHMP opinion for Gavreto represents another important step towards our goal of providing effective therapeutics that target genomic drivers of disease for as many cancer patients as possible," said Levi Garraway, M.D., Ph.D., Roche’s Chief Medical Officer and Head of Global Product Development. “Advances in personalized medicine also underscore the importance of tumor genomic profiling to identify patients who may benefit from targeted therapies.”
In the wake of its failed bid to acquire Kansas City Southern, Canadian National-CNI announced its strategic and financial value plan which includes the resumption of its C$1.1 billion share repurchase program, expected to be completed by 1/31/2022. Leadership is reviewing CNI's capital structure and financial leverage to increase shareholder distributions including share repurchases of about C$5 billion for 2022. The company expects to reduce capital expenditures to 17% of revenues during the next three years, down from an average of 24% during the past three years, while continuing its absolute commitment to safety and customer service. CNI targets an operating ratio of 57% for 2022 by focusing on its rail operations and pursuing strategic alternatives for non-rail businesses that are not best in class and by rationalizing its cost structure. Leadership is committed to driving top-quartile Total Shareholder Return (TSR), leading the industry in organic revenue growth, driven by CNI’s intermodal business with continuous operating margin improvement.
Wednesday, Sept. 15, 2021
Microsoft-MSFT announced that its board of directors declared a quarterly dividend of $0.62 per share, reflecting a 6 cent or 11% increase over the previous quarter's dividend. This marks the 12th consecutive year of dividend increases. The board of directors also approved a new share repurchase program authorizing up to $60 billion in share repurchases.
Canadian National Railway-CNI announced that Kansas City Southern (KCS) has provided notice of termination of the previously announced May 21, 2021 definitive merger agreement with Canadian National. In connection with KCS’ termination of the CNI merger agreement, KCS will pay CNI $700 million cash “Company Termination Fee” as well as the $700 million cash “CP Termination Fee Refund” provided for in the CNI merger agreement. CNI is also not obligated to pay any termination fees as a result of the termination of the CNI merger agreement.
Cisco-CSCO provided a long-term financial outlook at its Investor Day and sees both revenues and adjusted EPS compounding at 5%-7% annual growth rates through fiscal 2025. Cisco projects 15% to 17% growth in subscription revenue on a compounded annual basis through 2025, with 2% to 4% growth in non-subscription businesses, and 2% to 3% growth in services. By the end of the period, Cisco sees subscription revenue accounting for 50% of overall revenue, up from 30% in the latest fiscal year. Cisco remains committed to returning at least 50% of free cash flow to shareholders through dividends and share repurchases.
Tuesday, Sept. 14, 2021
Regeneron Pharmaceuticals-REGN announced that the U.S. Department of Health and Human Services (HHS) and the Department of Defense (DOD) will purchase 1.4 million additional doses of REGEN-COV. The government will continue to provide REGEN-COV at no cost to patients. Under the new agreement, Regeneron will supply an additional 1.4 million 1,200 mg doses of REGEN-COV to the U.S. government by January 31, 2022, at a cost of $2,100 per dose. This new agreement follows two earlier agreements with the U.S. government announced. "More than a year and a half into this pandemic, too many people are still being hospitalized and dying due to COVID-19," said Leonard S. Schleifer, M.D., Ph.D., President and Chief Executive Officer of Regeneron. "While vaccination remains the first line of defense to decrease the burden of COVID-19, REGEN-COV is a key tool that reduces the risk of hospitalization or death by 70% in high-risk individuals when given early in the course of the infection. Recently there has been greater demand for REGEN-COV, and we will provide additional doses to the U.S. government as quickly as possible."
Monday, Sept. 13, 2021
Oracle Corporation-ORCL reported fiscal 2022 first quarter revenues increased 4% year-over-year to $9.7 billion with net income increasing 9% to $2.5 billion and EPS up 19% to $0.86 on an 8% reduction in weighted average shares outstanding. Cloud services and license support revenues were up 6% to $7.4 billion while cloud license and on-premise license revenues were down 8% to $813 million. Short-term deferred revenues were $10 billion. Oracle's two new cloud businesses, IaaS and SaaS, now represent over 25% of total revenue with an annual run rate of $10 billion. These fast-growing and high-margin new businesses are expected to boost Oracle’s overall profit margins and push earnings per share higher. During the quarter, Oracle generated $4.3 billion in free cash flow, down nearly 22% from last year, due to higher capital investments to drive growth and working capital changes to support that growth. The company returned $8.88 billion to shareholders during the quarter through dividends of $887 million and share repurchases of $8 billion at an average cost per share of $85.11. During the past ten years, Oracle has reduced its shares outstanding by 46% at an average cost per share that is less than 50% of the current stock price. Oracle ended the quarter with $39.3 billion in cash and investments and $76.0 billion in long-term debt. Looking ahead to the full fiscal year, Oracle expects revenues to grow in the mid-single digits range with operating margins the same or better than pre-pandemic levels. For the second quarter, revenues are expected to grow in the 3% to 5% range with non-GAAP EPS increasing 2% to 6% to $1.09 to $1.13.
T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.68 trillion as of August 31, 2021, representing a 14% increase since year end.
Friday, Sept. 10, 2021
Facebook-FB, in partnership with EssilorLuxottica, will be selling Ray-Ban Stories glasses for $299. “The Facebook View app on iOS and Android makes it easy to import, edit, and share content captured on the smart glasses to apps on your phone: Facebook, Instagram, WhatsApp, Messenger, Twitter, TikTok, Snapchat, and more,” Facebook said in a blog post. “You can also save content to your phone’s camera roll and edit and share from there.”
Collins Aerospace, a Raytheon Technologies-RTX business, unveiled Lilac-UV, an ultraviolet (UV) lighting solution to sanitize aircraft interiors nearly anywhere a light is installed inside an aircraft. Lilac-UV emits a slight violet light that disinfects surfaces in seconds to minutes, depending on lamp configuration and specific pathogen. Lilac-UV can be applied in lavatories, galleys, flight decks, cargo bays and throughout the cabin, and can be set for scheduled cleanings or manual applications during or between flights. The sanitizing light, combined with other hygienic measures taken onboard aircraft, gives added peace of mind and protection to passengers while also reducing aircraft downtime for manual cleaning.
Wednesday, Sept. 8, 2021
FactSet-FDS announced that it has been selected by Raymond James Ltd. as its market data provider for financial advisors in Canada. FactSet is working with Raymond James Ltd. to implement its web-based Wealth Workstation to over 900 wealth management professionals. The virtual implementation will provide them with personalized and efficient access to comprehensive multi-asset class market data and analytics within a modern and easy-to-use platform.
Tuesday, Sept. 7, 2021
Intel-INTC plans to build new chip-making facilities in Europe valued at up to $95 billion over the next decade to help add manufacturing capacity at a time of a global chip-supply crunch. Intel said it plans to commit manufacturing capacity at a factory in Ireland to the auto-chip sector. Intel’s CEO, Mr. Gelsinger, predicted that the market for car chips would more than double by the end of the decade. Semiconductors, he said, would account for more than 20% of the material costs for new premium-segment cars, up from 4% in 2019, as new driver-assistance capabilities, flashy touch screens and other features that require more processing power become more widespread.
Gentex-GNTX announced LCV manufacturers have begun turning to Gentex's Full Display Mirror an intelligent rear-vision system that uses a custom camera and mirror-integrated video display to optimize a vehicle's rearward view. The system captures video from the rearward-facing camera and streams it to a unique, mirror-integrated LCD that provides the driver with an unobstructed, panoramic view behind the vehicle. This makes it easier to spot pedestrians, cyclists, and rearward-approaching traffic while also improving the driver's ability to safely change lanes, reverse, park, turn, and dock the vehicle. Co also announced the acquisition of Guardian Optical Technologies, an Israeli startup that pioneered a unique, multi-modal sensor technology designed to provide a comprehensive suite of driver- and cabin-monitoring solutions for the automotive industry.
NeuExcell Therapeutics and Spark Therapeutics, a member of the Roche Group-RHHBY announced a gene therapy collaboration aimed at developing a safe and effective treatment for patients suffering from Huntington's Disease. Under the terms of the agreement, Spark Therapeutics will receive access to NeuExcell's proprietary neuro-regenerative gene therapy platform and capabilities. NeuExcell's research team will collaborate closely with Spark Therapeutics to advance the program. Under the Option License, NeuExcell is eligible to receive upfront, license fees, R&D and Sales milestone payments up to approximately $190 million plus product royalties.
Webex by Cisco-CSCO hosts a record eight billion calls monthly and supports more than 39 million cloud calling users worldwide - the most of any cloud calling provider. Cisco announced it is now hosting a record eight billion calls monthly across its cloud calling platforms, the most of any cloud calling provider. To meet enterprises growing global needs, Cisco has also extended its domestic calling coverage to include the UK, with more than 65 countries now covered with its Cisco Calling Plans and Cloud Connected PSTN services -- the most in the industry. Enterprises such as T-Mobile, Office Depot, Cigna Health, and CDK Global are relying on Webex Calling to power their businesses.
Thursday, Sept. 2, 2021
Baxter International-BAX has agreed to acquire Hillrom for $156.00 per share in cash for a total equity value of approximately $10.5 billion and a total enterprise value of approximately $12.4 billion, including the assumption of debt. Hillrom is a global medical technology leader which provides smart bed hospital systems, patient monitoring and diagnostic technologies, respiratory health device and advanced equipment for the surgical space. The Baxter-Hillrom combination will expand access to Hillrom’s portfolio globally; broaden the presence of the combined companies across sites of care; accelerate and strengthen the combined organization’s digital transformation; and is expected to generate compelling financial returns for Baxter’s shareholders. The transaction provides a significant opportunity to build upon Baxter’s established global infrastructure to grow Hillrom’s international business, which currently represents approximately one-third of Hillrom’s total 2020 revenue of $2.9 billion. It should also meaningfully enhance Baxter’s earnings growth through the realization of substantial cost synergies and potential opportunities to accelerate revenue growth over the longer term. Baxter expects the combination to result in approximately $250 million of annual pre-tax cost synergies by the end of year three. The transaction is expected to be low double-digit accretive to Baxter’s adjusted earnings per share (EPS) in the first full year post close, increasing to more than 20% by year three. The transaction is also expected to expand Baxter’s overall adjusted EBITDA margins over the medium-term and deliver strong cash flow generation with a high single-digit return on invested capital (ROIC) expected by year five. Baxter will finance the transaction through a combination of cash and fully committed debt financing. At closing, Baxter estimates that it will have net leverage of approximately 4.2x net debt to pro forma adjusted EBITDA of the combined companies (as estimated by Baxter management). Baxter is committed to an investment grade credit rating and deleveraging to 2.75x net leverage within two years of closing. The transaction is expected to close by early 2022. Baxter remains committed to its dividend and expects to moderate its share repurchase program in the near term as it uses its cash flow to pay down the debt related to the acquisition. As a standalone entity. Baxter expects sales to grow 4-5%, compounded annually from 2021 to 2024 based on current foreign exchange rates. Over this period, Baxter anticipates expanding its adjusted operating margin by 300 basis points or more. On an adjusted basis, Baxter expects to deliver earnings growth of low double digits compounded annually over the same period. This Baxter standalone guidance does not reflect any impact from the proposed acquisition.
Hormel Foods-HRL reported third quarter revenue increased 20% to a record $2.9 billion with organic sales up 14% thanks to strong demand in all four business segments and across all four sales channels. Net sales were up 25% compared to 2019 pre-pandemic levels demonstrating the power of Hormel’s brands and the successful integration of the Planters business. During the quarter, the company saw significant inflationary pressure in almost all areas of the business, including raw materials, packaging, freight, labor and many other inputs. As a result of these higher costs and the acquisition costs related to Planters, net income and EPS declined 13% during the quarter to $177 million and $.32, respectively. Free cash flow declined 54% fiscal year-to-date due to the lower earnings and an increase in inventory due to significantly higher raw material costs. During the quarter, Hormel paid tis 372nd consecutive quarterly dividend, marking the 93rd consecutive year of uninterrupted dividends. Hormel is ably managing through industrywide operational challenges, including labor availability, supply chain disruptions and highly volatile and inflationary input costs. Hormel has implemented pricing actions across virtually every brand to offset inflationary pressures. In addition, Hormel is taking other strategic actions to offset cost increases, including optimizing promotional activity, improving product mix and rationalizing less efficient products in the portfolio. Hormel expects to deliver record sales again in the fourth quarter, along with improving margins as additional pricing actions go into effect. Reflecting the full impact of the acquisition of Planters snack nuts business, Hormel raised its sales guidance for the full year to $11.0 billion to $11.2 billion with EPS expected in the range of $1.65-$1.69, which includes the impact of the inflationary pressure on the business.
Wednesday, Sept. 1, 2021
Brown-Forman-BFB reported first quarter sales increased 20% to $906 million with net income and EPS down 41% to $192 million and $.40, respectively. The United States and developed international markets grew underlying sales 16% and 12%, respectively, while underlying sales in emerging markets increased 34%. Travel Retail increased 74% reflecting travel recovery after the height of the pandemic. Jack Daniel’s family of brands grew underlying net sales 16%. Premium bourbons grew underlying sales 36% driven by Woodford Reserve’s and Jack Daniel’s Tennessee Apple’s 35% growth. The tequila portfolio grew underlying sales 23% with the Vodka portfolio growing 17%. Brown-Forman increased advertising 46% as the company supported brand momentum. Free cash flow increased 125% during the first quarter to $171 million. On July 22, 2021, the Brown-Forman Board of Directors declared a regular quarterly cash dividend of $0.1795 per share. Brown-Forman has paid regular quarterly cash dividends for 77 consecutive years and has increased the regular dividend for 37 consecutive years. Management revised expectations for fiscal 2022 due to supply chain disruptions and recent Covid-19 trends. Management is expecting gross margins to be flat, while anticipating mid-single digit growth in underlying net sales and operating income.
Tuesday, Aug. 31, 2021
The Surface Transportation Board announced a unanimous decision rejecting the use of a voting trust agreement in connection with the proposed transaction between Canadian National Railway- CNI and Kansas City Southern Railway (KCS). The Board has determined that the proposed voting trust is not consistent with the public interest standard under the Board’s merger regulations. CNI expressed disappointment in the decision and is evaluating its options.
SEI-SEIC announced continued global growth in its institutional business, adding 11 clients and nearly $3.8 billion in new outsourced chief investment officer (OCIO) and fiduciary management assets during the first half of 2021. Among SEI's institutional clients added in 2021 are Greater Philadelphia YMCA and Real Estate Council of Ontario.
Wednesday, August 25, 2021
Ulta Beauty-ULTA rang up a 60.2% rebound in second quarter sales to $2.0 billion with net income of $250.9 million and EPS of $4.56, compared to net income of $8 million and EPS of $0.14 reported last year. Comparable store sales increased 56.3% driven by a 52.5% increase in transactions and a 2.5% increase in average ticket. During the quarter, Ulta Beauty opened 6 net new stores, ending the quarter with 1,296 stores. In addition, Ulta ended the quarter with 58 Target “store within a store” locations and plans to have 100 open by the end of the third quarter. Loyalty members increased by a record 2.3 million during the quarter to 34.6 million, up 8% from last year. During the quarter, Ulta repurchased $243.5 million shares at an average cost per share of $326.41, leaving $886.2 million remaining under the current $1.6 billion authorization. During the first half of 2021, Ulta generated $344 million in free cash flow and returned $635.8 million to shareholders through share buybacks. Ulta ended the quarter with $770 million in cash and $1.9 billion in shareholders’ equity on its clean, debt-free balance sheet. Given the better-than-anticipated second quarter results, leadership updated its fiscal 2021 guidance with sales now expected in the $8.1 billion to $8.3 billion range on comp store growth of 30% to 32% with EPS of $14.50 to $14.70. This compares to prior guidance of sales in the $7.7 billion to $7.8 billion range on comp store growth of 23% to 25% with EPS in the $11.50 to $11.95 range.
Friday, August 20, 2021
The UK Medicines and Healthcare products Regulatory Agency approved the monoclonal antibody treatment for the prevention and treatment of COVID-19 in the UK. Developed by Regeneron-REGN and Roche-RHHBY, the drug is administered either by injection or infusion and acts at the lining of the respiratory system where it binds tightly to the coronavirus and prevents it from gaining access to the cells of the respiratory system. Clinical trial data assessed by a dedicated team of MHRA scientists and clinicians has shown that Ronapreve may be used to prevent infection, promote resolution of symptoms of acute COVID-19 infection and can reduce the likelihood of being admitted to hospital due to COVID-19.
Thursday, August 19, 2021
Ross Stores-ROST reported second quarter revenues increased 79% to $4.8 billion with net income and EPS both significantly increasing over last year’s depressed results to $494 million and $1.39, respectively. Comparable store sales rose a robust 15% during the quarter reflecting a larger average basket and slightly higher traffic into the stores. Growth was broad based with strength seen in children’s products and in the Midwest region of the U.S. About 50% of Ross’s sales come from Texas, California and Florida, which saw tourism pick up during the quarter. Sales and earnings substantially exceeded management’s expectations during the quarter and benefited from customers’ positive response to the company’s broad assortment of great bargains, ongoing government stimulus, increasing vaccination rates and diminishing COVID restrictions. Free cash flow rose significantly to $1.1 billion during the first half with the company paying $203 million in dividends and repurchasing $176 million of its common stock at an average price of $125.71 per share. Ross plans to buy back a total of $650 million of its stock for the full fiscal 2021 year. Given the uncertainty and risk related to the spread of the COVID variants and worsening industry-wide supply chain congestion, Ross sees third quarter same store sales growth decelerating to 5% to 7% with EPS in the range of $.61 to $.69. This guidance reflects expectations for significantly escalating freight and supply chain costs and higher COVID and labor costs. For the full fiscal 2021 year, Ross expects comparable store sales gains of 10% to 11% with EPS expected in the range of $4.20 to $4.38.
Wednesday, August 18, 2021
Cisco Systems-CSCO reported fourth quarter revenues increased 8% to $13.1 billion with net income routing up 14% growth to $3 billion and EPS up 15% to $.71. Cisco had double-digit order growth across all customer markets and geographies, including product order growth of 31%, the strongest year-over-year growth in over a decade. During the quarter, Cisco had continued growth in their software and subscription business, with a 6% increase in software revenue and a 9% increase in subscription revenue. During the fourth quarter, product revenue was up 10% and service revenue increased 3%. For the full fiscal 2021 year, revenues increased 1% to $49.8 billion with net income down 6% to $10.6 billion and EPS down 5% to $2.50. Return on shareholders’ equity was an impressive 26% for the year. Free cash flow remained flat at $14.8 billion for the year with the company using this strong cash flow to pay $6.2 billion in dividends and repurchase $2.9 billion of its common stock. Cisco ended the year with a strong financial position with more than $24 billion in cash and investments, $9 billion in long-term debt and $41.3 billion in shareholders’ equity. Management’s outlook for the first quarter of fiscal 2022 is for revenue growth of 7.5%-9.5% and EPS in the range of $.61 to $.66. Guidance for the full fiscal year 2022 is for revenue growth of 5%-7% and EPS in the range of $2.72 to $2.84.
The TJX Companies-TJX reported second quarter sales jumped 81% to $12.1 billion, driven by a 20% increase in open-only comp store sales with strong double-digit growth in all U.S. and international divisions. TJX rang up a profit of $785.7 million, or $.64 per share, compared to losses last year due to store closures related to the pandemic. The $.64 in EPS includes a debt extinguishment charge of $.15 per share as the company repaid debt early and reduced its outstanding debt by $2.75 billion since the beginning of the year. Free cash flow improved significantly in the first half to about $500 million with the company paying $629 million in dividends and repurchasing $297 million of its common stock at an average price of about $64.59 per share. The company expanded its share buyback program by $250 million and now plans to repurchase about $1.25 billion to $1.5 billion of its stock in fiscal 2022. The company ended the quarter with $7.1 billion in cash and investments, $3.4 billion in long-term debt and $6.4 billion in shareholders’ equity on its strong balance sheet. Sales are very strong to start the third fiscal quarter with overall open-only comp store sales up mid-teens compared to the prior year period. While the environment remains uncertain, particularly with the Delta variant, TJX sees numerous opportunities to continue to gain market share and improve profitability in the medium to longer term. Management remains confident in their ability to reach their long-term strategic vision of TJX becoming a $60 billion revenue company.
Wednesday, August 11, 2021
T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.64 trillion as of July 31, 2021, representing an 11.3% increase since year end.
In response to Canadian Pacific recently making another offer for Kansas City Southern (KCS), Canadian National (CN)-CNI noted that they believe their proposal remains superior. On May 21, 2021, CN and KCS announced that they entered into a definitive merger agreement under which KCS shareholders will receive $325 per common share based on CN’s May 13, 2021 offer, which implies a total enterprise value of $33.6 billion, including the assumption of approximately $3.8 billion of KCS debt. Under the terms of that transaction, which was unanimously approved by KCS’ board of directors, KCS shareholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS shareholders expected to own 12.6% of the combined company.
Saturday, August 7, 2021
Berkshire Hathaway-BRKB reported the company’s net worth during the first half of 2021 increased 6%, or $27.2 billion, to $470.4 billion with book value equal to about $311,300 per Class A share as of 6/30/21. Berkshire earned $28.1 billion in the second quarter, including $6.7 billion of operating earnings and $21.4 billion of investment and derivate gains.
Berkshire’s four major equity investment holdings represent 69% of total equities, including American Express at $25.1 billion (which charged 37% higher during the first half or $6.8 billion), Apple at $124.3 billion (which gained 3% in the first half or $3.9 billion), Bank of America at $42.6 billion (which deposited a 36% gain in value during the first half or $11.3 billion), and Coca-Cola at $21.6 billion (fizzling 1% or $300 million since year end).
Berkshire’s revenues increased 22% during the second quarter to $69.2 billion with operating earnings rising 21% to $6.7 billion as many of Berkshire’s businesses experienced a significant recovery in revenues and earnings following the pandemic.
During the second quarter, Berkshire’s insurance underwriting profit declined 53% to $376 million as underwriting losses from reinsurance operations offset underwriting earnings from the primary insurance operations. Underwriting results in the second quarter reflected the effects of the premium reductions from the GEICO Giveback program, higher private passenger automobile claims frequencies as people began to drive more following the pandemic and higher losses in the life reinsurance business. Insurance investment income declined 11% during the second quarter to $1.2 billion, reflecting the significant decline in interest rates resulting in lower interest income on substantial holdings of cash and U.S. Treasury Bills. Berkshire expects interest rates, which are historically low, to negatively affect earnings from fixed-income investments for the remainder of 2021. The float of the insurance operations approximated $142 billion as of 6/30/2021, an increase of $4 billion since year end 2020. The average cost of float was negative during the first half as the underwriting operations generated pre-tax earnings of $1.4 billion.
Burlington Northern Santa Fe’s (BNSF) revenues chugged 26% higher during the second quarter to $5.6 billion with net earnings roaring 34% higher to $1.5 billion reflecting overall higher freight volumes and lower costs due to improved productivity. Volume was up a smoking 25% during the quarter driven by double-digit gains in volume in all business sectors led by a 27% volume increase in consumer products and a 32% rebound in coal.
Berkshire Hathaway Energy reported revenues charged ahead 31% during the second quarter to $6.1 billion. Net earnings rose 17% during the quarter to $740 million reflecting increased earnings from all the energy business units and the real estate brokerage business, with the exception of the Northern Powergrid due in part to an increase in the United Kingdom tax rate.
Berkshire’s Manufacturing businesses reported second quarter revenues rose 34% to $17.4 billion with operating earnings up 94% to $2.7 billion. The Industrial Products segment rebounded with revenues rising 24% and operating earnings more than doubling from the pandemic lows in the prior year second quarter. Precision Castparts still experienced lower financial results in the second quarter due to the decline in commercial air travel and aircraft production. While air travel in the U.S. is increasing, Berkshire does not expect significant increases in the level of aircraft production to occur in the near term with Precision Castparts’ revenues and earnings in 2021 expected to remain below pre-pandemic levels. On a more positive note, both Building and Consumer Products generated strong 20+% sales and earnings growth during the quarter as residential housing construction demand remains strong with consumer product sales also demonstrating recoveries from the pandemic led by strong demand for Forest River, Brooks Sports and Duracell products.
Service and Retailing revenues increased 23% during the second quarter to $21.3 billion with pre-tax earnings nearly tripling to $1.3 billion. Earnings at most of the services businesses increased significantly compared to last year with the biggest increases from TTI, reflecting accelerating demand across all electronic component markets, and the aviation business services due to higher training hours at FlightSafety and significantly higher customer flight hours at NetJets. Thanks to strong demand for home furnishings and new and pre-owned vehicle sales at Berkshire Hathaway Automotive, retailing operations reported strong increases in sales and earnings during the second quarter. McLane’s revenues and earnings also rebounded sharply due to growth from the foodservice and beverage business as restaurants reopened and ongoing cost management efforts.
Berkshire’s balance sheet continues to reflect very significant liquidity and a very strong capital base of $470 billion as of 6/30/21. Excluding railroad, energy and utility investments, Berkshire ended the first half with $485.6 billion in investments allocated approximately 63.4% to equities ($307.9 billion), 4.2% to fixed-income investments ($20.5 billion), 3.4% to equity method investments ($16.5 billion), and 29.0% in cash and equivalents ($140.7 billion).
Free cash flow rose 23% during the first half to $13.9 billion. During the first half, capital expenditures declined 8% to $5.7 billion, including $4.1 billion in the capital-intensive railroad, utilities and energy businesses. Berkshire expects capital expenditures for the remainder of 2021 to approximate an additional $6.2 billion for BNSF and Berkshire Hathaway Energy. During the first half, Berkshire purchased a net $11.4 billion in Treasury Bills and fixed-income investments and sold a net $5.0 billion of equity securities. The $1.3 billion acquisition of the remainder of the Dominion pipeline business was terminated due to uncertainty regarding regulatory approvals.
Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett and Charlie Munger. During the first half, Berkshire repurchased $12.6 billion of its common stock including $6 billion in the second quarter. These repurchases included 8,646,680 Class B shares acquired at an average price of $279.94 per share and 2,250 Class A shares purchased at an average price of $432,132 per share during June 2021. After quarter end, it appears Berkshire has acquired about $1.8 billion in additional shares of its common stock based on its lower share count on the 10-Q as of 7/26/21. Berkshire revised its buyback policy to note that repurchases would not be made if they would reduce the total value of Berkshire’s consolidated cash below $30 billion from the previous $20 billion benchmark.
Thursday, August 5, 2021
For the quarter ended June 30, 2021, Maximus-MMS reported record revenue of $1.24 billion, up 38% from last year, with net earnings and EPS rebounding from pandemic lows to $139.6 million and $1.51, respectively, compared to $87.3 million and $1.04 last year. COVID-19 response work including vaccination distribution support services, unemployment insurance program support, disease investigation, contact tracing and other key initiatives drove the results, contributing $460 million to revenue during the quarter. By segment, U.S. Services Segment revenue increased 29% to $436.3 million with COVID-19 response work contributing nearly 40% of segment revenue. Segment operating margins declined 380 basis points to 14.3%, reflecting continued headwinds experienced on core programs, including those impacted by the pause of Medicaid redeterminations and delays in non-COVID new work, which is now expected to begin next fiscal year. U.S. Federal Services Segment revenue increased 37% to $617.6 million. An expected decline in Census contract revenue was more than offset by an increase of COVID response work that exceeded management’s expectations. Segment operating margin expanded 520 basis points from higher-than-expected volumes on the COVID-19 response work. Outside the U.S. segment revenue increased 66% to $189.6 million. Segment operating margin of 4.4% rebounded from last year’s pandemic-related loss, largely driven by strong demand for employment services in Australia. During the quarter, Maximus generated negative free cash flow of $41.6 million as revenue increases required additional investment in working capital. Maximus expects fourth quarter fiscal 2021 cash flows to be strong. The company ended the quarter with $96.1 million in cash, $1.6 billion in long-term debt taken on to finance two recent acquisitions and $1.45 billion in shareholder equity. Over the next few quarters, Maximus will use free cash flow to pay down debt and pay the regular quarterly dividend which is targeted to yield between 1% and 2%. Given the robust year-to-date results and planned losses on multiple startup contracts, most notably the UK Restart program, Maximus updated its guidance for the full fiscal year. Revenues are expected in the $4.2 billion to $4.25 billion range, up from $4.0 billion to $4.2 billion previously guided, with EPS in the $4.65 to $4.75 range, up from prior guidance of $4.20 to $4.40. Free cash flow is expected in the $375 million to $405 million range, up from $360 million to $410 million previously guided. Looking ahead to fiscal 2022, management expects earnings to be back loaded with the first fiscal quarter expected as a low point followed by sequential improvement as core programs and startup contract costs outside the U.S. begin to gain traction.
UPS-UPS announced its regular quarterly dividend of $1.02 per share on all outstanding Class A and Class B shares. The dividend is payable September 9, 2021 to shareowners of record on August 23, 2021. In addition, the Company announced that its Board of Directors has approved a new share repurchase program of $5.0 billion, replacing its existing $2.1 billion authorization. Carol Tomé, UPS chief executive officer, commented, “Commitment to the dividend is one of UPS’s core principles and a hallmark of the company’s financial strength. As previously disclosed, we expect to continue paying regular cash dividends, with a targeted dividend payout ratio, starting in 2022, of approximately 50% of our prior year’s adjusted net income. In addition, we are pleased that the Board has increased our flexibility to engage in share repurchases. UPS will deploy a disciplined and balanced approach to capital allocation, including returns to shareowners through dividends and share repurchases.”
Regeneron-REGN reported second quarter revenues rose 163% to $5.1 billion with net income jumping 245% to $3.1 billion and EPS up 268% to $27.97. This outstanding performance included $2.76 billion in revenue attributable to REGN-COV, the company’s COVID-19 antibody cocktail which has proven potent against all know variants. Excluding REGN-COV sales, revenues still rose a healthy 22% as the company generated record global sales from its core products such as EYLEA and Dupixent. Regeneron has approximately 30 product candidates in clinical development, including six marketed products for which it is investigating additional indications. Regeneron continues to advance Dupixent’s potential to help new patient groups with recent positive Phase 3 data that reported Dupixent significantly improved itch and hives in patients with chronic spontaneous urticaria, marking the fifth disease to show positive pivotal data. The Phase 3 trial of Libtayo combined with chemotherapy showed significant improvement in overall survival in patients with first-line advanced non-small cell lung cancer. During the past quarter, the Regeneron Genetics Center provided landmark clinical data with the discovery of a promising new obesity target which may protect patients from obesity and Type 2 diabetes. With more than 20 gene editing programs under consideration, Regeneron may change the progress of medicine with future gene therapies. Free cash flow during the first half of the year declined 23% to $1.0 billion although the company expects a significant increase in free cash flow in the third quarter as the company has collected all amounts due from the U.S. government in July in connection with delivering 1.25 million doses of REGN-COV. During the second quarter, Regeneron repurchased $289 million of its common stock and will remain opportunistic on future share repurchases. The company plans to invest about $1.8 billion over six years to expand its research and preclinical manufacturing facilities as it advances its promising pipeline of new products. As of quarter end, Regeneron’s strong balance sheet boasted a healthy $7.8 billion in cash and investments, $2.0 billion in long-term debt and $15.1 billion in shareholders’ equity.
Check Point® Software-CHKP announced that its board of directors has authorized a $2 billion expansion of the company’s on-going share repurchase program. Under the extended share repurchase program, Check Point is authorized to continue repurchasing its shares up to $325 million each quarter. As of June 30, 2021, Check Point has approximately 133 million ordinary shares outstanding. Since the beginning of the share repurchase program, Check Point has repurchased approximately 188 million shares for a total purchase price of approximately $11.1 billion.
Wednesday, August 4, 2021
Gentex-GNTX announced a new 25 million share repurchase program. “Despite the issues created by the pandemic over the last 18 months, we have been focused on creating and implementing the financial discipline that was needed to support profitability, cash generation and new product development,” said Gentex President and CEO Steve Downing. “Our capital allocation strategy is designed to supplement our company’s growth with consistent and appropriate utilization of the company’s cash flow. This strategy prioritizes reinvestment into the company by funding capital expenditures and provides the ability to acquire new and exciting technologies that fit well with our technology portfolio. Beyond that, our strategy focuses on M&A, a consistent dividend and a very meaningful repurchase philosophy. In fact, since 2015 the Company has repurchased around 86 million shares and paid nearly $720 million dollars in dividends to our shareholders. We have also acquired several new technology companies, formed strategic relationships with several other organizations, and continued to invent new technologies organically from our own research and development efforts. These successes combined with our customer awards and high levels of cash generation have provided the board with the confidence it needed to further commit to this capital allocation philosophy.”
Regeneron Pharmaceutical-REGN announced that the New England Journal of Medicine published "positive" detailed results from a Phase 3 trial that assessed the ability of REGEN-COV to prevent COVID-19 infection among household contacts of SARS-CoV-2 infected individuals. The trial met its primary endpoint, reducing the risk of symptomatic infections by 81%. The robust REGEN-COV development program has reported "positive" Phase 3 trial results across the spectrum of COVID-19 infection, from prevention to hospitalization.
NVR, Inc.-NVR announced that its Board of Directors has authorized the repurchase of $500 million of its outstanding common stock. The Company indicated that the authorization is a continuation of the stock repurchase program that began in 1994 and is consistent with NVR's strategy of maximizing shareholder value.
Tuesday, August 3, 2021
Roche-RHHBY announced that the US Food and Drug Administration (FDA) has accepted the company’s supplemental Biologics License Application (sBLA) and granted Priority Review for Tecentriq® (atezolizumab) as adjuvant treatment following surgery and platinum-based chemotherapy for people with non-small cell lung cancer. “New treatment options are urgently needed in early-stage non-small cell lung cancer to help the nearly 50% of people who currently experience a recurrence following surgery,” said Levi Garraway, M.D., Ph.D., Roche’s Chief Medical Officer and Head of Global Product Development. “Tecentriq is the first cancer immunotherapy to show a clinically meaningful benefit in the adjuvant lung cancer setting, and we’re working closely with the FDA to bring this significant advancement to patients as quickly as possible.”
PepsiCo-PEP announced that it has entered into an agreement with PAI Partners (PAI) to sell Tropicana, Naked and other select juice brands across North America, and an irrevocable option to sell certain juice businesses in Europe, which will result in combined pre-tax cash proceeds of approximately $3.3 billion while retaining a 39% non-controlling interest in a newly formed joint venture. PAI, a leading private equity firm with strong experience in the food and beverage space, will be the majority shareholder of the transferred business, with PepsiCo retaining exclusive U.S. distribution rights to the portfolio of brands in its best-in-class, chilled Direct Store Delivery for small-format and foodservice channels. These juice businesses delivered approximately $3 billion in net revenue in 2020 with operating profit margins that were below PepsiCo's overall operating margin in 2020. PepsiCo expects to use the proceeds from the sale of these assets primarily to strengthen its balance sheet and to make organic investments in the business. The transaction is expected to close in late 2021 or early 2022.
Thursday, July 29, 2021
T. Rowe Price-TROW reported strong second quarter results with revenues rising 36% to $1.9 billion, net income gaining 35% to $815.7 million and EPS up 36% to $3.46. The company ended the quarter with assets under management (AUM) of $1.62 trillion, a 33% increase over the prior year period thanks to strong long-term investment performance. During the second quarter, AUM increased $105.1 billion primarily due to market appreciation with $600 million in net cash outflows as some large subadvised clients trimmed their holdings of U.S. equities. During the quarter, T. Rowe Price announced a transformation of its retirement recordkeeping business with the expansion of its 30-year partnership with FIS, a global technology leader. This led T. Rowe Price to increase its operating expense growth expectations from a range of 10%-14% to a range of 12% to 15% for 2021. T. Rowe Price remains debt-free and cash-rich with total cash and investments of about $7.5 billion as of quarter end. During the first half of the year, T. Rowe Price repurchased 1.9 million of its common stock for $308.9 million at an average cost of $166.57 per share. The company also paid a special dividend on July 7, 2021 of $3.00 per share, or $699.8 million, which was in addition to its regular quarterly dividend of $1.08 per share, which was up 20% from the prior year. In separate news, T. Rowe Price announced that CEO Bill Stromberg will retire at the end of 2021 and will be succeeded by Rob Sharps, TROW's current president, head of Investments and group CIO. Additionally, effective 7/31/2021, CFO and COO Céline Dufétel will be stepping down from her roles to assume a leadership position with a fintech company. Jen Dardis, currently head of Finance, will become CFO and treasurer effective August 1, 2021. COO responsibilities will transition on an interim basis to Robert Higginbotham.
Mastercard-MA reported second quarter revenue rose 36% to $4.5 billion with net income charging 46% higher to $2.1 billion and EPS up 48% to $2.08. This solid growth reflected the continued recovery in domestic and cross-border spending. Domestic spending is showing strength due to increased consumer mobility and stimulus payments. International travel is still in the early stages of recovery and represents additional upside potential. Cross-border spending is normalizing as border restrictions are easing. Mastercard expects more borders to open in the second half of the year depending on the impact of the Delta variant. Approximately 35 countries have greater than 50% vaccinated populations so there is a long runway of people who want to travel. Gross dollar volume was up 33% during the quarter to $1.9 trillion on a local currency basis. Mastercard reported cross-border volume growth of 58% and switched transaction growth of 41% as the company lapped last year’s weak results due to the pandemic. As of June 30, 2021, the company’s customers had issued 2.9 billion Mastercard and Maestro-branded cards. During the first half of the year, Mastercard’s free cash flow increased 15% to $3.6 billion with the company paying $873 million in dividends and repurchasing $3.1 billion of its common stock, including 4.6 million shares in the second quarter for $1.7 billion at an average cost of $369.56 per share. After quarter end, Mastercard repurchased an additional $398 million of its common stock with $6.4 billion remaining authorized for future share repurchases. During the first half of the year, Mastercard also invested $4.2 billion in acquisitions which are contributing to revenue growth. Revenue growth in the third quarter should be in the mid-20% range.
Roche-RHHBY announced that the U.S. Food and Drug Administration (FDA) has accepted the company’s Biologics License Application (BLA), under Priority Review, for faricimab for the treatment of neovascular or “wet” age-related macular degeneration (nAMD) and diabetic macular edema (DME). The FDA has also accepted the company’s submission for diabetic retinopathy. “If approved, faricimab would be the first in a new class of eye medicines targeting two key pathways that drive retinal disorders, with the potential to offer durable vision outcomes with fewer eye injections than the current standard of care,” said Levi Garraway, M.D., Ph.D., Roche’s Chief Medical Officer and Head of Global Product Development. “Therefore, we hope faricimab will become a new treatment option for millions of people living with nAMD and DME.”
Wednesday, July 28, 2021
Cognizant Technology Solutions-CTSH reported second quarter revenue increased 15% to $4.6 billion with net earnings and EPS surging more than 40% to $512 million and $0.97, respectively. Digital revenue grew 20% from last year and now represents 44% of total revenue, up from 28% when CEO Brian Humphries took the helm two years ago. Cognizant ended the quarter with a solid 1.2 book to bill ratio. By business segment, Financial Services (33% of total revenue) increased 7.6%, Healthcare (29% of total revenues) increased 15%, Products and Resources (23% of total revenue) jumped 22% and Communications, Media and Technology (15% of total revenue) increased 21%. Operating margin increased 350 basis points to 15.2% thanks to the lapping of last year’s COVID and ransomware related expenses. Cognizant’s headcount increased 7% from last year despite an elevated 29% attrition rate during the quarter, mainly of junior digital engineers based in India. Management is focused on reducing attrition through merit salary increases, quarterly promotions, job rotation, reskilling and supporting higher education for some employees. Cash flow from operations and free cash flow declined more than 40% year-over-year to $541 million and $466 million, respectively, due to the COVID-related deferral of tax payments last year and a payment made this year for settlement from Cognizant’s decision to exit the content review business. During the quarter, Cognizant paid $127 million in dividends and repurchased $296 million shares at an average cost of $74.00 per share, leaving $2.3 billion remaining under the current share repurchase authorization. Cognizant ended the quarter with $2.3 billion in cash and investments, $645 million in long-term debt and $11.2 billion in shareholders' equity. Given the solid first half performance, management increased its full year guidance with revenues now expected to increase 10% to 11% with adjusted operating margin of 15.4% and adjusted EPS in the $4.00 to $4.06 range. Management expects to retain its current capital allocation strategy with 50% of free cash flow applied to acquisitions to build its digital business, 25% to share repurchases and 25% to dividend payments.
Facebook-FB reported second quarter revenue rose 56% to $29.1 billion with net income and EPS each doubling to $10.4 billion and $3.61, respectively. This strong growth reflected the very strong macro environment in all geographic regions as the company lapped the weak pandemic results from a year ago. Advertising growth was driven by a 47% increase in the average price per ad and a 6% increase in the number of ads delivered compared to the prior year period. Facebook daily active users and monthly active users each increased 7% year-over-year to 1.91 billion on average and 2.9 billion on average, respectively. Family daily active people and family monthly active people each increased 12% year-over-year to 2.76 billion and 3.51 billion as of June 30, 2021. Free cash flow more than doubled during the first half of the year to $16.6 billion with the company repurchasing $11 billion of its common stock, including $7.1 billion in the second quarter. The company ended the quarter with $64 billion in cash and investments, no long-term debt and $138.2 billion in shareholders’ equity on its fortress balance sheet. In 2021, Facebook expects total expenses to be in the range of $70 billion to $73 billion with capital expenditures expected in the range of $19 billion to $21 billion as the company is investing ahead of the compelling long-term growth opportunities management sees across its product portfolio and as it builds the metaverse, its virtual environment which will become the next generation of the Internet. In the second half of the year, Facebook expects revenue growth to decelerate as the company laps periods of increasingly strong growth. In addition, Facebook expects increased ad targeting headwinds from regulatory and platform changes, notably the recent operating system update from Apple regarding privacy of data.
Automatic Data Processing-ADP reported fourth quarter revenue rose 11% to $3.7 billion with net income and EPS each up 31% to $538.2 million and $1.26, respectively. With more than 920,000 clients around the world, ADP paid 1 in 6 U.S. workers last year and processed $2.3 trillion in payrolls and taxes. For the full year, revenue increased 3% to $15 billion with net earnings up 5% to $2.6 billion and EPS up 6% to $6.07. These results were impressive given the unprecedented change for employers and workers around the world during the pandemic. New business bookings increased 23% for the year to $1.5 billion with productivity for the year at about 90% of pre-pandemic levels. Client retention increased to a record 92.2% for the year. Return on shareholders’ equity for the year was an impressive 45.8% Free cash flow increased 7% during the year to $2.8 billion with the company paying $1.6 billion in dividends and repurchasing $1.4 billion of its common stock during the year. ADP has increased its dividend for 46 consecutive years. Encouraged by signs of economic recovery in a supply-constrained labor market, ADP expects another solid year of growth in fiscal 2022 with revenue growth of 6%-7%, new business bookings of 10%-15%, operating margin expansion of 25 to 50 basis points and EPS growth of 8% to 10%.
General Dynamics-GD reported second quarter revenue dipped slightly to $9.2 billion with net earnings increasing 18% to $737 million and EPS soaring 20% to $2.61 as margins at all segments expanded year-over-year and sequentially. Quarter-end backlog of $89.2 billion increased 8% from last year’s second quarter. By segment, Aerospace revenue dropped 18% to $1.6 billion as the negative impact of COVID-related production cuts hit the low point during the quarter. However, aerospace backlog of $13.5 billion is the highest since 2015 and second quarter Gulfstream orders of $3.3 billion were the highest since 2008 resulting in a 2.0 book-to-bill ratio. Marine Systems revenue increased 2% to $2.5 billion, marking the 15th consecutive quarter of growth. Combat Systems revenue increased 8.3% to $1.9 billion, driven by combat vehicles. Technologies revenue increased 3.2%, powered by the expansion of IT services which expanded close to a double-digit pace. During the quarter, General Dynamics generated $943 in free cash flow, representing 128% of net income with the company repurchasing $600 million of common stock. During the first half of the year, General Dynamics returned $ 2.0 billion dollars to shareholders through dividend payments of $651 million and share repurchases of $1.35 billion at an average cost per share of $173 per share. General Dynamics ended the quarter with nearly $3.0 billion in cash, $11.5 billion in long-term debt and $15.3 billion in shareholders’ equity. During the second quarter conference call, management raised its full-year EPS guidance by $0.45 to $0.50 cents to about $11.50 with free cash flow conversion expected in the 95% to 100% range.
Tuesday, July 27, 2021
Starbucks-SBUX reported third quarter fiscal 2021 sales increased 78% to a record $7.5 billion with net income of $1.153 billion, or $0.97 per share, compared to last year’s net loss of $678.4 million, or $0.58 per share. Global comparable store sales increased 73%, driven by a 75% increase in comparable transactions due to the lapping of the pandemic-related business disruption last year, partially offset by a 1% decrease in average ticket. By region, Americas revenues increased 92% to $5.4 billion on an 84% increase in comp store sales, International revenues increased 41% to $1.7 billion on a 41% comp store sales increase and Channel Development sales dipped 7% to $414 million due a 20% unfavorable impact of Global Coffee Alliance transition-related activities. Loyalty program members grew 48% to 24.2 million. Starbucks opened 352 net new stores during the June quarter, yielding 3% year-over-year unit growth, ending the quarter with a record 33,295 stores globally, with 46% located in the U.S. and 15% in China. During the first nine months of the fiscal year, Starbucks generated $3.5 billion in free cash flow, compared to a negative $1 billion last year, with the company returning $1.6 billion to shareholders through dividend payments. Starbucks ended the quarter with $5.4 billion in cash and investments, $13.6 billion in long-term debt and a shareholders’ deficit of $6.8 billion. For the full fiscal year, Starbucks expects revenues of about $29 billion on a same store sales lift of 20% to 21%. Starbucks increased its Americas and U.S. comp store growth to 21% to 22% from 17% to 22% previously and lowered its forecast for China comp store sales growth to 18% to 20% from 27% to 32% with international comp store sales now expected to grow in the 15% to 17% range from 25% to 30% previously guided. EPS are expected in the range of $2.97 to $3.02 and capital expenditures are expected to total $1.7 billion with the company opening about 1,100 net new stores globally including 600 net new stores in China.
Apple-AAPL rang up a juicy 36% jump in fiscal 2021 third quarter sales to a record $81.4 billion with net income increasing 93% to $21.7 billion and EPS doubling to $1.30. Apple’s June quarter operating performance included new revenue records in each geographic segment, double-digit growth in each of product categories and a new all-time high for the installed base of active devices. Product revenues rose 37% to $63.9 billion and Services revenue increased 33% to $17.5 billion. By product category, iPhone sales surged nearly 50% to $39.6 billion thanks to the iPhone 12 lineup and its 5G connectivity. Mac sales increased 16.3% to $8.2 billion, iPad sales increased 12% to $7.3 billion and Wearables, Home and Accessories sales jumped 36% to $8.8 billion. By reportable segment, sales in the Americas, 44% of the total, jumped 33%, sales in Europe, 23% of the total, rose 34%, sales in Greater China, 18% of the total, rose an impressive 58%, while Japan, 8% of the total, increased 30% and Rest of Asia Pacific, 7% of the total, increased 29%. Apple returned $29 billion to shareholders during the quarter through dividend payments of $3.8 billion and share repurchases of $17.5 billion at an average cost per share of $128.68 per share. During the first nine months of the fiscal year, Apple generated nearly $76.0 billion in free cash flow, up 39% from last year, with the company returning $77.1 billion to shareholders through dividends of $10.8 billion and share repurchases of $66.2 billion. Apple ended the quarter with $193.6 billion in cash and investments, $105.8 billion in long-term debt and $64.3 billion in shareholders’ equity on its shiny balance sheet. Given the uncertainty related to the pandemic, Apple suspended quarterly guidance. However, management expects solid double-digit revenue growth, albeit at a slower pace than the June quarter due to less favorable tailwinds from foreign currency, a slowdown in the torrent growth in services due to more difficult comps and the higher impact of supply constraints that will especially impact iPhone and iPad sales. The company had predicted a $3.0 billion to $4.0 billion supply constraint impact on sales during the June quarter, but management was able to mitigate the impact to slightly below the bottom of the range.
Microsoft-MSFT reported strong fourth quarter results with revenue up 21% to $46.2 billion and net income jumping 47% to $16.5 billion and EPS up 49% to $2.17. Cloud strength fueled growth during the quarter with revenue in Intelligent Cloud increasing 30% to $17.4 billion driven by Azure revenue growth of 51%. During the quarter, revenue in Productivity and Business Processes increased 25% to $14.7 billion driven by Office 365 Commercial and LinkedIn. Revenue in More Personal Computing rose 9% to $14.1 billion driven by Search advertising. Microsoft is meeting customer needs in large and growing markets, notably commercial cloud. In addition, Microsoft is building new franchises including gaming, security and LinkedIn, all of which surpassed $10 billion in annual revenue over the past three years. For the full fiscal 2021-year, Microsoft’s revenue increased 18% to $168.1 billion with net income jumping 38% to $61.3 billion and EPS up 40% to $8.05. Return on shareholders’ equity for the year was an impressive 43.2%. Free cash flow increased 24% during the year to $56.1 billion with Microsoft paying $16.5 billion in dividends and repurchasing $27.4 billion of its common stock during the year. Microsoft ended the year with more than $130 billion in cash and investments, $50 billion in long-term debt and $142 billion in shareholders’ equity on its strong balance sheet. For the first fiscal quarter of 2022, Microsoft expects revenues in the range of $43.3 billion to $44.2 billion, representing better than 20% growth over the prior year period. For the full 2022 year, Microsoft expects to generate double-digit growth in revenues and operating income with expanding profit margins.
Stryker-SYK reported second quarter net sales jumped 55% to $4.3 billion with net income and EPS increasing from prior year losses to $592 million and $1.55, respectively. By segment, Orthopaedics net sales of $1.6 billion increased 82% in the quarter, MedSurg net sales increased 32% to $1.7 billion and Neurotechnology and Spine net sales of $0.9 billion increased 67%. During the first half of the year, Stryker reduced long-term debt by $1.2 billion and generated $1.1 billion in free cash flow with the company returning $475 million to shareholders through dividend payments. Stryker ended the quarter with $2.3 billion in cash and investments, $12.7 billion in long-term debt and $13.8 billion in shareholders’ equity. Management raised its 2021 outlook expecting organic net sales growth of 9% to 10% and adjusted EPS of $9.25 to $9.40. "Business momentum continues to build as the pandemic moderates and the integration of Wright Medical is pacing ahead of plan. Our positive outlook is reflected in our raised guidance” said Kevin Lobo, Chairman and Chief Executive Officer.
Alphabet-GOOGL reported strong second quarter results with revenues jumping 62% to $61.9 billion and ne income and EPS both up more than 165% to $18.5 billion and $27.26, respectively. These excellent results reflect Alphabet lapping weak pandemic results last year, a rising tide of online activity in many parts of the world, broad-based advertising spending and excellent management execution during the quarter. Google advertising revenue increased 69% to $50.4 billion including 84% growth in YouTube ads. Retailers led advertising growth followed by travel, financial and entertainment ads. Google Cloud generated 54% growth during the quarter to $4.6 billion in revenues as the company’s security, real-time data and analytics and artificial intelligence and machine learning are attracting growing customer interest. Free cash flow more than doubled during the first half of the year to $29.7 billion with the company repurchasing about $24.2 billion of its common stock as part of its $50 billion share buyback authorization. Alphabet ended the quarter with a fortress balance sheet with more than $161 billion in cash and investments, $14 billion in long-term debt and $237.6 billion in shareholders’ equity.
UPS-UPS delivered a 14.5% increase in second quarter revenue to $23.4 billion with net earnings and EPS increasing more than 50% to $2.676 billion and $3.05, respectively. U.S. Domestic revenue increased 10.2% to $14.4 billion, driven by a 13.4% increase in revenue per piece on double-digit growth in both ground and Next Day Air products. Domestic operating margins dipped to 10.9% from 11.6% last year due to fuel increases, network enhancements and employee benefit increases, partially offset by productivity improvements that reduced direct labor hours by 1.4%. International revenue jumped 30% to $4.8 billion, with all major regions growing double digits, led by Europe. International segment adjusted operating margins expanded 200 basis points to 24.7% as revenue per piece increased 15.5% on an adjusted cost per piece of 12.4%. Supply Chain Solutions revenue increased 14.3% to $4.2 billion with adjusted operating margins increasing 240 basis points to 9.7%. Ocean freight forwarding more than doubled its profit margins. In healthcare supply chain solutions, clinical trails along with cell and gene solutions delivered record top- and bottom-line results. During the first half of the year, UPS generated $8.5 billion in operating cash flow, up 42.2% from last year, and free cash flow of $6.8 billion, more than free cash flow generated during any prior full year. This robust free cash flow enabled the company to strengthen its balance sheet by paying down debt (thereby completing its $2.55 billion debt repayment target for the year) and reducing its pension liability by a total of $10 billion. UPS returned $1.7 billion to shareholders during the first half of the year, ending the quarter with nearly $10 billion in cash and investments, $21 billion in long-term debt and $10.8 billion in shareholders’ equity. Management views company cash as “belonging to shareowners” and aims to return 50% of earnings to shareholders through dividend payments. While share repurchases were suspended due to the pandemic, the company expects to soon reinstate share buybacks. While UPS suspended quarterly guidance due to uncertainties surrounding the pandemic and supply chains (one brick and mortal customer has 50 containers stuck in port), it projects full year operating margins of 12.7% and return on invested capital of 28%. Capital expenditures are projected at $4 billion during 2021, compared to $5.4 billion in 2020 and $6.4 billion in 2019.
Accenture Federal Services (AFS), a subsidiary of Accenture-ACN, has been awarded a $729 million contract to help the U.S. Army Communications-Electronics Command (CECOM) transform multiple enterprise resource planning (ERP) systems into a single, consolidated model to improve efficiency, enhance readiness, and reduce costs. The contract runs for six years.
Regeneron Pharmaceuticals, Inc.-REGN and AstraZeneca announced that the companies have entered into a collaboration to research, develop and commercialize small molecule compounds directed against the GPR75 target with the potential to treat obesity and related co-morbidities.
Raytheon Technologies-RTX reported second quarter net sales increased 13% to $15.9 billion with the company swinging to a profit of $1.0 billion or $.69 per share compared to losses in the prior year period. These strong results were driven by growth in the defense businesses and the better-than-expected commercial aerospace recovery. The full aerospace recovery is still expected to occur by the end of 2023 once international air travel fully resumes. While the U.S. and Europe have about half their populations vaccinated, the rest of the world is only about 9% vaccinated which will curtail international travel. Backlog at the end of the quarter was $151.8 billion with $85.7 billion from commercial aerospace and $66.1 billion from defense with a book-to-bill ratio of 1.12. Raytheon scored notable billion-dollar defense bookings during the quarter. Raytheon is well positioned to help the country defend itself in the next war which likely will occur in cyberspace or in outer space’s communication satellites. Free cash flow more than doubled during the first half of the year to $1.3 billion with the company paying $1.5 billion in dividends and repurchasing $1.0 billion of its common stock during the same time. Raytheon plans to repurchase an additional $1 billion of its common stock in the second half of the year. Raytheon raised its financial outlook for the full 2021 year with sales now expected in the range of $64.4 billion to $65.4 billion, with organic sales growth of 1% to 3%, and adjusted EPS expected in the range of $3.85-$4.00. The free cash flow forecast for the year was raised to a range of $4.5 billion to $5.0 billion.
3M-MMM reported second quarter sales increased 25% to $8.9 billion with net earnings increasing 17% to $1.5 billion and EPS increasing 15% to $2.59. By business segment, total sales increased 25% in Health Care to $2.3 billion, 20% in Consumer to $1.5 billion, 22% in Safety and Industrial to $3.3 billion and 28% in Transportation and Electronics to $2.5 billion. On a geographic basis, total sales increased 20% in Asia Pacific, 26% in the Americas and 29% in EMEA (Europe, Middle East and Africa). During the first half of the year, 3M generated $2.9 billion in free cash flow with the company returning $2.5 billion to shareholders through dividend payments of $1.7 billion and share repurchases of $734 million. 3M ended the quarter with $5.5 billion in cash and investments, $16.3 billion in debt and $14.5 billion in shareholders’ equity. The company updated its guidance with projected total sales growth of 7% to 10%, EPS in the $9.70 to $10.10 range and free cash flow conversion of 90% to 100%. “3M delivered strong performance in the second quarter, once again posting organic growth across all business groups and geographic areas, along with increased earnings and robust cash flow,” said Mike Roman, 3M chairman and chief executive officer.
Monday, July 26, 2021
F5 Networks-FFIV reported fiscal third quarter sales increased 12% to $651.5 million with net earnings and EPS increasing 28% to $89.6 million and $1.46, respectively. Product sales increased 21% to $310 million, powered by a 34% jump in software sales to $129 million, now representing 42% of total product sales, up from 38% last year. Subscription sales accounted for 78% of software sales, up from 73% last year. Services sales increased 4% to $341.6 million. Deferred revenues increased 13% to $1.44 billion due to a jump in multi-year NGINX and SHAPE contracts. Enterprise customers accounted for 69% of sales, Service Providers accounted for 15% of sales and government sales accounted for 17%, including 4% Federal. During the latest quarter, F5 generated $182 million in operating cash flow and $173 million in free cash flow with the company repurchasing $100 million shares, thereby completing its $500 million share repurchase program at an average cost per share of $199.90. F5 Networks ended the quarter with $863 million in cash and investments, $662.7 million in long-term obligations and $2.2 billion in shareholders’ equity. Looking ahead, management expects sales in the $660 million to $680 million range, up 9% at the mid-point, with non-GAAP EPS in the $2.68 to $2.80 range, up 13% at the mid-point. Software sales are expected to continue to increase at a 35% pace.
Bank of Hawaii-BOH reported revenue declined 6% to $167.9 million with net income jumping 74% to $67.5 million and EPS up 71% to $1.68. The net interest margin was 2.37% during the quarter compared to 2.83% in the prior year period reflecting higher levels of liquidity from continued strong deposit growth and lower interest rates. The return on average assets and average equity improved to 1.23% and 19.6%, respectively, during the quarter compared to the prior year period. Total assets increased to a new record of $22.7 billion as total deposits increased 16% from a year ago to $20.2 billion. Total loans and leases increased 2% from a year ago to $12 billion as of June 30, 2021. The company’s overall asset quality remained stable during the quarter. The bank successfully issued preferred stock during the quarter which enhances the strength of the balance sheet and positions the bank well for future growth. Thanks to its capital strength, the Board of Directors increased the quarterly dividend 4% to $.70 per share. The bank’s long-term goal is to pay out 50% of net income in dividends. Bank of Hawaii announced the resumption of the share buyback program beginning in July with $113 million remaining authorized for future share repurchases. Unemployment is improving and Hawaii’s real estate market is very strong like in much of the country. Tourism is also improving with the visitor count nearly back to pre-pandemic levels despite international travelers, which typically make up one-third of visitors, still not back due to the pandemic. Hotels in Hawaii are doing nicely with 97% of them once again open and occupancy at about 77%. Revenue per available room is now higher than in 2019, prior to the pandemic.
Check Point Software-CHKP reported second quarter revenue rose 4% to $526.1 million with net income declining 5% to $186 million and EPS flat at $1.38. Strong execution drove double-digit growth across cloud-based cybersecurity products during the quarter in response to a 93% surge in ransomware attacks. Deferred revenue increased 10% over the prior year period to $1.5 billion. Free cash flow increased 5% during the first half to $631 million with the company repurchasing $650 million of its common stock including 2.7 million shares in the second quarter for $325 million at an average cost of $120.37 per share. For the third quarter, Check Point expects revenue in the range of $515 million to $540 million with EPS in the range of $1.30-$1.40.
Friday, July 23, 2021
Gentex-GNTX reported second quarter sales increased 86% to $428 million with the company swinging to an $86.5 million profit or $.36 per share compared to a loss in the prior year period resulting from the pandemic. Gentex is experiencing tremendous volatility in its business due to industry-wide part shortages and global supply chain constraints in the auto industry. This led to an estimated 2 million unit push out of mirror shipments during the quarter due to a shortfall in industry vehicle production. Over the past 18 months, the auto industry has faced significant challenges due to the COVID-19 pandemic. During the first half of last year, the impact was felt in terms of very low sales levels due to shutdowns, but this year, the impact has been felt in the form of massive order changes and reductions to planned volumes due to supply related issues that are affecting the auto manufacturer’s ability to achieve the production levels needed to satisfy strong demand. For the second half of 2021, Gentex expects orders to improve but supply constraints are expected to continue to cause disruptions that are leading to higher commodity pricing, higher freight expenses and inefficiencies in operations. Despite all the challenges, Gentex remains optimistic that the next 18 months has the potential to produce record levels of revenue and profitability for the company. For the second half of 2021, Gentex expects revenues in the range of $970 million to $1.07 billion with a gross margin in the range of 37.5% to 38.5%. For fiscal 2022, Gentex expects revenue to be about 10%-15% higher than the updated 2021 revenue estimates of $1.88-$1.98 billion. While industry supply shortages are expected to continue into the first half of 2022, Gentex is encouraged that the overall demand for vehicles should still provide opportunities for the company to continue to outperform the underlying market. Gentex remains cash rich and debt-free as of quarter end and repurchased 3.4 million shares of its common stock during the quarter for $115.9 million or at an average price of $34.09 per share as management views the stock as undervalued. Gentex plans to continue to return 100% of its strong free cash flows to shareholders through dividends and share repurchases unless a strategic and attractive acquisition opportunity appears.
Thursday, July 22, 2021
Roche Group-RHHBY reported first half sales increased 8% in constant exchange rates (CER) to CHF 30.7 billion with net income and EPS both increasing 2% in CER to CHF 7,803 and CHF 9.05, respectively. The 8% sales growth was driven by a 51% jump in Diagnostics Division sales to CHF 9.0 billion as continued growth in sales of COVID-19-related products coupled with a rebound in routine testing across all regions as pandemic measures eased. While Roche’s industry-leading portfolio of COVID-19 tests contributed total sales of CHF 2.5 billion, the demand for COVID-19 tests is likely to decrease in the second half of the year. Pharmaceuticals Division sales declined 3% to CHF 21.7 billion due to biosimilar competition, notably in the US, although the continuing uptake of new medicines partially offset the decline. New medicines launched since 2012 continued their strong growth, up 30% during the first half, to CHF 11 billion, now contributing more than 50% of pharma division sales. During the first half of the year, Roche generated operating cash flow of CHF 8.2 billion and free cash flow of CHF 6.45 billion, up 18% from last year. During the first half of the year, Roche paid shareholders nearly CHF 8 billion in dividends, up 2% year-over-year. Roche ended the quarter with cash and investments of CHF 8.0 billion, long-term debt of CHF 11.3 billion and shareholders’ equity of CHF 37.8 billion on its sturdy balance sheet. Given the first half results and its robust pipeline, including a pill for COVID and a new Alzheimer’s treatment, management remains very confident about meeting its full year forecast with sales and core EPS targeted to growth in the low- to mid-single digit range. Roche expects to further increase its dividend in Swiss francs.
Intel-INTC reported second quarter revenues increased 2% to $19.6 billion with net income declining 1% to $5.1 billion and EPS up 4% to $1.19. By business segment, Client Computing Group revenue increased 6% to $10.1 billion on strong PC demand. Data Center Group revenues declined 9% to $6.5 billion. Internet of Things revenue increased 47% to $984 million on higher demand while Mobileye revenue jumped 124% to $327 million, driven by the automotive recovery. During the first half of the year, Intel generated $6.7 billion in free cash flow with the company returning $5.2 billion to shareholders through dividend payments of $2.8 billion and share repurchases of $2.4 billion at an average cost of $59.53 per share. Intel has $7.2 billion authorized for future share repurchases. Intel ended the quarter with $7.8 billion in cash and investments, $31.7 billion in long-term debt and $85.2 billion in shareholders’ equity. Management raised guidance with 2021 revenue now expected to be relatively flat at $77.6 billion with EPS of $4.09. Capital expenditures are expected in the $19 billion-$20 billion range. “There’s never been a more exciting time to be in the semiconductor industry. The digitization of everything continues to accelerate, creating a vast growth opportunity for us and our customers across core and emerging business areas. With our scale and renewed focus on both innovation and execution, we are uniquely positioned to capitalize on this opportunity, which I believe is merely the beginning of what will be a decade of sustained growth across the industry,” said Pat Gelsinger, Intel CEO.
Biogen-BIIB reported second quarter sales declined 25% to $2.8 billion with net income dropping 71% to $448.5 million and EPS declining 69% to $2.99 which included impairment charges of $542 million. Generic competition resulted in a 24% decline in Multiple sclerosis (MS) revenue to $1.8 billion. SPINRAZA revenue increased 1% to $500 million while biosimilar revenues increased 18% to $202 million. During the quarter, Biogen received accelerated FDA approval for ADUHELM for initiation of treatment in patients with mild cognitive impairment or mild dementia due to Alzheimer’s disease. The FDA approval has been swirled in controversy due to much confusion on the science and data on the drug. Several large medical sites that specialize in Alzheimer’s have announced they will not administer the drug. ADUHELM revenue during the quarter was minimal at $2 million as it will take time, resources and planning to get medical sites to administer the drug and for Medicare to approve the $56,000 treatment. Biogen is working to provide additional clarity on ADUHELM and is continuing engagement with worldwide regulators on the drug. Free cash flow declined 42% to $1.8 billion during the first half due primarily to the lower earnings. During the second quarter, Biogen repurchased 1.6 million shares of its common stock for $450 million at an average price of $281.25 per share with $3.55 billion remaining authorized for future share repurchases throughout 2021. Biogen updated its full year 2021 guidance with revenue now expected in the range of $10.65 billion to $10.85 billion and non-GAAP EPS estimated in the range of $17.50 to $19.00. This guidance assumes modest ADUHELM revenue in 2021, ramping higher thereafter. This guidance also assumes erosion of Biogen’s MS drugs in the U.S. with the decreased revenue from these high margin products expected to reduce gross margins.
Genuine Parts-GPC reported strong second quarter results with sales up 25% to $4.8 billion with net income and EPS from continuing operations increasing from prior year losses to $196 million and $1.36, respectively. By business segment, Automotive parts group sales increased 28% to $3.2 billion, representing 67% of total company revenues. The Industrial business sales increased 20% to $1.6 billion, representing 33% of total revenues. Genuine Parts produced its 15th consecutive quarter of gross margin expansion while further improving productivity via ongoing expense initiatives. The company generated cash flow from operations of $614 million during the first half of 2021. During the first half, the company repurchased $184 million of its common shares and paid dividends of $232 million, marking 65 consecutive years of increasing dividends. Genuine Parts has a strong balance sheet with $987 million in cash, $2.5 billion in long-term debt and $3.2 billion in shareholders’ equity. The company is well positioned to benefit from the strong economic recovery and raised its financial outlook for the full year. Total sales growth is expected to increase 10% to 12% in 2021 with EPS expected in the range of $5.81 to $5.96 with cash flow from operations in the range of $1.2 billion to $1.4 billion.
Wednesday, July 21, 2021
NVR, Inc.-NVR reported second quarter revenues increased 41% to $2.3 billion with net income jumping 96% to $321 million and EPS increasing 94% to $82.45, respectively. New orders decreased by 6% during the quarter to 5,521 units. However, the average sales price of new orders increased by 20% to $440,200. The cancellation rate in the second quarter was 8% compared to 16% in the prior year period. Settlements increased 32% during the quarter to 5,685 units. The backlog of homes sold but not settled as of June 30, 2021 increased on a unit basis by 19% to 12,527 units and increased on a dollar basis by 35% to $5.41 billion. Mortgage loan closings increased 37% to $1.57 billion during the quarter. During the first half of the year, the company repurchased 165 million shares for an average price of $4,572 per share and ended the quarter with $2.6 billion in cash, $1.5 billion in long-term debt and $3 billion in shareholders’ equity on its sturdy balance sheet.
SEI Investments-SEIC reported a 19% increase in revenues to $475.7 million with net income increasing 32% to $133.8 million and EPS up 37% to $0.93. Over 90% of the company’s revenues are recurring and customer retention rates are in the high 90s. By segment, Private Banks revenues increased 15% to $123.7 million with operating margins of 5%; Investment Advisors revenues increased 27% to $119.4 million with operating margins of 50%; Institutional Investors revenues increased 12% to $85.7 million with operating margins of 51%; Investment Managers revenues increased 20% to $142.8 million with operating margins of 40%. Average assets under management, excluding LSV, increased 28% to $858.2 billion, primarily due to market appreciation. During the second quarter, SEI Investments generated $188.4 million in cash flow from operations and $171.3 million in free cash flow, representing a robust 128% of reported earnings. During the quarter, the company repurchased $129 million shares at an average cost per share of $61.93. Given the current market value of SEI shares, the company expects to remain active in the repurchase space. SEI Investments ended the quarter with $911 million in cash and $32 million in long-term obligations on its clean balance sheet.
Johnson & Johnson-JNJ reported second quarter sales increased 27% to $23.3 billion with net income and EPS both rebounding a healthy 73% to $6.3 billion and $2.35, respectively. Growth was driven by the Medical Devices unit which reported sales increased 63% to $7 billion during the quarter due to the COVID-19 related market recovery and innovation. Pharmaceutical sales increased 17% to $12.6 billion during the quarter driven by double-digit growth in key products led by 22% growth in oncology products. Consumer Health sales increased 13% during the quarter to $3.7 billion with strong growth across multiple franchises primarily due to the market recovery. JNJ continued to generate strong free cash flow of $8 billion during the quarter and ended the quarter with $25 billion in cash and investments and $33 billion in long-term debt on its strong balance sheet. A key priority for deploying cash is the dividend with $2.8 billion paid in dividends during the quarter. JNJ also invested $3.4 billion in R&D during the quarter to advance its promising pipeline of new products. Based on strong first half performance, JNJ increased its outlook for full year 2021 results with revenues expected to increase 13.5%-14.5% to a range of $93.8 billion to $94.6 billion with adjusted EPS expected to increase 19.6% to 20.8% to a range of $9.60 to $9.70.
Tuesday, July 20, 2021
Canadian National Railway-CNI reported second quarter revenues chugged ahead 12% to $3.6 billion with net income and EPS rebounding 90% to $1.034 billion and $1.46, respectively. Adjusted net earnings and EPS increased 16% to $1.058 billion and $1.49, respectively. Revenue ton miles increased 13% year-over-year to 59.2 billion and volume grew in virtually every business unit, with notable strength in industrial products, international and domestic intermodal and propane. During the first half of the year, the company generated $1.3 billion in free cash flow, down $300 million from last year, mainly due to the sale of assets last year and timing of tax payments. Canadian National paid $872 million in dividends during the first half of the year and ended the quarter with $569 million in cash, $12 billion in long-term debt and $20.3 billion in shareholders’ equity. During the conference call, management reiterated its confidence in its ability to obtain the necessary approvals for the proposed $33.6 billion merger with Kansas City Southern and has filed shelf registration to issue up to $6.0 billion of debt financing. Management also reaffirmed 2021 guidance with high-single digit RTM volume growth, overall pricing above rail inflation, double-digit adjusted EPS growth, capital expenditures of $3.0 billion and free cash flow in the range of $3.0 billion to $3.3 billion.
Maximus-MMS has been awarded two contracts from the Internal Revenue Service (IRS) worth a combined $151 million. Under the contracts, Maximus will conduct a variety of work for IRS, including implementing legislation such as the American Recovery Plan, training IRS employees and moving specific content to the cloud for the first time. With the implementation of new technology and the work completed through these two contracts, Maximus will help the IRS turn its modern vision for the agency into reality. Throughout the COVID-19 pandemic, Maximus helped the IRS meet the increased needs of citizens, through the distribution of relief payments in 2020 and 2021, as well as extensions and special exemptions during filing season including support for the IRS Call Center for information on Economic Impact Payments (EIP).
Monday, July 19, 2021
Tractor Supply-TSCO rang up a 13.4% increase in second quarter sales to $3.6 billion with net income plowing ahead 9.2% to $370 million and EPS up 10% to $3.19. Comparable store sales increased 10.5% during the second quarter, driven by transaction count and average ticket growth of 4.5% and 6.0%, respectively. The increase in comparable store sales was driven by robust growth in everyday merchandise, including consumable, usable and edible products and solid demand for spring and summer seasonal categories. All geographic regions and major merchandising categories reported comparable store sales growth. In addition, Tractor Supply experienced record e-commerce sales. Operating margins declined 61 basis points to 13.5% as commodity inflation and increased freight and wage costs were mostly offset by price increases. Management expects inflation to persist in the back half of the year and will continue to ably manage through it. During the first half of the year, Tractor Supply generated $592.9 million in free cash flow, representing more than 100% of net income, a sign of high-quality reported earnings. During the second quarter, the company returned $263.2 million to shareholders through share repurchases of $203.3 million at an average cost per share of $184.82 and cash dividends totaling $59.9 million. During the second quarter of 2021, the company opened 11 new Tractor Supply stores and one new Petsense store and closed four Petsense stores. Tractor Supply ended the quarter with $1.4 billion in cash and investments and $3.5 billion in long-term obligations on its sturdy balance sheet. Given the robust first half results, Tractor Supply upped its guidance with sales now expected in the $12.1 billion to $12.3 billion range. Comparable store sales are now expected to increase between 11% and 13%, up from prior guidance of 5% to 8%. EPS are now expected in the range of $7.70 to $8.00, up from previous guidance of $7.05 to $7.40.
Friday, July 16, 2021
UnitedHealth Group-UNH reported second quarter revenues rose a healthy 14.8% to $71.3 billion with net income and EPS each down 36% to $4.3 billion and $4.46, respectively. Well-diversified revenue growth during the quarter included double-digit growth at both Optum and UnitedHealthcare. The earnings comparison reflected the broad-based deferral of healthcare during the second quarter of 2020 due to the pandemic. Cash flows from operations during the second quarter were $5.5 billion, or 1.3 times net income. Free cash flow declined 13% during the first half of the year to $10.4 billion with the company paying $2.5 billion in dividends and repurchasing 7.9 million shares of its common stock for $2.9 billion at an average price of $367.08 per share during the past six months. Return on equity during the second quarter of 25.2% reflected the company’s strong and diverse earnings profile and efficient capital bases. Debt to total capital was 40.1% at quarter end with the company holding over $66.6 billion of cash and investments. Based upon first half 2021 performance, management raised its full year earnings outlook to $17.35 to $17.85, which includes $1.80 in net unfavorable COVID-19 effects.
Wednesday, July 14, 2021
Walgreens Boots Alliance-WBA announced that its board of directors has declared a quarterly dividend of 47.75 cents per share, an increase of 2.1 percent. The increased dividend is payable September 10, 2021 to stockholders of record as of August 20, 2021, and raises the annual rate from $1.87 per share to $1.91 per share. Walgreens Boots Alliance and its predecessor company, Walgreen Co., have paid a dividend in 355 straight quarters (more than 88 years) and have raised the dividend for 46 consecutive years.
Tuesday, July 13, 2021
Fastenal-FAST reported a slight dip in second quarter sales to $1.5 billion with net income inching up to $239.7 million and EPS coming in flat at $0.42. Sales to manufacturing and construction customers grew 21.5% during the quarter, but the fall-off of the pandemic-related surge in PPE and sanitation product sales from last year resulted in flat overall sales. Pricing taken to mitigate product and transportation cost inflation contributed 80 to 110 basis points to net sales during the second quarter. During the quarter, Fastenal reported daily sales of $23.6 million, reflecting a slight decline from last year. Daily sales of Fastener products, accounting for about 33.6% of second-quarter sales, rose 28.4% year-over-year on higher manufacturing and construction demand. Sales of safety products, about 21% of second-quarter sales, declined 38.6% on a daily basis. Sales of the remaining products, about 45.4% of second-quarter sales, grew 12.9% year-over-year. Fastenal signed 87 new Onsite locations during the quarter, bringing the total to 1,323 active sites, up 9.2% from last year. Daily sales through Onsites increased more than 25% on weak 2020 comps. Daily sales through Fastenal Managed Inventory (FMI) devices grew 61.4% for second-quarter 2021 and represented 31.1% of net sales. E-commerce sales rose 53% and now represent nearly 42% of sales. During the second quarter, Fastenal generated operating cash flow of $171.5 million and free cash flow of $140 million with the company returning $161 million to shareholders through dividend payments. Fastenal ended the quarter with $322 million in cash, $365 million in long-term debt and $2.9 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead to the remainder of the year, Fastenal expects tight supply chains and labor shortages to persist with pressure from product and transportation inflation expected to increase during the second half of the year. Management anticipates taking further steps to address these cost pressures during the third quarter.
PepsiCo-PEP reported second quarter sales bubbled up 21% to $19.2 billion with net income and EPS popping more than 40% to $2.36 billion and $1.70, respectively. Excluding the impacts of currency translation impacts and special items, organic revenues increased 12.5% on 7 points of volume growth and 5 points of price and mix. Core EPS increased 27%. PepisCo’s North American beverage business delivered a 21% gain lapping pandemic related impacts as the foodservice industry began re-opening doors and lifting capacity restrictions. PepsiCo gained beverage market share in the carbonated soft drink, ready-to-drink tea and juice categories. Revenues from key brands including Pepsi, Mountain Dew, Gatorade, bubly and Starbucks grew at double-digit rates. Global snacks business remained resilient as organic revenue grew 6%, powered by market share gains across key brands such as Lays, Doritos, Cheetos, Ruffles, PopCorners, Sun Chips and Miss Vickie’s. Despite gaining market share in the home breakfast, snacks and meals categories, Quaker Foods revenue declined 13% as the business lapped a surge in consumer demand during the pandemic. Despite uneven recoveries across many international markets, the International Beverage business accelerated 22% organically and the International snack business delivered 11% growth, driven by double-digit growth in Mexico, Russia, Brazil, Turkey, Egypt, India, Germany, France, Spain and South Africa. During the first half of 2021, PepsiCo generated over $1 billion in free cash flow with the company returning nearly $3 billion to shareholders through dividends of $2.8 billion and share buybacks of $106 million, which marked the completion of share buybacks for 2021. PepsiCo ended the quarter with $2.8 billion in cash and investments, $38 billion in long-term debt and $15.3 billion in shareholders’ equity. Looking ahead to the full year, PepsiCo expects revenue growth of 6%, versus prior guidance of mid-single-digit growth, and constant currency EPS growth of 11%, up from previous guidance of high-single-digit growth. Core EPS is expected to be $6.20 compared to $5.52 in 2020. PepsiCo expects to return $5.9 billion to shareholders during 2021, mainly through dividend payments. Management also expects to mitigate higher input, freight and supply chain costs with price increases, mix and assortment.
Thursday, July 8, 2021
In addition to announcing its regular quarterly dividend of $.66 per share, Paychex-PAYX also announced a new $400 million share repurchase authorization. "At Paychex, we take great pride in the company’s history of providing exceptional shareholder value. Today’s dividend and stock repurchase announcement are an illustration of that commitment and positions us to continue to make strategic investments in the long-term growth of Paychex," said Martin Mucci, Paychex president and CEO. In fiscal 2021, ended May 31, 2021, Paychex returned $909 million in dividends, or 83% of net income, to shareholders.
Thursday, July 1, 2021
Regeneron Pharmaceuticals-REGN announced that scientists from the Regeneron Genetics Center® (RGC) have discovered rare genetic mutations in the GPR75 gene associated with protection against obesity. As reported in Science almost 650,000 people were sequenced to find rare individuals with this genetic 'superpower,' providing new insights into the genetic basis of obesity. Potential therapeutics mimicking these genetic superpowers are being developed at Regeneron, utilizing its VelocImmune technologies and novel technologies from collaborators such as Alnylam Pharmaceuticals, Inc. It is estimated that more than one billion people could be suffering from obesity (body mass index [BMI] of 30 or higher) by 2030. Working with research collaborators, RGC scientists found that individuals who have at least one inactive copy of the GPR75 gene have lower BMI and, on average, tend to weigh about 12 pounds less and face a 54% lower risk of obesity than those without the mutation. Protective 'loss of function' mutations were found in about one of every 3,000 people sequenced. "Discovering protective genetic superpowers, such as in GPR75, provides hope in combating global health challenges as complex and prevalent as obesity," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer at Regeneron. "Discovery of protective mutations – many of which have been made by the Regeneron Genetics Center in its eight-year history – will allow us to unlock the full potential of genetic medicine by instructing on where to deploy cutting-edge approaches like gene-editing, gene-silencing and viral vector technologies."
Walgreens Boots Alliance-WBA reported third quarter sales rose 12.1% to $34 billion with the company swinging to a $1.2 billion profit and EPS of $1.27 compared to a loss in the prior year period, which included a $2 billion non-cash impairment charge related to goodwill and intangible assets in Boots UK. Sales growth during the quarter reflected strong growth in the International segment, aided by the formation of the company’s joint venture in Germany, and solid growth in the United States segment. Profitability improved across both the pharmacy and retail segments in the United States and a rebound in the International segment due to less severe Covid-19 restrictions in the UK. Free cash flow increased 36% during the first nine months to $3.3 billion with the company paying $1.2 billion in dividends. During the quarter, WBA completed the divestiture of the Alliance Healthcare businesses and used a portion of the $6.275 billion in cash to pay off $3.3 billion of debt and will deploy the remainder to accelerate growth. The company raised fiscal 2021 guidance from mid-to-single growth to around 10% growth in constant currency EPS reflecting the strong results in the third quarter and greater clarity on the impact of COVID-19 vaccinations. Walgreens has administered more than 25 million COVID-19 vaccinations to date.
Tuesday, June 29, 2021
FactSet-FDS reported third quarter revenue rose 7% to $399.6 million with net income and EPS each dipping less than 1% to $100.7 million and $2.62, respectively. The increase in revenue was due to higher sales of analytics and content and technology solutions. Annual Subscription Value (ASV) plus professional services was $1.6 billion as of 5/31/21. Annual ASV retention was greater than 95%. Client count during the quarter increased 69 to 6,172 with user count up 1,649 to 155,004. Operating margin declined to 29.5% compared with 32.5% in the prior year period because of higher spending for the company’s multi-year investment plan as well as increased performance-based compensation reflecting the acceleration in ASV. Free cash flow year-to-date increased 14% to $322.8 million with share repurchases of $172 million and dividend payments of $87.1 million during the same time. During the third quarter, the company repurchased 178,100 shares of its common stock at an average price of $323.25 for $57.6 million with $292.4 million remaining authorized for future share repurchases. During the past quarter, the company increased its dividend 6.5%, marking the 22nd consecutive year of dividend increases. For the full fiscal 2021 year, FactSet expects revenue in the range of $1.57 billion to $1.59 billion and EPS in the range of $10.05 to %10.45.
Saturday, June 28, 2021
Regeneron-REGN and Intellia Therapeutics announced positive interim data from an ongoing Phase 1 clinical study of their lead in vivo genome editing candidate, NTLA-2001, which is being developed as a single-dose treatment for transthyretin (ATTR) amyloidosis. NTLA-2001 is the first CRISPR/Cas9-based therapy candidate to be administered systemically, via intravenous infusion, for precision editing of a gene in a target tissue in humans. NTLA-2001 is designed to inactivate the TTR gene in liver cells to prevent the production of misfolded transthyretin (TTR) protein, which accumulates in tissues throughout the body and causes the debilitating and often fatal complications of ATTR amyloidosis. "This is exciting early data both for people living with this devastating disease and for the entire scientific community working to maximize the potential of genetics-based medicines through cutting-edge research and technologies," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer of Regeneron, which first partnered with Intellia in 2016 to advance CRISPR/Cas9 gene-editing technology for in vivo therapeutic development. "Thanks to large-scale human genetics research, there have been many new genetic targets identified and confirmed to have an impact on human health. Combining this knowledge with the precision and enhanced convenience of a single CRISPR infusion unlocks new possibilities in treating – and potentially even curing – life-threatening and historically difficult-to-address diseases."
Friday, June 25, 2021
Paychex-PAYX reported strong fourth quarter results with revenues up 12% to $1.0 billion, net income up 19% to $263 million and EPS jumping 20% to $.73. Double-digit growth during the fourth quarter was driven by a record 85% client retention level, record sales results and stronger checks per client, which were due to improving macroeconomic conditions and gains in employment. The client base growth was strong, and Paychex ended the year with over 710,000 clients thanks to the value the company added for clients during the pandemic. For the full fiscal 2021 year amid unprecedented challenges, Paychex reported flat revenues, net income and EPS of $4.1 billion, $1.1 billion and $3.03, respectively. Return on shareholders’ equity was a superb 37.2% for the year. Free cash flow declined 13% during the year to $1.1 billion with the company paying $909 million in dividends and repurchasing 1.7 million shares of its common stock for $156 million at an average price of $91.59 per share. Paychex is well positioned for growth in fiscal 2022 with total revenue anticipated to grow approximately 7% and adjusted EPS growth of 10%-12% expected.
Thursday, June 24, 2021
Nike-NKE rang up a 96% jump in fourth quarter sales to $12.3 billion with earnings of $1.5 billion and EPS of $0.93 compared to last year’s fourth quarter loss of $790 million, or $0.51 per share. North America sales, which accounted for more than 40% of Nike’s total quarterly revenue, spiked 141% higher amid reopening of the economy, increased wholesale as supply chain issues abated and continued growth in NIKE Brand Digital sales which jumped 41%. Despite temporary COVID-related retail store closures, Europe, the Middle East and Africa sales increased 124% to nearly $3 billion, boosted by a 40% increase in digital sales and the gradual reopening of markets across the region. Sales in Greater China increased 17% to $1.9 billion as boycotts by consumers in response to Nike’s decision to check its supply chain for the use of forced labor by Uighurs and other ethnic minorities likely muted demand for Nike products though sales trends improved during the quarter. For the year, Nike reported sales of $44.5 billion, up 19% from last year, with earnings up 126% to $5.7 billion and EPS up 123% to $3.56. During fiscal 2021, Nike generated a winning 44.9% return on shareholders’ equity. Nike has a strong track record of investing to fuel growth and running up shareholder returns through share repurchases and dividends, including 19 consecutive years of dividend increases. During 2021 Nike returned $2.25 billion to shareholders through dividend payments of $1.6 billion and share repurchases of $650 million at an average cost per share of $132.65. Looking ahead to fiscal 2022, Nike expects revenue to grow in the low double-digits, surpassing $50 billion, with gross margins expanding 125 basis points to 150 basis points, reflecting the continued shift to a more profitable NIKE Direct business and sustained strong full price realization, partially offset by higher product costs and supply chain investments.
Accenture-ACN reported excellent third quarter results with revenues up 21% to $13.2 billion and net income and EPS each jumping 26% to $1.6 billion and $2.40, respectively. Operating margin expanded 40 basis points to 16% during the quarter. New booking increased 39% during the quarter to $15.4 billion with consulting bookings of $8 billion and outsourcing bookings of $7.4 billion. These strong financial results reflect significant market share gains and the continued momentum driven by the demand for digital transformation for clients. Accenture is seeing not only the strong recovery from the pandemic but sustained growth in demand as the cloud becomes critical for clients. Growth was broad-based across geographic markets with double-digit growth in all regions, led by 18% growth in North America, and double-digit growth in 11 of 13 industry groups led by 21% growth in Health and Public Service. Year-to-date, free cash flow increased 33% to $6.2 billion. During the first nine months, Accenture paid $1.7 billion in dividends and repurchased $2.8 billion of its common stock at an average price of $253.64 per share. Accenture’s remaining share repurchase authorization is $4.2 billion. Year-to-date, Accenture has acquired 39 innovative companies for $1.5 billion bringing the company scale and new or expanded capabilities. Accenture raised financial projections for the full fiscal 2021 year with revenue now expected to increase 10% to 11%, operating margin expected to expand 40 basis points to 15.1% and EPS in the range of $9.07 to $9.16, representing 15% to 16% growth. Free cash flow for the full year is expected in the range of $8.0billion-$8.5 billion with the company planning to return at least $5.8 billion to shareholders via dividends and share repurchases.
Wednesday, June 16, 2021
Regeneron Pharmaceuticals-REGN welcomed positive results from the largest trial assessing any monoclonal antibody treatment in patients hospitalized with severe COVID-19. The UK RECOVERY trial found that adding investigational REGEN-COV™ to usual care reduced the risk of death by 20% in patients who had not mounted a natural antibody response on their own against SARS-CoV-2, compared to usual care on its own. "Definitive Phase 3 trials have now demonstrated that REGEN-COV can alter the course of COVID-19 infection from prevention, to very early infection, all the way through to when patients are on a ventilator in the hospital," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer at Regeneron. "We are incredibly grateful to the RECOVERY team, participating investigators and patients for conducting this in-depth analysis, and hope that the results mean that even more patients may soon be able to benefit from this life-saving medicine. We intend to rapidly discuss these results with regulatory authorities, including in the U.S. where we will ask for our EUA to be expanded to include appropriate hospitalized patients." Regeneron is collaborating with Roche-RHHBY to increase global supply of REGEN-COV. Regeneron is responsible for development and distribution of the treatment in the U.S., and Roche is primarily responsible for development and distribution outside the U.S. The companies share a commitment to making the antibody cocktail available to COVID-19 patients around the globe and will support access in low- and lower-middle-income countries through drug donations to be made in partnership with public health organizations.
Tuesday, June 15, 2021
Oracle-ORCL reported fourth revenues increased 8% to $11.2 billion with net income increasing 29% to $4.0 billion and EPS up 38% to $1.37. Adjusted net income and EPS increased 20% and 29%, respectively. Accelerating growth in cloud application revenue powered fourth quarter results with Fusion ERP up 46%, Fusion HCM up 35% and NetSuite up 26%. Revenue from Oracle’s Gen2 Cloud Infrastructure business, including Autonomous Database, grew over 100% during the quarter. For the fiscal year ended May 31, revenues increased 4% to $40.5 billion with net income up 36% to $13.7 billion and EPS up 48% to $4.55. Adjusted net income and EPS increased 11% and 21%, respectively, representing the 4th consecutive year of double-digit growth and the best results in seven years. Cloud service subscriptions now account for 71% of total revenues. During fiscal 2021, Oracle generated a record $13.8 billion in free cash flow with the company returning nearly $24 billion to shareholders through dividend payments of $3.0 billion and share repurchases of $21 billion at an average cost per share of $63.83. During the past 10 years, Oracle has reduced its shares outstanding by more than 44%. Oracle ended the fiscal year with $46.6 billion in cash and investments, $76.0 billion in long-term debt and $6.0 billion in shareholders’ equity. Oracle generated a remarkable 230.9% return on shareholders’ equity during fiscal 2021, thanks to its profitable operations and balance sheet leverage. Management expects growth to accelerate during 2022 and beyond as the fast-growing cloud business becomes a larger portion of the business. Given the high returns on investment in the cloud, Oracle plans to nearly double its capital investments to $4 billion in 2022. First quarter revenues for fiscal 2022 are expected to increase 3% to 5% generating non-GAAP operating margins of 47%, higher than any of Oracle’s competitors.
Biogen-BIIB and Sage Therapeutics, Inc. announced that the WATERFALL Study in patients with Major Depressive Disorder (MDD) met its primary endpoint with zuranolone (SAGE-217/BIIB125) 50 mg showing statistically significant improvement in depressive symptoms compared with placebo at Day 15 as assessed by the 17-item Hamilton Rating Scale for Depression (HAMD-17) total score. Monoamine-based antidepressants have been the standard of care for chronic treatment of MDD for the past 60 years. They are treatments administered daily, which require sufficient exposure and continuous use to maintain effect. Zuranolone is a two-week, once-daily oral drug under investigation for the treatment of MDD. It is a molecule that is designed to potentially provide a rapid-acting, sustainable treatment option, and could represent a breakthrough in the current management of depression. “Together with our collaboration partners at Sage, we are proud to announce highly encouraging results from the Phase 3 WATERFALL Study of zuranolone in major depressive disorder. These results represent hope and positive progress for the more than 250 million patients worldwide who are estimated to live with depression,” said Alfred Sandrock, Jr., M.D., Ph.D., Head of Research and Development at Biogen. “Major depressive disorder is a common co-morbidity of many diseases represented in Biogen’s neuroscience portfolio. We believe zuranolone has the potential to offer a unique, first-in-class therapeutic for depression with a distinct benefit-risk profile to people living with this common but serious mental health condition.” “MDD is a pressing mental health concern and, unlike physical health concerns where innovation is commonplace, many of the treatments for MDD were first approved more than two decades ago,” said Paul Gionfriddo, President and CEO of Mental Health America (MHA). “We welcome today’s news, and the potential for a new and innovative treatment that could change the way we treat depression.” Zuranolone has been granted Breakthrough Therapy Designation by the U.S. Food & Drug Administration, and the companies intend to discuss next steps with the Agency.
Monday, June 14, 2021
Cisco Systems-CSCO was awarded a single-award indefinite-delivery/indefinite-quantity contract with a ceiling of $1.2 billion for brand name Cisco Smart Net Total Care and Software Support Services for users across the Department of Defense. The period of performance is a one-year base period and two one-year option periods, for a total contract life cycle of three years.
T. Rowe Price Group-TROW announced that its Board of Directors has declared a special cash dividend of $3.00 per share payable on July 7, 2021 to stockholders of record as of the close of business on June 25, 2021. William J. Stromberg, the company's chair and chief executive officer, commented: "This special cash dividend is an efficient return of capital to our stockholders and reflects the healthy cash position on our balance sheet. After the special dividend payment, the company's balance sheet will remain very strong, with ample liquidity to continue to execute on our business strategy. In addition, we believe that the payment of the special cash dividend will not have a material impact on the company's ability to meet its ongoing financial needs, continue our outstanding dividend record for the foreseeable future, or maintain a buffer against market volatility."
Thursday, June 10, 2021
Raytheon Technologies-RTX has been awarded a $3,120,000,000 indefinite-delivery/indefinite-quantity contract for F-15 Radar Eagle Vision. This contract provides for the production, modernization and support of the F-15 APG-82 radar system to rapidly deliver and stay aligned with the F-15 weapon system program. Work will be performed in El Segundo, California, and is expected to be completed June 8, 2036.
T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.59 trillion as of May 31, 2021, representing an 8.4% increase since year end.
Wednesday, June 9, 2021
Brown-Forman-BFb reported fourth quarter revenue rose 14% to $812 million with net income and EPS each down 6% to $120 million and $.25, respectively. For the full fiscal 2021 year, revenues rose 3% to $3.5 billion with net income and EPS each bubbling up 9% gains to $903 million and $1.88, respectively. Sales growth during the year was generated in all major geographic regions demonstrating the resilience of the company’s brands in a difficult environment. Growth was driven by 4% underlying growth in the Jack Daniel’s family of brands while premium bourbons maintained double-digit underlying sales growth with the tequila portfolio growing underlying net sales by 14%. Return on shareholders’ equity for the year was a strong 34% driven by an industry-leading return on invested capital of nearly 20%. Free cash flow during the year increased 24% to $755 million with the company paying $338 million in dividends. Brown-Forman has paid dividends for 77 consecutive years and has increased the dividend for 37 straight years. Management is optimistic for fiscal 2022 as the operating environment continues to improve with the re-opening of on-premise locations and the increase in tourism. For fiscal 2022, the company anticipates mid-single digit growth in underlying sales and operating income.
UPS-UPS discussed its 2023 financial targets as follows: Consolidated revenue is expected to range from approximately $98 billion to $102 billion with consolidated adjusted operating margin ranging from approximately 12.7 percent to 13.7 percent. Cumulative capital spending from 2021–2023 is expected to approximate $13.5 billion to $14.5 billion. Adjusted return on invested capital is expected to range from approximately 26 percent to 29 percent.
Monday, June 7, 2021
The FDA approved Biogen’s-BIIB Aduhelm (aducanumab) to treat patients with Alzheimer’s disease using the Accelerated Approval pathway, under which the FDA approves a drug for a serious or life-threatening illness that may provide meaningful therapeutic benefit over existing treatments when the drug is shown to have an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit to patients and there remains some uncertainty about the drug’s clinical benefit. This approval is significant in many ways. Aduhelm is the first novel therapy approved for Alzheimer’s disease since 2003. Perhaps more significantly, Aduhelm is the first treatment directed at the underlying pathophysiology of Alzheimer’s disease, the presence of amyloid beta plaques in the brain. The clinical trials for Aduhelm were the first to show that a reduction in these plaques—a hallmark finding in the brain of patients with Alzheimer’s—is expected to lead to a reduction in the clinical decline of this devastating form of dementia.
Friday, June 4, 2021
Regeneron Pharmaceuticals-REGN announced the U.S. Food and Drug Administration (FDA) updated the Emergency Use Authorization (EUA) for REGEN-COV™, lowering the dose to 1,200 mg (600 mg casirivimab and 600 mg imdevimab), which is half the dose originally authorized. Pivotal Phase 3 data showed the 1,200 mg dose reduced risk of hospitalization or death by 70%. As part of the updated EUA, REGEN-COV should be administered by intravenous (IV) infusion; subcutaneous (SC) injections are an alternative when IV infusion is not feasible and would lead to a delay in treatment. "Despite increased use of vaccines, thousands of patients are still becoming infected in the U.S. every day, with many at high risk of serious complications from COVID-19. Unfortunately, to date only a fraction of patients eligible for antibody treatments have received them, which we hope will change based on this updated FDA authorization. REGEN-COV is readily available and supplied free of charge by the U.S. government," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer at Regeneron. "REGEN-COV has also demonstrated potency against the main variants of concern to date in vitro and is the only antibody therapy currently available across the U.S., including in states where variants first identified in Brazil and South Africa are circulating at a higher rate."
Fastenal-FAST reported May net and daily sales each declined 3.2% to $477.2 million and $23.9 million, respectively. Strong growth in Canada/Mexico was offset by declines in the U.S. and the rest of the world. By end market, manufacturing sales jumped 18.9% with non-residential construction sales up 4.4%. Daily sales by product line reflected strong 28.2% growth in fasteners, 12.5% growth in other products offset by the 44.1% decline in Safety products as Fastenal is lapping the strong demand for Safety products last year due to the pandemic.
Thursday, June 3, 2021
The Board of Directors of SEI Investments Company-SEIC approved an increase in its stock repurchase program by an additional $250 million, increasing the available authorization under the program to approximately $316 million.
Thursday, May 27, 2021
The TJX Companies-TJX announced that its Board of Directors has reinstated its share repurchase program. The Company plans to repurchase approximately $1.0 billion to $1.25 billion of TJX stock during the fiscal year ending January 29, 2022, and currently has approximately $3.0 billion remaining under its existing stock repurchase programs. TJX also announced the declaration of a quarterly dividend on its common stock of $.26 per share payable September 2, 2021, to shareholders of record on August 12, 2021. Further, as of today, the Company continues to see second quarter overall open-only comp store sales trends similar to the first quarter.
Ulta Beauty-ULTA reported first quarter revenues increased 65% to $1.9 billion with net income and EPS increasing from prior year losses to $230 million and $4.10, respectively. Comparable sales increased 66% compared to a decrease of35% in the first quarter of fiscal 2020, driven by a 52.5% increase in transactions and a 9% increase in average ticket. During the first quarter, the company opened 28 new stores and ended the quarter with 1,290 stores. Ulta Beauty generated $296 million of free cash flow during the quarter and repurchased 1.2 million shares of common stock for $392 million at an average cost of $315.55 per share. As of 5/1/21, the company had $1.1 billion remaining authorized for future share repurchases. The company ended the quarter with $947.5 million in cash, $1.6 billion in operating lease liabilities and $1.8 billion in shareholders’ equity. For fiscal 2021, the company plans to open 40 net new stores with revenues expected in the range of $7.7 billion to $7.8 billion on comparable store sales growth of 23% to 25%. The company expects operating margin to expand to 11%, driven by gross margin expansion with EPS in the range of $11.50-$11.95. The company expects to repurchase $850 million of its stock in fiscal 2021 with capital expenditures expected in the range of $225 million to $250 million.
Thursday, May 20, 2021
Ross Stores-ROST rang up sales $4.5 billion with net income of $467 million and EPS of $1.34. This compares to sales of $1.8 billion and a net loss of $306 million, or $0.87 per share, last year. Same store sales increased 13% from 2019 levels on an increase in basket, partially offset by a slight decline in traffic. First quarter sales significantly exceeded management’s expectations as the company benefited considerably from a combination of government stimulus payments, ongoing vaccine rollouts, easing of COVID restrictions and pent-up consumer demand. Operating margin of 14.2% was well above plan and slightly above 2019 as leverage from the strong comparable sales gains offset the expected expense pressures from higher freight and wages, as well as ongoing COVID-related operating costs. During the quarter, Ross Stores generated $615.9 million in free cash flow, representing a stellar 129% of reported earnings, with the company paying $101.5 million in dividends. Ross Stores ended the quarter with $5.4 billion in cash and investments, $2.4 billion in long-term debt and $3.7 billion in shareholders’ equity on its dressy balance sheet. Given the strong results and cash flow, the company’s Board authorized a new program to repurchase up to $1.5 billion of its common stock through fiscal 2022, with plans to buy back $650 million this year and $850 million in 2022. Ms. Rentler, CEO, noted, “The reinstatement of our share repurchase program reflects the current strength of our balance sheet, confidence in the company’s ability to generate excess cash after funding our growth and other capital needs of the business, and our long-standing commitment to enhancing stockholder value and returns.” For the full 2022 fiscal year, Ross expects same store sales to increase 7% to 9% from 2019 levels with EPS in the $3.93 to $4.20 range.
Cisco Systems-CSCO reported third quarter revenues increased 7% to $12.8 billion with net income increasing 3% to $2.9 billion and EPS increasing 5% to $0.68. There was broad-based strength across the business with 10% year-over-year product order growth, representing the strongest demand in nearly a decade. Product revenue increased 6% to $9.1 billion and Service revenue increased 8% to $3.7 billion. Cisco continues to make progress on transforming to more software and subscription with 81% of software revenue sold as a subscription in the quarter, up from 76% in the last quarter. Revenue by geographic region was led by 19% growth in Asia Pacific, Japan, and China. Free cash flow declined 6% during the first nine months of the year to $10.4 billion with the company paying $4.6 billion in dividends and repurchasing $2.1 billion of its common stock, including 10 million shares repurchased in the third quarter at an average price of $48.71 per share. This reflects management’s confidence in future growth and the company’s financial strength with more than $23 billion in cash and investments on its quarter end balance sheet with $9.5 billion in long-term debt and $40.2 billion in shareholders’ equity. During the quarter, Cisco closed its acquisition of Acacia Communications for $4.5 billion. Cisco is seeing encouraging signs of strength across its business segments with its technology expected to be a powerful engine for economic recovery and growth. For the fourth quarter of fiscal 2021, management expects revenue growth of 6% to 8% with EPS expected in the range of $.64 to $3.69.
Hormel Foods-HRL reported second quarter sales rose 8% to a record $2.6 billion, net earnings and EPS each remained flat compared to last year, at approximately $228 million and $0.42. Free cash flow decreased 61% during the quarter to $110 million with the company repurchasing nearly $1 million of its common stock and paying $132.3 million in dividends, reflecting the company’s 371st consecutive quarter of dividend payments. Management is increasingly optimistic about generating sales and earnings growth in fiscal 2021 with the International segment expected to have a record year led by the continued strength in China, strides made in the global e-commerce business, a recovering foodservices business as restaurants open again and momentum in the deli and retail businesses. In February 2021, the company entered into a definitive agreement to acquire the Planters snack nuts business. The company expects to close the transaction in June 2021. For fiscal 2021, Hormel raised its sales guidance, expecting sales in the range of $10.2 billion-$10.8 billion with EPS expected in the range of $1.70-$1.82. These results do not include the pending Planters acquisition. “We have a very positive outlook on the foodservice industry and continue to see elevated demand in the retail, deli and international channels. As we enter this inflationary period, we will continue to offset margin pressure with price actions and supply chain improvements. Our experienced management team has a proven ability to navigate and grow our business in volatile market conditions,” said Jim Snee, chairman of the board, president and CEO.
Thursday, May 27, 2021
The TJX Companies-TJX announced that its Board of Directors has reinstated its share repurchase program. The Company plans to repurchase approximately $1.0 billion to $1.25 billion of TJX stock during the fiscal year ending January 29, 2022, and currently has approximately $3.0 billion remaining under its existing stock repurchase programs. TJX also announced the declaration of a quarterly dividend on its common stock of $.26 per share payable September 2, 2021, to shareholders of record on August 12, 2021. Further, as of today, the Company continues to see second quarter overall open-only comp store sales trends similar to the first quarter.
Ulta Beauty-ULTA reported first quarter revenues increased 65% to $1.9 billion with net income and EPS increasing from prior year losses to $230 million and $4.10, respectively. Comparable sales increased 66% compared to a decrease of35% in the first quarter of fiscal 2020, driven by a 52.5% increase in transactions and a 9% increase in average ticket. During the first quarter, the company opened 28 new stores and ended the quarter with 1,290 stores. Ulta Beauty generated $296 million of free cash flow during the quarter and repurchased 1.2 million shares of common stock for $392 million at an average cost of $315.55 per share. As of 5/1/21, the company had $1.1 billion remaining authorized for future share repurchases. The company ended the quarter with $947.5 million in cash, $1.6 billion in operating lease liabilities and $1.8 billion in shareholders’ equity. For fiscal 2021, the company plans to open 40 net new stores with revenues expected in the range of $7.7 billion to $7.8 billion on comparable store sales growth of 23% to 25%. The company expects operating margin to expand to 11%, driven by gross margin expansion with EPS in the range of $11.50-$11.95. The company expects to repurchase $850 million of its stock in fiscal 2021 with capital expenditures expected in the range of $225 million to $250 million.
Thursday, May 20, 2021
Ross Stores-ROST rang up sales $4.5 billion with net income of $467 million and EPS of $1.34. This compares to sales of $1.8 billion and a net loss of $306 million, or $0.87 per share, last year. Same store sales increased 13% from 2019 levels on an increase in basket, partially offset by a slight decline in traffic. First quarter sales significantly exceeded management’s expectations as the company benefited considerably from a combination of government stimulus payments, ongoing vaccine rollouts, easing of COVID restrictions and pent-up consumer demand. Operating margin of 14.2% was well above plan and slightly above 2019 as leverage from the strong comparable sales gains offset the expected expense pressures from higher freight and wages, as well as ongoing COVID-related operating costs. During the quarter, Ross Stores generated $615.9 million in free cash flow, representing a stellar 129% of reported earnings, with the company paying $101.5 million in dividends. Ross Stores ended the quarter with $5.4 billion in cash and investments, $2.4 billion in long-term debt and $3.7 billion in shareholders’ equity on its dressy balance sheet. Given the strong results and cash flow, the company’s Board authorized a new program to repurchase up to $1.5 billion of its common stock through fiscal 2022, with plans to buy back $650 million this year and $850 million in 2022. Ms. Rentler, CEO, noted, “The reinstatement of our share repurchase program reflects the current strength of our balance sheet, confidence in the company’s ability to generate excess cash after funding our growth and other capital needs of the business, and our long-standing commitment to enhancing stockholder value and returns.” For the full 2022 fiscal year, Ross expects same store sales to increase 7% to 9% from 2019 levels with EPS in the $3.93 to $4.20 range.
Cisco Systems-CSCO reported third quarter revenues increased 7% to $12.8 billion with net income increasing 3% to $2.9 billion and EPS increasing 5% to $0.68. There was broad-based strength across the business with 10% year-over-year product order growth, representing the strongest demand in nearly a decade. Product revenue increased 6% to $9.1 billion and Service revenue increased 8% to $3.7 billion. Cisco continues to make progress on transforming to more software and subscription with 81% of software revenue sold as a subscription in the quarter, up from 76% in the last quarter. Revenue by geographic region was led by 19% growth in Asia Pacific, Japan, and China. Free cash flow declined 6% during the first nine months of the year to $10.4 billion with the company paying $4.6 billion in dividends and repurchasing $2.1 billion of its common stock, including 10 million shares repurchased in the third quarter at an average price of $48.71 per share. This reflects management’s confidence in future growth and the company’s financial strength with more than $23 billion in cash and investments on its quarter end balance sheet with $9.5 billion in long-term debt and $40.2 billion in shareholders’ equity. During the quarter, Cisco closed its acquisition of Acacia Communications for $4.5 billion. Cisco is seeing encouraging signs of strength across its business segments with its technology expected to be a powerful engine for economic recovery and growth. For the fourth quarter of fiscal 2021, management expects revenue growth of 6% to 8% with EPS expected in the range of $.64 to $.69.
Hormel Foods-HRL reported second quarter sales rose 8% to a record $2.6 billion, net earnings and EPS each remained flat compared to last year, at approximately $228 million and $0.42. Free cash flow decreased 61% during the quarter to $110 million with the company repurchasing nearly $1 million of its common stock and paying $132.3 million in dividends, reflecting the company’s 371st consecutive quarter of dividend payments. Management is increasingly optimistic about generating sales and earnings growth in fiscal 2021 with the International segment expected to have a record year led by the continued strength in China, strides made in the global e-commerce business, a recovering foodservices business as restaurants open again and momentum in the deli and retail businesses. In February 2021, the company entered into a definitive agreement to acquire the Planters snack nuts business. The company expects to close the transaction in June 2021. For fiscal 2021, Hormel raised its sales guidance, expecting sales in the range of $10.2 billion-$10.8 billion with EPS expected in the range of $1.70-$1.82. These results do not include the pending Planters acquisition. “We have a very positive outlook on the foodservice industry and continue to see elevated demand in the retail, deli and international channels. As we enter this inflationary period, we will continue to offset margin pressure with price actions and supply chain improvements. Our experienced management team has a proven ability to navigate and grow our business in volatile market conditions,” said Jim Snee, chairman of the board, president and CEO.
Wednesday, May 19, 2021
TJX-TJX rang up $10.1 billion in first quarter sales compared to $4.4 billion last year when its stores were closed for 50% of the quarter due to the pandemic. TJX reported $534 million in first quarter net income, or $.44 per share, compared to last year’s loss of $887 million, or $0.74 per share. Management estimates that temporary store closures for about 14% of the current quarter, primarily in Canada and Europe, negatively impacted first quarter sales by $1.1 billion to $1.2 billion and EPS by about $.21 to $.24. First quarter Open-Only Comp Store Sales increased 16%, driven by 40% growth in Home Goods comp store sales and 12% growth in Marmaxx U.S. During the quarter, TJX generated negative $432.7 million in operating cash flow and negative $658 million in free cash flow from negative free cash flow of $3.4 billion last year when the company temporarily suspended its dividend. The company paid $315.2 million in dividends during the quarter and redeemed $750 million in senior 2.75% notes due 6/15/2021. TJX ended the quarter with $8.8 billion in cash, $13.2 billion in long-term debt and lease obligations and $6.1 billion in shareholder equity. Management expects to reduce its debt by $2 billion in June by calling 3.5% notes due in 2025 and 3.75% notes due in 2027, thereby saving $90 million in annual interest expense. For the start of the second quarter of fiscal 2022, overall open-only comp store sales trends remain similar to the first quarter. In the second quarter of fiscal 2022, the company expects total sales and earnings per share to be negatively impacted from the temporary store closings. Due to the continued uncertainty of the current environment, the company has suspended providing financial guidance. Commenting on the future, Ernie Herrman, President and CEO said, “While the environment remains uncertain, particularly internationally, we are convinced we are strongly positioned as we emerge from this health crisis. Looking ahead, we see numerous opportunities to capture additional market share around the world and are excited about the runway for growth we see for TJX.”
Friday, May 14, 2021
Canadian National Railway-CNI announced that it submitted an enhanced binding superior proposal and merger agreement to the Kansas City Southern (KSU) Board of Directors. The KCS Board has determined CN's proposal to be a "Company Superior Proposal" and has announced its intention to terminate the previously executed March 21, 2021 merger agreement with Canadian Pacific Railway Limited (CP). CN looks forward to promptly entering into a definitive merger agreement with KCS to create the premier railway for the 21st century. CN's proposal offers KCS shareholders $325 per common share based on yesterday's closing price of CN shares, which implies a total enterprise value of $33.6 billion, including the assumption of approximately $3.8 billion of KCS debt. Under the terms of CN's revised proposal, KCS shareholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS shareholders expected to own 12.6% of the combined company. This represents an implied premium of 45% when compared to KCS' unaffected closing stock price on March 19, 2021. Under the terms of the revised proposal, a wholly owned subsidiary of CN has also agreed to reimburse $700 million to KCS in connection with their payment of the termination fee to CP under the merger agreement with CP. The completion of the transaction would be expected to take place in the second half of 2022.
Thursday, May 13, 2021
T.Rowe Price Group-TROW reported preliminary month-end assets under management of $1.59 trillionas of April 30, 2021, representing an 8.4% increase since year end.
Alphabet-GOOGL announced that its cloud unit has won a deal to supply computing and networking resources to Elon Musk’s SpaceX to help deliver internet service through the latter’s Starlink satellites. The Starlink satellite internet will rely on Google’s private fiber-optic network to quickly make connections to cloud services as part of a deal that could last seven years.
To support growing customer demand for cloud services in Brazil, Oracle-ORCL announced the opening of the Vinhedo Cloud region. This follows the launch of its São Paulo Cloud region last year, making Brazil Oracle's latest country offering dual cloud regions. The opening marks Oracle's 30th Cloud region worldwide and is part of Oracle's global plan to operate 38 Cloud regions by the end of 2021.
Regeneron Pharma and Sanofi presented "positive" Phase 3 Libtayo results in advanced cervical cancer. The data adds to previously reported data showing an improvement in overall survival with Libtayo compared to chemotherapy. "In this Phase 3 trial, Libtayo demonstrated a significant improvement in overall survival in women with advanced cervical cancer after progression on chemotherapy, reducing the risk of death by 31% compared to chemotherapy in the overall population," said Krishnansu S. Tewari, M.D., Professor and Director of the Division of Gynecologic Oncology at the University of California, Irvine and a trial investigator. "Improvements in progression-free survival and objective response rate were also demonstrated in the overall population compared to chemotherapy. Taken together, this landmark trial -- which enrolled patients regardless of PD-L1 expression status -- helps support the use of Libtayo as a potential new second-line treatment for women with advanced cervical cancer who face a poor prognosis and limited treatment options."
Thursday, May 6. 2021
Regeneron-REGN reported a healthy 38% increase in first quarter revenues to $2.5 billion with net earnings surging 78% to $1.15 billion and EPS soaring 86%, on fewer shares outstanding, to $10.09. Adjusted EPS, which excludes unrealized gains and losses on investments and other items, increased 50% to $9.89. First quarter revenues were boosted by $262.2 million in domestic sales of Regeneron’s antibody cocktail, REGEN-COV, approved for emergency use in the U.S. to treat non-hospitalized COVID-19 patients. The U.S. government has agreed to acquire up to 1.25 million additional doses at $2,100 per dose, resulting in payments of up to $2.625 billion in the aggregate. Excluding sales of REGEN-COV, Regeneron delivered a 20% year-over-year revenue increase. First quarter worldwide sales of products discovered by Regeneron included: Eylea, a leader in treatment for age-related macular degeneration and diabetic edema, with a 17% jump to $2.2 billion; Dupixent, a first-in-class treatment option for inflammatory diseases, surged 48% to $1.3 billion and recently approved Libtayo, now the standard of care for advanced cutaneous squamous cell carcinoma, generated sales of $101 million, up 35% from last year, with numerous new indications for the drug on the horizon. During the quarter, Regeneron generated free cash flow of $668.5 million, down 4% from last year, and free cash flow of $553.2 million, up 5%, on lower capital expenditures. The company repurchased 690,265 shares for $323.5 million, or $468.66 per average share. With $1.18 billion remaining under the current share repurchase program and a stock that, according Regeneron executives, trades below intrinsic value, the company remains active in repurchasing its shares. Regeneron ended the quarter with $7.05 billion in cash and investments, $2 billion in long-term debt and nearly $12 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead to the full year, the company expects to generate gross margins of 86% to 88% on net product sales and to spend between $3 billion to $3.175 billion in research and development.
Maximus-MMS reported second quarter revenue increased 17.3% to $959.3 million with net income jumping 191% to $80.6 million and EPS up 200% to $1.29. Growth was driven by new COVID-response work in the U.S segments, most notably U.S. Services, and employment services work in Australia. Year-to-date signed contracts as of 3-31-21 were $1.1 billion with contracts pending (awarded but unsigned) totaling $1.3 billion. The sales pipeline at quarter end was $35.6 billion, comprised of $6.9 billion in proposals pending, $1.6 billion in proposals in preparation and $27 billion in opportunities tracking. Free cash flow increased a whopping 1150% during the first quarter to $167 million with the company paying $17.2 million in dividends. With a strong balance sheet and cash flows, liquidity is not a concern at the company. Maximus is raising guidance for fiscal 2021 as a result of the improved COVID-19 response work forecast and following the recently announced acquisitions of the Federal division of Attain, LLC and Veterans Evaluation Services, Inc. (VES). Revenue is expected to range between $4.0 billion and $4.2 billion and EPS to range between $4.20 and $4.40 per share including the expected impact of the two acquisitions.
Wednesday, May 5, 2021
Cognizant-CTSH reported first quarter revenues rose 4% to $4.4 billion with net income up 38% to $505 million and EPS up 42% to $.95. Revenue growth was driven by digital revenue growth of 15% which now represents 44% of total revenue up from 39% in the prior year period. Operating margin expanded to 15.2% during the quarter. Cognizant has over 200,000 associates working in India with the ongoing humanitarian crisis brought on by the pandemic deeply concerning. Cognizant has made a series of investments to support India during this time of need and continues to prioritize the health and safety of all their associates who continue to work from home. Total employee attrition during the quarter was a high 21%, partly due to the pandemic but also due to the intensely competitive war for talent. Cognizant is increasing its investments in recruiting and talent with a record 28,000 offers to new graduates. Free cash flow during the quarter declined 76% to $93 million reflecting payments of taxes that had been deferred due to the pandemic and increased cash incentives to associates. During the quarter, Cognizant paid $128 million in dividends and repurchased $234 million of its common stock at an average price of $75.80 per share. Cognizant has $2.6 billion remaining authorized for future share repurchases. In addition, Cognizant spent about $340 million on acquisitions during the quarter to support future growth. The company raised its outlook for sales for the full fiscal 2021 year to a range of $17.8 billion to $18.1 billion, representing 7%-9% growth , with adjusted EPS expected in the range of $3.90-$4.02.
FactSet-FDS announced that its Board of Directors approved a 6.5% increase in the regular quarterly cash dividend from $0.77 per share to $0.82 per share. The $0.05 per share increase marks the twenty-second consecutive year the Company has increased dividends on a stock split adjusted basis, demonstrating its ongoing commitment to bring value to shareholders. The cash dividend will be paid on June 17, 2021, to holders of record of FactSet’s common stock at the close of business on May 31, 2021.
Private sector employment increased by 742,000 jobs from March to April according to the April ADP® National Employment ReportTM. The labor market continues an upward trend of acceleration and growth, posting the strongest reading since September 2020," said Nela Richardson, chief economist, ADP. "Service providers have the most to gain as the economy reopens, recovers and resumes normal activities and are leading job growth in April. While payrolls are still more than 8 million jobs short of pre-COVID-19 levels, job gains have totaled 1.3 million in the last two months after adding only about 1 million jobs over the course of the previous five months."
Tuesday, May 4, 2021
Berkshire Hathaway-BRKB reported the company’s net worth during the first quarter of 2021 increased 1%, or $4.8 billion, to $448 billion with book value equal to $293,627 per Class A share as of 3/31/21. Berkshire earned $11.7 billion in the first quarter, including $7.0 billion of operating earnings and $4.7 billion of investment and derivate gains.
Berkshire’s four major equity investment holdings represent 69% of total equities, including American Express at $21.4 billion (which charged 17% higher during the first quarter or $3.1 billion), Apple at $110.9 billion (which pared back 8% in total value or $9.5 billion), Bank of America at $40 billion (which deposited a 28% gain in value during the quarter or $8.7 billion), and Coca-Cola at $21.1 billion (slipping 4% or $800 million).
Berkshire’s revenues increased 6% during the first quarter to $64.7 billion with operating earnings rising 19.5% to $7 billion as many of Berkshire’s businesses experienced a significant recovery in revenues and earnings following the pandemic.
During the first quarter, Berkshire’s insurance underwriting profit more than doubled to $764 million as underwriting earnings from primary insurance offset underwriting losses from reinsurance. Underwriting results in the first quarter reflected the effects of the pandemic, arising from premium reductions from the GEICO Giveback program and reduced claims for private passenger automobile insurance. Insurance investment income declined 13% during the first quarter to $1.2 billion, reflecting the significant decline in interest rates resulting in lower interest income on substantial holdings of cash and U.S. Treasury Bills. Berkshire expects interest rates, which are historically low, to remain low. This will negatively affect earnings from fixed-income investments in 2021. The float of the insurance operations approximated $140 billion as of 3/31/2021, an increase of $2 billion since year end 2020. The average cost of float was negative during the first quarter as the underwriting operations generated pre-tax earnings of $764 million.
Burlington Northern Santa Fe’s (BNSF) revenues were relatively unchanged during the first quarter at $5.2 billion with net earnings chugging ahead 5% to $1.3 billion reflecting overall higher freight volumes and lower costs due to improved productivity and lower average fuel prices. Volume was up 5% during the quarter driven by double-digit gains in consumer and agricultural products, while industrial products and coal registered double-digit declines in volume.
Berkshire Hathaway Energy reported revenues charged ahead 31% during the first quarter to $5.9 billion. Net earnings rose 25% during the quarter to $703 million reflecting increased earnings from the natural gas pipelines and real estate brokerage businesses, partially offset by lower earnings from the other energy businesses.
Berkshire’s Manufacturing businesses reported first quarter revenues rose 6% to $15.9 billion with operating earnings up 15% to $2.4 billion. The Industrial Products segment continued to be hard hit with revenues down 9% and operating earnings down 13% during the first quarter. Precision Castparts experienced lower financial results due to the pandemic and the decline in commercial air travel and aircraft production. While air travel in the U.S. is increasing, Berkshire does not expect significant increases in the level of aircraft production to occur in the near term with Precision Castparts’ revenues and earnings expected to remain relatively low in 2021. On a more positive note, both Building and Consumer Products generated strong double-digit sales and earnings growth during the quarter as residential housing construction demand remains strong with consumer product sales also demonstrating recoveries from the pandemic led by strong demand for Forest River, Brooks Sports and Duracell products.
Service and Retailing revenues increased 4% during the first quarter to $19.6 billion with pre-tax earnings soaring 67% higher to $1.0 billion. COVID-19 still has had a negative impact on NetJets and FlightSafety operations due to lower demand for aviation services. Thanks to strong demand for home furnishings and new and pre-owned vehicle sales at Berkshire Hathaway Automotive, retailing operations reported a 21% increase in sales and a 162% jump in earnings during the first quarter. McLane’s revenues decreased 2% during the quarter to $11.6 billion with pre-tax earnings motoring 59% higher to $103 million due to increased earnings from the beverage business and ongoing cost management efforts.
Berkshire’s balance sheet continues to reflect very significant liquidity and a very strong capital base of $448 billion as of 3/31/21. Excluding railroad, energy and utility investments, Berkshire ended the first quarter with $460.9 billion in investments allocated approximately 61.2% to equities ($282.1 billion), 4.3% to fixed-income investments ($20.0 billion), 3.6% to equity method investments ($16.5 billion), and 30.9% in cash and equivalents ($142.2 billion).
Free cash flow rose 77% during the first quarter to $6.8 billion. During the quarter, capital expenditures declined 15% to $2.5 billion, including $1.9 billion in the capital-intensive railroad, utilities and energy businesses. Berkshire expects capital expenditures for the remainder of 2021 to approximate an additional $8.5 billion for BNSF and Berkshire Hathaway Energy. During the quarter, Berkshire sold or redeemed a net $9.3 billion in Treasury Bills and fixed-income investments and sold a net $3.9 billion of equity securities. The $1.3 billion acquisition of the remainder of the Dominion pipeline business is expected to close in the second quarter of 2021.
Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett and Charlie Munger. During the first quarter, Berkshire repurchased $6.6 billion of its common stock. These repurchases included 4,545,124 Class B shares acquired at an average price of $251.40 per share and 1,113 Class A shares purchased at an average price of $396,163 per share during March 2021. After quarter end, it appears Berkshire has acquired an additional $1.3 billion of its common stock based on its lower share count on the 10-Q as of 4/22/21.
Subsequent to the annual meeting, Warren Buffett announced that Greg Abel, Vice Chairman, would be Buffett’s future successor. We believe Mr. Abel will be more than able to continue growing Berkshire and maintaining its culture in the decades ahead.
Friday, April 30, 2021
Paychex-PAYX announced that its board of directors approved a $.04 increase in the company’s regular quarterly dividend, an increase of 6%. The dividend will increase from $.62 per share to $.66 per share and is payable May 27, 2021 to shareholders of record May 12, 2021.
Thursday, April 29, 2021
T. Rowe Price-TROW reported first quarter revenues rose 25% to $1.8 billion with net income and EPS each more than doubling to $749.4 million and $3.17, respectively. Assets under management ended the quarter at $1.52 trillion, a $47.5 billion or 3.2% increase since year end. Net client inflows accounted for $1.2 billion of the increase with net market appreciation and gains accounting for $46.3 billion of the increase. The doubling of net earnings was due in large part to non-operating income of $102.1 million during the quarter compared to a non-operating loss of $500.3 million in the prior year period reflecting the impact on the firm’s investment portfolio of strong market returns this quarter compared to significant market losses last year as the pandemic ensued. T. Rowe Price remains debt-free with ample liquidity including $6.9 billion in cash and investments. During the past quarter, T. Rowe Price repurchased 1.6 million shares of its common stock for $267.6 million at an average price of $164.22 per share.
Mastercard-MA reported first quarter revenues increased 4% to $4.2 billion with net income increasing 8% to $1.8 billion and EPS increasing 9% to $1.83. Worldwide Gross Dollar Volume increased 8% to $1.7 trillion as domestic spending returned to pre-pandemic levels on the heels of fiscal stimulus and improving domestic travel trends. Switched Transactions grew 9% to 23.8 billion and the number of Mastercard and Maestro cards grew 6% to 2.8 billion. By segment, Domestic Assessments revenues increased 7% to $1.8 billion, Transaction Processing increased 7% to $2.4 billion and Other Revenues charged ahead 27% to $1.35 billion, primarily driven by Mastercard’s Cyber & Intelligence and Data & Services solutions. These revenue gains were partially offset by a 23% decline in Cross-Border Volume Fees to $932 million as international travel remained stalled due to the pandemic and a 6% increase in Rebates and Incentives to $2.3 billion. During the quarter, Mastercard generated $1.4 billion in free cash flow, down 19% from last year. Mastercard paid $439 million in dividends during the quarter and repurchased $1.4 billion shares for an average cost per share of $358.97, which leaves $8.1 billion remaining under the current repurchase authorization. The company ended the quarter with $7.7 billion in cash and investments, $13.2 billion in long-term debt and $6.3 billion in shareholders’ equity. Looking ahead to the second quarter, management expects revenues to increase in the low-to-mid 20% range. “We started the year with good momentum, delivering positive net revenue growth this quarter, and are encouraged by the return of domestic spending levels to pre-pandemic trends,” said Michael Miebach, Mastercard CEO. “We continued to execute against our strategic objectives, as we signed notable new deals and broadened existing relationships with key global partners. We’ve made strong progress in delivering on our multi-rail strategy, as we integrate the Finicity and Nets corporate services teams. And, we continue to invest for the long-term, adding to our trust and digital identity capabilities with the planned acquisition of Ekata.”
Wednesday, April 28, 2021
Apple-AAPL reported record second quarter revenue of $89.6 billion, up a shiny 54% year over year, with net income and EPS more than doubling to $23.6 billion and $1.40, respectively. Apple delivered revenue records in each geographic segment and strong double-digit growth in each product category. Americas sales increased 35% to $34.3 billion, Europe sales increased 56% to $22.3 billion, Greater China sales jumped 87% from pandemic lows to $17.7 billion, Japan increased 49% to $7.7 billion and Rest of Asia Pacific sales jumped 94% to $7.5 billion. By product, iPhone sales surged 66% to $47.9 billion as consumers scooped up the iPhone 12 family of phones, the first 5G-enabled phone offered by Apple. Mac sales jumped 70% to $9.1 billion with the last three quarters the “best ever” for Mac sales, driven by Apple’s innovative M1 chip and the work-and-learn from home trend. iPad sales soared 79% to $7.8 billion with 50% of the sales to new customers which drove iPad’s installed base to new records. Wearables, Home and Accessories sales grew 25% to $7.8 billion and Services sales increase 27% with the number of paid subscribers growing by 145 million from last year to 660 million. During the quarter, Apple generated nearly $22 billion in free cash flow with the company returning $23 billion to shareholders through share repurchases of $19 billion at an average cost per share of $129.25 and dividends of $3.4 billion. Given the confidence in its future, Apple announced a new $90 billion share buyback program and a 7% increase in the quarterly dividend to 22 cents per share. Apple ended the quarter with $204 billion in cash and investments and $122 billion in long-term debt, resulting in an $83 million net cash position. The company remains committed to achieving a neutral net cash position over time. Given the strength of Apple's business model that connects hardware to software and services, the company remains committed to returning cash to shareholders while investing confidently in the future. To that end, Apple announced plans to invest $430 billion in the U.S. with the expectation of creating 20,000 new jobs. Given the uncertainly surrounding the pandemic, Apple declined to give sales guidance, but said it expects the sequential decline in iPhone sales from the March to June quarter to be greater than the historic average of 13% due to the late launch of the iPhone 12 and expected supply chain constraints that will negatively impact Mac and iPad sales by $3 billion to $4 billion.
Facebook-FB reported first quarter revenues rose 48% to $26.2 billion with net income up 94% to $9.5 billion and EPS up 93% to $3.30. During the quarter, Facebook’s daily active users increased 8% year-over-year to 1.88 billion on average with monthly active users increasing 10% to 2.72 billion on average. The strength in advertising revenue growth was driven by a 30% increase in the average price paid per ad and a 12% increase in the number of ads delivered. Facebook expects advertising revenue growth will continue to be driven primarily by price during the rest of 2021 thanks to the shift in online commerce. Free cash flow increased 7% during the quarter to $8.0 billion with the company repurchasing $3.9 billion of its common stock Facebook has $8.6 billion remaining authorized on the previous share buyback program while announcing a new $25 billion share buyback program. The company ended the quarter with a fortress balance sheet with more than $64 billion in cash and investments, no long-term debt and $133.7 billion in shareholders’ equity. Management expects second quarter revenue growth to remain stable or modestly accelerate relative to the growth rate in the first quarter as it laps the slower growth related to the pandemic last year. In the second half of 2021, revenue growth is expected to significantly decelerate sequentially as Facebook laps periods of increasingly strong growth. Facebook expects increased ad targeting headwinds in 2021 from regulatory and platform changes, notably from Apple’s privacy update for its new operating system. Facebook bumped up its total expense outlook for 2021 to a range of $70-$73 billion with capital expenditures lowered to a range of $19-$21 billion.
General Dynamics-GD reported first quarter revenue increased 7% to $9.4 billion with net income up slightly to $708 million and EPS up 2.1% to $2.48. Free cash flow was a net outflow of $131 million with the company paying $315 million in dividends and repurchasing approximately 4.6 million shares of its common stock for $744 million at an average price of $161.38 per share. Orders remained strong across the company with a book-to-bill of 1-to-1 led by a book-to-bill of 1.3-to-1 in Aerospace. Backlog grew 4.5% from the prior year to $89.6 billion. Management’s outlook for the full year is for revenues to increase 3% to $39 billion with EPS in the range of $11.00-$11.05. Free cash flow is expected to increase in 2021 from already strong levels, which may lead to further dividend increases and share repurchases.
Starbucks-SBUX reported second fiscal quarter sales increased 11.2% to $6.7 billion with net earnings increasing 100.8% to $659.4 million and EPS increasing 100% to $0.56. Global comparable store sales increased 15%, driven by a 19% increase in average ticket, partially offset by a 4% decline in comparable transactions. Americas comparable store sales increased 9% while International comparable store sales increased 35%, both primarily due to lapping the severe impact of the COVID-19 pandemic the prior year. The company opened 5 net new stores during the quarter and ended the quarter with 32,943 stores, up 3% from last year. Active Starbucks Rewards Membership in the U.S. was up 18% year-over-year to 22.9 million members. Operating margins increased from 8.1% to 14.8% year-over-year, primarily driven by sales leverage from business recovery and the lapping of COVID-19 related costs in the prior year. During the quarter, Starbucks generated $2.1 billion in free cash flow and returned approximately $1 billion to shareholders through dividends. Starbucks ended the quarter with over $4 billion in cash and short-term investments and $14.6 billion in long-term debt. Starbucks updated fiscal year 2021 guidance, expecting EPS in the range of $2.65 to $2.75, revenue in the range of $28.5 billion to $29.3 billion, global comparable store sales growth of 18% to 23% and expects to open approximately 2,150 new stores. “I am very pleased with our progress to date in fiscal 2021, as our second quarter results demonstrated impressive momentum in the business with full sales recovery in the U.S. Our strong results validate our ability to adapt to changes in our environment and the needs of our customers,” said Kevin Johnson, president and CEO.
ADP-ADP reported third quarter fiscal 2021 revenues increased 1% to $4.1 billion with net earnings declining 1% to $811 million and EPS flat with last year at $1.90. New Business Bookings grew 7% with sales performance improving consistently through the quarter. Year-to-date fiscal 2021 sales are now ahead of fiscal 2020 and 2019 levels. Number of clients served grew 6% to a record 900,000. By segment, Employer Services revenues dipped 1% to $2.78 billion with margins declining 120 basis points on continued investment in marketing and next generation platforms along with higher incentive compensation expense. U.S. pays per control declined by 6%, which was softer than expected due to the cadence of employment during the quarter. PEO Services revenue increased 7% to $1.3 billion with margins increasing 100 basis points. While Average Worksite Employees paid was flat, retention was stronger than expected and wages were higher. Interest on funds held for clients decreased 32% to $107 million on a 6% increase in Average Client Funds to $33.2 billion and a 70 basis point decline in average interest yield. During the quarter, ADP generated $2.3 billion in free cash flow with the company returning nearly $2.1 billion to shareholders through dividends of $1.18 billion and share repurchases of $902.5 million. ADP ended the quarter with $1.9 billion in cash, $2.0 billion in long-term debt and $5.7 billion in shareholders’ equity. Given the strong third quarter and the improving U.S. economy, ADP upped its fiscal 2021 guidance with revenue now expected to increase in the 2% to 3% range and adjusted EPS flat to up 1%. “Our strong results this quarter provide further evidence that our decision to maintain our investment in our associates, client service, and product has positioned us well for a recovering global economy," said Carlos Rodriguez, President and Chief Executive Officer, ADP. “We remain focused on driving greater client satisfaction, retention, and market share, and as we continue to press ahead with our Next Gen products and our digital transformation, we are emerging from this challenging economic environment a more nimble and efficient organization ready for the growth opportunities ahead."
Tuesday, April 27, 2021
Microsoft-MSFT reported third quarter revenues for fiscal 2021 increased 19% to $41.7 with net income up 44% to $15.5 billion and EPS up 45% to $2.03. By segment, Productivity and Business Processes revenue increased 15% to $13.6 billion, boosted by 22% growth in Office 365, 25% increase in LinkedIn revenue and 45% increase in Dynamics 365 revenue. Intelligent Cloud revenue increased 23% to $15.1 billion and included 50% growth in Azure revenue. More Personal Computing revenue increased 19% to $13 billion on a 34% increase in Xbox content and services revenue, a 17% increase in Search and a 12% increase in Surface sales. During the third quarter, Microsoft generated $22.2 billion in operating cash flow, up 27% year-over-year, driven by strong cloud billings and collections and $17.1 billion in free cash flow, up 24% from last year. Microsoft returned $10 billion to shareholders in the form of share repurchases and dividends in the third quarter. Microsoft ended the quarter with $130.8 billion in cash and investments, $50 billion in long-term debt and $134.5 billion in shareholders’ equity. Looking ahead to the fourth quarter, leadership expects sales in the range of $43.6 billion and $44.5 billion.
Alphabet-GOOGL reported first quarter results with revenues up 34% to $55.3 billion and net income and EPS rising more than 160% to $17.9 billion and $26.29, respectively. This strong performance was driven by elevated consumer activity online and broad-based growth in advertiser revenue. Google advertising revenue increased 32% in the first quarter, including 49% growth in YouTube ads. Google Cloud revenues increased 46% during the quarter to $4.0 billion. Alphabet’s free cash flow more than doubled during the first quarter to $13.3 billion with the company repurchasing $11.4 billion of its common shares. On April 23, 2021, the Board of Directors of Alphabet authorized the company to repurchase up to an additional $50.0 billion of its stock. Alphabet ended the quarter with more than $135 billion in cash and investments, $13 billion in long-term debt and $230 billion in shareholders’ equity on its sturdy balance sheet.
F5 Networks-FFIV reported second quarter revenue increased 11% to $645 million with net income and EPS declining 30% to $43.2 million and $0.70, respectively. Revenue growth was driven by a 20% increase in software sales to $108 million, a 17% increase in systems sales to $201 million and 4% growth in global services to $336 million. Subscriptions now account for 79% of F5’s software sales, up from 73% last year. Systems sales growth was higher than expected due to a larger than expected increase in application traffic and the emergence of 5G demand as service providers upgrade existing 4G systems to accommodate 5G traffic. Second quarter cash flow from operations declined 30% year-over-year to $128 million. During the quarter, F5 Networks repurchased $400 million shares under its $500 million accelerated share repurchase program (ASR) at an average cost of $194.91 per share. F5 Networks ended the quarter with $662 million in cash, down from $1.5 billion at year end, reflecting $440 million cash paid for the Volterra acquisition and initiation of its ASR. Given potential supply chain issues, management lowered the bottom end of its revenue guidance with revenues for the third quarter of fiscal year 2021 ending June 30, 2021, now expected in the range of $620 million to $650 million, up 8.9% from last year at the midpoint. Non-GAAP earnings are expected in the range of $2.36 to $2.54 per share, up 12.4% from last year.
Stryker-SYK reported first quarter net sales increased 10.2% to $4 billion with net income decreasing 38.7% to $302 million and EPS decreasing 39.2% to $0.79. By segment, Orthopaedics net sales of $1.5 billion increased 21.4% in the quarter, MedSurg net sales remained constant at $1.6 billion and Neurotechnology and Spine net sales of $848 million increased 14%. During the quarter, Stryker generated $369 million in free cash flow with the company returning $238 million to shareholders through dividend payments. Stryker ended the quarter with $2.3 billion in cash and investments, $13 billion in long-term debt and $13.5 billion in shareholders’ equity. In 2021, management expects organic net sales growth of 8% to 10% and adjusted EPS of $9.05 to $9.30. "We are pleased with our results, as business picked up meaningfully in the latter part of the first quarter," said Kevin Lobo, Chairman and Chief Executive Officer. "We expect this momentum to continue and are encouraged by the Wright Medical integration, which is pacing ahead of our expectations."
3M-MMM reported first quarter sales increased 9.6% to $8.9 billion with net earnings up 24% to $1.6 billion and EPS up 23% to $2.77. Sales in the Safety & Industrial segment grew 13.7%, due to high demand in respirators. 3M announced last week that they expect to reduce its dependence on virgin fossil-based plastics by 125 million pounds by 2025. Over the last two decades 3M has reduced its emissions by 70%, while doubling its revenues. During the quarter, 3M generated $1.7 billion in operating cash flow, up 39% from last year, on strong working capital management and $1.4 billion in free cash flow, up 56% on lower capital expenditures. The company returned $1.1 billion to shareholders during the quarter through dividends of $858 million and share repurchases of $231 million. 3M reduced total debt by $0.6 billion, or 3%, strengthening an already strong balance sheet. The company’s full-year guidance remains unchanged with projected 2021 sales growth of 5% to 8%, EPS in the $9.20 to $9.70 range and free cash flow conversion of 95% to 105%.
Raytheon Technologies-RTX reported first quarter revenues rose 34% to $15.3 billion with net income and EPS increasing from prior year losses to $753 million and $.50, respectively. Earnings include $.39 of net significant and/or non-recurring charges and acquisition accounting adjustments. Backlog at the end of the quarter was $147.4 billion, including $82.2 billion from commercial aerospace and $65.2 billion from defense. RTX generated $336 million of free cash flow during the quarter and returned $1.1 billion to shareholders through dividends of $705 million and share repurchases of $375 million. Based on the strong cash position, RTX increased the second quarter dividend by more than 7%. Management increased the lower end of their outlook for 2021 and expects sales of $63.9 billion to $65.4 billion with adjusted EPS of $3.50-$3.70. In December, the company authorized a $5 billion share repurchase program and plans to repurchase at least $2.0 billion of shares in 2021, up from previous guidance of $1.5 billion, while remaining committed to paying and growing its dividend.
UPS-UPS delivered record first quarter results with sales increasing 27% to $22.9 billion and net income and EPS up nearly fivefold to $4.8 billion and $5.47, respectfully. Excluding a $2.5 billion, or $2.86 per share, mark-to-market pension benefit and transformation charges, adjusted EPS increased 141% to $2.77. Adjusted operating margin more than doubled to 12.9% on leverage from the sales growth and favorable sales mix as high-margin sales to small and medium-sized businesses advanced by 35.6%. By business segment, U.S. Domestic revenue increases 22.3% to $14 billion on a 10.2% increase in revenue per piece. International revenue increased 36.2% to $4.6 billion, led by Asia and Europe. Supply Chain and Freight revenue increased 34.3% to $4.3 billion, driven by record growth from Healthcare activities including the delivery of 196 million COVID-19 doses with 99.9% on-time delivery. UPS generated cash from operations of $4.5 billion and free cash flow of $3.7 billion. Given continued economic uncertainty, the company did not provide revenue of EPS guidance, however UPS did affirm its full-year capital allocation plans with capital expenditures of $4 billion and long-term debt repayments of $2.5 billion. The company has no plans to repurchase shares. Improved macro environment forecasts and the expectation of continuing imbalances between market demand and industry capacity bodes well for UPS stakeholders.
Monday, April 26, 2021
Bank of Hawaii-BOH reported first quarter revenues fell 8.6% to $163.5 million with net income increasing 73% to $60 million and EPS increasing 72% to $1.50. During the quarter, Bank of Hawaii reduced its provision for credit losses by $14 million, reflecting an improvement in the economic outlook. Deposit growth continued in the first quarter, as deposits grew $3.5 billion or 22% year-over-year, due, in large part, to government stimulus activities. Net margin in the first quarter was 2.43% down from 2.96% last year, reflecting the impact from the strong deposit growth as well as the ongoing effects of the lower interest rate environment. Noninterest expenses increased 3% year-over-year to $98.9 million resulting in an efficiency ratio of 60.5% compared to 56% last year. First quarter's expenses included $1.8 million charge related to the voluntary separation incentive program and $1.9 million in onetime charges related to the mass issuance of contactless debit cards. Bank of Hawaii maintains a strong balance sheet including a high-quality securities portfolio, good asset quality, high levels of liquidity, and a solid capital base that will allow the bank to provide financial support to customers and the Hawaiian community as needed to emerge from the COVID-19 crisis. There were no share repurchases in the first quarter, but the bank did declare its regular quarterly dividend of $.67 per share payable on June 14, 2021. The dividend currently yields an attractive 3%. “We are pleased with our financial performance during the first quarter of 2021," said Peter Ho, Chairman, President, and CEO. “Our balance sheet remains strong with deposit balances and total assets reaching new record highs, solid asset quality, and high levels of liquidity and capital.”
Canadian National Railway-CNI reported revenues dipped slightly to C$3.5 billion with net income and EPS declining 4% to C$974 million and C$1.37, respectively. Record first quarter intermodal traffic and shipments of Canadian grain and freight rate increases were offset by lower volumes for other commodity groups caused mainly by the ongoing effects of the COVID-19 pandemic, the negative impact of a stronger Canadian dollar and lower fuel surcharge rates. CNI’s operating ratio of 62.5% improved 3.2 points, mainly due to the partial economic recovery and reduced impacts of the COVID-19 pandemic. Fuel efficiency improved by 4% to 0.92 US gallons of locomotive fuel consumed per 1,000 gross ton miles while revenue ton miles, train length (in feet) and car velocity (car miles per day) all increased by 5%. During the quarter, Canadian National generated C$540 million in free cash flow, down 6% from last year, despite a 32% decline in capital expenditures. During the quarter, the company paid C$436 million in dividends, or C$0.615 per share, up 7% from last year. After pausing its share repurchases at the end of March 2020 due to the pandemic, the company resumed its share repurchases during the quarter with C$291 million shares repurchased at a weighted average cost of C$140.70 per share. Canadian National Railway’s share repurchase program once again will be paused due to the proposed combination with Kansas City Southern. Management updated its 2021 financial outlook and is now targeting double-digit adjusted EPS growth, versus prior guidance in the high single-digit range. This guidance assumes high single-digit revenue per ton miles volume growth in 2021. CNI still targets free cash flow in the range of C$3.0 billion to C$3.3 billion in 2021 compared to C$3.2 billion in 2020.
Maximus-MMS secured two prime contracts to deliver the Restart program in South and East London, and in South and West Yorkshire, Derbyshire, and Nottinghamshire. The Restart program provides 12 months of tailored and community-based support for people that are long-term unemployed, and forms part of the UK Government’s Plan for Jobs to help people directly impacted by the pandemic. Maximus will also invest more than ten million Great British Pounds (GPB), or 13 million U.S. Dollars (USD), into hundreds of community organizations, charities, and small and medium sized businesses through its innovative Community Partnership Networks, co-locating services in towns and cities, and funding innovative support to help Restart participants develop new skills, overcome barriers, and find work. In total, the two contracts – the maximum that could be won by a single provider – are for four years with a two year option, and are valued at more than $960 million USD for the total contract period.
Apple®-AAPL announced an acceleration of its US investments, with plans to make new contributions of more than $430 billion and add 20,000 new jobs across the country over the next five years. Over the past three years, Apple’s contributions in the US have significantly outpaced the company’s original five-year goal of $350 billion set in 2018. Apple is now raising its level of commitment by 20 percent over the next five years, supporting American innovation and driving economic benefits in every state. This includes tens of billions of dollars for next-generation silicon development and 5G innovation across nine US states.
Raytheon Technologies-RTX announced that its Board of Directors declared a dividend of 51 cents per outstanding share of RTX common stock, which represents an increase of more than 7 percent over the prior quarter's dividend amount. The dividend will be payable on June 17, 2021 to shareowners of record at the close of business on May 21, 2021. "The increase in our dividend reflects our long-standing commitment to deliver consistent and growing cash returns to shareowners," said Raytheon Technologies chief executive officer Greg Hayes. "The outlook for our company is positive and we remain on track to return $18 to $20 billion to shareowners in the four years following the merger." RTX, formerly United Technologies Corporation, has paid cash dividends on its common stock every year since 1936.
Check Point Software Technologies-CHKP reported first quarter sales increased 4% to $508 million with net income up 2.4% to $182.9 million and EPS up 8.1% to $1.33 on fewer shares outstanding. Subscription sales, which accounted for 35% of total sales, increased 11.7% and deferred revenues increased 8% to $1.5 billion. During the quarter, Check Point generated $370.7 million in free cash flow, up 5.7% from last year, with the company returning $325 million to shareholders through share repurchases at an average cost of $120.37 per share. The company ended the quarter with $4.06 billion of cash and marketable securities, $379 million in long-term debt and $3.4 billion in shareholders’ equity on its super-secure balance sheet. Looking ahead to the second quarter, management expects sales in the $510 million to $535 million range, up 8% at the midpoint from 2020, with EPS in the $1.30 to $1.40 range, up 9.8% at the mid-point. Gil Shwed, Founder and CEO of Check Point Software Technologies, remarked, “The cyber threat landscape is reaching new levels of risk and requires a holistic security architecture to prevent the next cyber pandemic. Our Infinity architecture can uniquely address these needs and consolidate security for the user, the network and the cloud to prevent Gen V cyber-attacks.”
Friday, April 23, 2021
Gentex-GNTX reported first quarter revenues rose 7% to $483.7 million with net income trucking 27% higher to $113.5 million and EPS motoring 28% higher to $.46. These results were especially impressive given the parts shortages in the light vehicle production market and driven by 15% growth in international auto mirror shipments, including significant growth in the China market. During the first quarter, gross margin expanded 340 basis points to 37.9% driven by structural cost savings, product mix tailwinds related to exterior-auto dimming mirrors and Full Display Mirror unit shipment growth. Management expects to see further improvement in gross margins based on the higher sales levels that are forecasted for the remainder of the year. Total light vehicle production is expected to increase 10% in 2021 and an additional 7% in 2022. Gentex expects fiscal 2021 revenue in the range of $1.94 billion to $2.02 billion with 2022 revenue expected to grow between 8%-13%. During the first quarter, Gentex repurchased 2.8 million shares of its common stock at an average price of $35.46 per share. The company has about 6.7 million shares remaining authorized for future share repurchases. The company ended the quarter with a strong balance sheet with more than $655 million in cash and investments, no long-term debt and shareholders’ equity of $2 billion.
Thursday, April 22,2021
Intel-INTC reported first quarter revenues dipped 1% to $19.7 billion with net income declining 41% to $3.4 billion and EPS down 37% to $0.82. Excluding restructuring and other charges, EPS declined 1.4% to $1.39. By business segment, Client Computing Group revenue increased 8% to $10.6 billion on strong PC demand with PC and Notebook unit volumes increasing 38% and 54%, respectively. Data Center Group revenues declined 20% to $5.6 billion on a 29% decline in Cloud Service Provider revenue due to difficult year-over-year comps and a 20% decline in Enterprise & Government sales that began recovering during the quarter. Internet of Things revenue increased 4% to $914 million on higher demand while Mobileye revenue increased 48% to a record $377 million, driven by the automotive recovery. During the quarter, Intel completed the CEO transition to Pat Gelsinger who unveiled Intel's new, differentiated IDM 2.0 strategy for manufacturing, innovation and product leadership, including $20 billion capacity expansion plans in Arizona and new Intel Foundry Services. Intel generated $1.6 billion in free cash flow during the quarter with the company returning $3.7 billion to shareholders through dividend payments of $1.4 billion and share repurchases of $2.3 billion at an average cost of $57.50 per share. While the company is committed to growing the dividend, given Intel’s $20 billion plant expansion plants, management anticipates lower future stock repurchases. Intel ended the quarter with $7.6 billion in cash and investments, $33 billion in long-term debt and $79.8 billion in shareholders’ equity. Given the solid first quarter results that exceeded expectations, management raised guidance with 2021 revenue now expected to decline 1% year-over-year to $72.5 billion with EPS down 10% to $4.60. Capital expenditures are expected in the $19-$20 billion range and free cash flow is expected to be $10.5 billion.
Tractor Supply-TSCO reported first quarter sales plowed ahead by 42.5% to a record $2.8 billion with net earnings sprouting 117% to $181 million and EPS growing 118% to $1.55. Comparable Store Sales increased 38.6% on a 21% increase in customer traffic and a 17.6% increase in average ticket. All geographic regions had positive comparable store sales growth of at least 30%, reflecting strong demand for consumable, usable and edible products and robust growth for seasonal categories. In addition, Tractor Supply’s e-commerce sales experienced triple-digit percentage growth for the fourth consecutive quarter. During the quarter, the company opened 21 new Tractor Supply stores and two new Petsense stores and ended the quarter with 1,944 Tractor Supply stores and 177 Petsense stores. The company generated $177 million in operating cash flow during the quarter and $76 million in free cash flow, up 41% from last year. During the quarter, the company returned $313.6 million to shareholders through share repurchases of $253.4 million at an average cost per share of $158.38 and dividends of $60.6 million. In January, the company increased it’s dividend by 30% to $0.52 per share. Tractor Supply ended the quarter with nearly $1.2 billion in cash, $3.4 billion in long-term obligations and $1.9 billion in shareholders’ equity. Given the strong performance during the first quarter, the company increased its guidance with revenues now expected in the range of $11.4 billion to $11.7 billion, up 38% at the midpoint, on 5% to 8% comparable store growth. Earnings per share are expected in the range of $7.05 and $7.40, up 13% from last year at the midpoint. Management expects share purchases in the range of $700 million to $800 million during 2021.
Genuine Parts-GPC reported strong first quarter results with sales up 9% to $4.5 billion with net income and EPS from continuing operations both motoring 78% higher to $217.7 million and $1.50, respectively. The positive sales growth was driven by the overall rebound in the economy, stimulus payments and the execution of key initiatives. The Automotive business posted the strongest growth with positive sales comparisons in each region of the operations. The Industrial business continued its recovery with the third consecutive quarter of improving sales trends. Genuine Parts produced its 14th consecutive quarter of gross margin expansion while managing operating costs closely leading to a substantial increase in earnings with the positive momentum expected to continue through the year. Free cash flow jumped to $253 million during the quarter driven by the higher earnings and working capital improvement with the company paying $114 million in dividends. The 2021 dividend was increased 3%, reflecting the 65th consecutive year of increased dividends. While the company did not repurchase any shares in the first quarter, it has 14.5 million shares authorized for future share repurchases which management expects to immediately resume. Genuine Parts has a strong cash position exceeding $1 billion and ample financial strength to pursue strategic growth opportunities through its disciplined capital allocation strategy. The company is well positioned to benefit from the strong economic recovery and raised its financial outlook for the full year. Total sales growth is expected to increase 5% to 7% in 2021 with EPS expected in the range of $5.85 to $6.05 with cash flow from operations in the range of $1 billion to $1.2 billion.
Biogen-BIIB reported first quarter revenues declined 24% to $2.7 billion with net income down 71% to $410.2 million and EPS dropping 67% to $2.69. These results were in line with management’s expectations and reflected the impact of generic competition on key products. Biogen is ready to launch aducanumab, its treatment for Alzheimer’s disease, in the U.S. if approval is received from the FDA with the decision expected by June 7, 2021. Regulatory approval filings for aducanumab has been submitted in additional global markets. Biogen is advancing its neuroscience pipeline with a Phase 2 study of BIIB124 meeting its primary endpoint in essential tremor. In April 2021, the European Commission granted marketing authorization for a subcutaneous injection of TYSABRI to treat relapsing-remitting MS. Free cash flow declined 49% in the first quarter to $676 million with the company repurchasing about 2.2 million shares for $600 million at an average price of $272.72 per share. The company plans to repurchase another $4 billion of its stock throughout 2021. Biogen expects revenue in 2021 to be between $10.45 to $10.75 billion with the outlook for non-GAAP EPS raised to a range of $17.50 to $19.00.
Wednesday, April 21, 2021
SEI Investments-SEIC reported first quarter revenue rose 10% to $455.7 million with net income increasing 19% to $129.5 million and EPS up 24% to $.89, reflecting capital market appreciation and positive cash flows from existing and new clients. The company experienced strong growth with average assets under administration increasing by 21% to $821.6 billion during the quarter. Average assets under management, excluding LSV, increased 18% to $280.4 billion. SEI Investments generated free cash flow of $126 million during the quarter and repurchased 1.2 million shares of its common stock for $66.9 million at an average price of about $55.75 per share. The company ended the quarter with a strong balance sheet with cash and investments topping $930 million, no long-term debt and shareholders’ equity of $1.8 billion.
Maximus-MMS announced that it signed an agreement to acquire the parent company of Veterans Evaluation Services, Inc. (VES) for a purchase price of $1.4 billion. Privately held VES serves the U.S. Federal Government and has established a strong reputation with the U.S. Department of Veterans Affairs as a leading provider of Medical Disability Examinations to determine Veterans’ eligibility for compensation and pension benefits. The VES business will be part of the U.S. Federal Services Segment of Maximus and is expected to generate revenue of $160 million to $175 million for the last four months of fiscal 2021. This implies an annual run rate in the range of $480 million to $525 million. The impact to earnings is dependent on the valuation of acquired intangible assets and the resulting amortization. Due to the nature of the acquired entity and underlying contract types, the addition of VES will blend up the company’s average margin. The transaction will have one-time expenses, including financing charges, and ongoing interest charges. As a result, the transaction is expected to be slightly dilutive for the remainder of fiscal 2021 and should be accretive in future periods. The acquisition is expected to close in the company’s third fiscal quarter.
Tuesday, April 20, 2021
Johnson & Johnson-JNJ reported strong first quarter performance with revenues up 8% to $22.3 billion and net earnings and EPS each up 7% to $6.2 billion and $2.32, respectively. Market share gains in the Pharmaceutical business and continued recovery in Medical Devices contributed to these results. Worldwide Pharmaceutical sales increased 10% to $12.2 billion driven by double-digit growth in seven key products. Sales jumped 11% in Medical Devices to $6.6 billion with growth driven by the market recovery in Asia Pacific and the U.S. following deferred procedures last year related to COVID-19. Worldwide Consumer Health Sales decreased 2% to $3.5 billion due to negative prior year comparisons related to the COVID-19 pantry loading last year in over-the-counter products. As of quarter end, JNJ’s balance sheet remained strong with $25 billion in cash and investments and $34 billion in long-term debt. During the quarter, the company invested $3.2 billion in research and development to advance its promising pipeline and paid $2.7 billion in dividends to shareholders. In addition, Johnson & Johnson announced that its Board of Directors has declared a 5.0% increase in the quarterly dividend, from $1.01 per share to $1.06 per share. "Despite a year of unprecedented disruption, Johnson & Johnson remained committed to its established financial principles that strengthen our ability to drive long-term value for stakeholders. In recognition of our notable 2020 results, strong financial position and confidence in the future of Johnson & Johnson, the Board of Directors has voted to increase the quarterly dividend for the 59th consecutive year," said Alex Gorsky, Chairman and Chief Executive Officer of the company. For the full year 2021, JNJ expects reported sales to increase 9.7%-10.9% to a range of $90.6 billion to $91.6 billion with adjusted EPS expected to increase 17.3%-19.2% to a range of $9.42-$9.57.
In other news, Johnson & Johnson announced that the European Medicines Agency's (EMA) Pharmacovigilance Risk Assessment Committee (PRAC) has provided updated guidance for use of the Company's COVID-19 vaccine and confirmed the overall benefit-risk profile remains positive. The guidance follows PRAC review of a small number of cases of a very rare adverse event involving blood clots in combination with low platelet counts that can occur within approximately one to three weeks following injection with the Company's COVID-19 vaccine. Following the PRAC recommendation, the company will resume shipment of the Janssen COVID-19 vaccine in the European Union (EU), Norway and Iceland and remains committed to supplying 200 million doses.
Canadian National Railway-CNI announced that it has made a proposal to combine with Kansas City Southern (KCS) in a cash-and-stock transaction valued at $33.7 billion, or $325 per share. CNI proposes to pay $200 per share in cash and 1.059 share of CNI for each share of KCS. The cash portion of the consideration will be funded through a combination of cash-on-hand and approximately $19.3 billion of new debt. Upon closing of the transaction and including the assumption of approximately $3.8 billion of KCS debt, CNI expects to have outstanding debt of approximately $33.6 billion. With strong cash flows, the company plans to pay down the debt rapidly while pausing share repurchases until leverage is reduced. Management expects to maintain its dividend and investment grade credit rating. The combination is expected to be accretive to CNI’s adjusted diluted EPS, excluding incremental transaction-related amortization, in the first full year following CNI’s acquisition of control of KCS, and is expected to generate double-digit accretion upon the full realization of synergies thereafter. CNI currently estimates that the combination would result in EBITDA synergies approaching $1 billion annually, with the vast majority of synergies coming from additional revenue opportunities.
Monday, April 19,2021
Mastercard-MA took steps to advance its identity verification efforts with the acquisition of Ekata for $850 million. Ekata's identity verification data, machine learning technology and global experience combined with Mastercard's fraud prevention and digital identity programs will help businesses confidently know who their customers are and, in turn, help those customers safely interact online. Mastercard and Ekata's integrated services will build on both companies’ commitments to ensure trust and the responsible use of data. As with past acquisitions, Mastercard does not expect this acquisition to be dilutive to its business for greater than 24 months. This dilution is driven by investments in the business, including the impact of purchase accounting and integration related costs. The transaction is anticipated to close within the next six months.
Thursday, April 15, 2021
United Healthcare-UNH reported first quarter revenues increased a healthy 9% to $70.2 billion with net earnings and EPS increasing 44% to $4.86 billion and $5.08, respectively. First quarter operating cost ratio of 14.6% decreased from 15.5% last year due to the repeal of the health insurance tax and continued operating efficiency gains, partially offset by business mix and increased service, growth and innovation investments. By segment, UnitedHealthcare revenues increased 8% to $55.1 billion and Optum revenues grew 11% to $36.4 billion. During the quarter, United Healthcare generated free cash flow of $5.4 billion, up from $2.5 billion last year and representing 1.09% of reported earnings. The company returned $2.8 billion to shareholders during the quarter through dividend payments of $1.18 billion and share repurchases of $1.65 billion. United Healthcare ended to quarter with $65 billion in cash and long-term investments, $37 billion in long-term debt and $69 billion in shareholders’ equity. Based upon initial 2021 business performance trends, the company increased its full year net earnings outlook to $17.15 to $17.65 per share, up 8.5% from 2020 at the midpoint. This outlook continues to include about $1.80 per share in potential net unfavorable impact to accommodate continuing COVID-19 effects, including the residual impact of people having deferred care in 2020 and unemployment and other economy-driven factors. UnitedHealth Group expects a continued rise in pandemic-related care as the year progresses including testing, treatment and vaccinations.
PepsiCo-PEP reported first quarter revenues rose 7% to $14.8 billion with net income popping 28% higher to $1.7 billion and EPS jumping 29% to $1.24. These solid results reflect the benefits of the company’s highly strategic acquisition activity to capitalize on additional global growth opportunities and continued investments in its multitude of billion-dollar brands, manufacturing capacity, supply chain and marketing systems. Core operating profit and EPS increased 7% and 14%, respectively, reflecting the benefits of ongoing efforts to tightly control costs. During the quarter, PepsiCo gained market share across many of its key global snacks and beverage markets with notable improvements in the U.S. snacks and beverage businesses with double-digit net revenue growth in bubly, Starbucks, Funyuns and the SodaStream business. PepsiCo expanded its presence in the energy drink category with the launch of Mountain Dew Rise Energy while Frito’s performance benefited from the introduction of Doritos 3D Crunch and Cheetos Crunch Pop Mix. On the international front, the developing and emerging markets remained resilient despite the pandemic with double-digit growth in Brazil, Russia and China. Management expects organic revenue growth to accelerate in the second quarter as vaccination efforts accelerate and population mobility improves. For the full 2021 year, PepsiCo continues to expect mid-single-digit organic revenue growth and high-single-digit core constant currency EPS growth. In 2021, the company plans to pay $5.9 billion in dividends to shareholders, a 5% increase over last year. Share repurchases will be curtailed this year as the company focuses on investing in the business and paying down debt from recent acquisitions.
Tuesday, April 13, 2021
The FDA and CDC issued a statement regarding the Johnson & Johnson-JNJ COVID19 vaccine, recommending a pause in the use of this vaccine out of an abundance of caution. As of 4/12, 6.8 mln doses of the J&J vaccine had been administered in the U.S. CDC & FDA are reviewing data involving 6 reported U.S. cases of a rare & severe type of blood clot in individuals after receiving the vaccine. Right now, these adverse events appear to be extremely rare. Treatment of this specific type of blood clot is different from the treatment that might typically be administered. JNJ responded, “The safety and well-being of the people who use our products is our number one priority. We are aware of an extremely rare disorder involving people with blood clots in combination with low platelets in a small number of individuals who have received our COVID-19 vaccine. The United States Centers for Disease Control (CDC) and Food and Drug Administration (FDA) are reviewing data involving six reported U.S. cases out of more than 6.8 million doses administered. Out of an abundance of caution, the CDC and FDA have recommended a pause in the use of our vaccine. In addition, we have been reviewing these cases with European health authorities. We have made the decision to proactively delay the rollout of our vaccine in Europe. We have been working closely with medical experts and health authorities, and we strongly support the open communication of this information to healthcare professionals and the public.”
Fastenal-FAST reported first quarter sales rose 3.7%, or 5.3% on a daily basis, to $1.4 billion with net income up 3.9% to $210.6 million and EPS up 3.7% to $.37. The first quarter results include a $7.8 million write-down of 3-ply masks as supply now exceeds demand. Growth during the quarter was largely due to higher unit sales, most notably of fastener, safety and janitorial products. Underlying demand is improving with fastener daily sale growth increasing to 14% in March. The company managed to leverage operating expenses, despite lost sales from February storms and one less selling day. Supply chain pressure and product cost inflation is leading Fastenal to broadly raise prices in the second quarter. Free cash flow increased 26% in the quarter to $274.8 million with the company paying $160.8 million in dividends. Fastenal’s balance sheet remains solid with minimal debt and ample liquidity.
Monday, April 12, 2021
Microsoft-MSFT announced they will acquire Nuance for $56.00 per share in an all-cash transaction valued at $19.7 billion, inclusive of Nuance's net debt. Nuance is a trusted cloud and AI software leader representing decades of accumulated healthcare and enterprise AI experience. The transaction is intended to close this calendar year. Upon closing, Microsoft expects Nuance's financials to be reported as part of Microsoft's Intelligent Cloud segment. Microsoft expects the acquisition to be minimally dilutive (less than 1 percent) in fiscal year 2022 and to be accretive in fiscal year 2023 to non-GAAP earnings per share. The acquisition will not impact the completion of its existing share repurchase authorization.
Mobileye, an Intel-INTC company, and Udelv, a Silicon Valley venture-backed company, announced that Mobileye’s self-driving system ― branded Mobileye Drive™ ― will "drive" the next-generation Udelv autonomous delivery vehicles (ADV), called "Transporters." The companies plan to produce more than 35,000 Mobileye-driven Transporters by 2028, with commercial operations beginning in 2023. The deal with Udelv advances Mobileye’s global mobility-as-a-service ambitions, validating the company’s technology and business approach. Mobileye plans to deploy autonomous shuttles with Transdev ATS and Lohr Group beginning in Europe. Mobileye also plans to begin operating an autonomous ride-hailing service in Israel in early 2022.
In other news, Intel’s CEO Pat Gelsinger said in a CNBC interview that the U.S. has to start building more chip capacity across the world. We are too dependent on production in a few Asian countries. The U.S. at 12% of global supply is headed to 10%. The U.S. had been 37% of global supply 20 years ago. Intel believes one-third of supply should be back on U.S. soil and provided by U.S. companies.
Regeneron Pharmaceuticals-REGN announced positive results from a Phase 3 trial assessing the ability of REGEN-COV™ to reduce the risk and burden of COVID-19 infection among household contacts of SARS-CoV-2 infected individuals. If authorized, convenient subcutaneous administration of REGEN-COV could help control outbreaks in high-risk settings where individuals have not yet been vaccinated, including individual households and group living settings.
Friday, April 9, 2021
Regeneron Pharmaceuticals-REGN announced that newly updated National Institutes of Health (NIH) COVID-19 Treatment Guidelines strongly recommend that REGEN-COV™ be used in non-hospitalized COVID-19 patients ("outpatients") at high risk of clinical progression. The new guidelines are based in part on robust clinical data involving more than 4,500 outpatients showing that REGEN-COV significantly reduced the risk of hospitalization or death by 70% compared to placebo. Despite the strong progress being made with vaccination, in the U.S. approximately 2 million people a month are still diagnosed with COVID-19 and tens of thousands are at risk of dying from COVID-19.
Tuesday, April 6, 2021
Paychex-PAYX reported third quarter revenue declined 3% to $1.1 billion with net income and EPS each down 1% to $350.5 million and $.97, respectively. Results continued to be impacted by the COVID-19 pandemic although client retention remained strong and at record levels. In fact, the company had its best third quarter net client gain thanks to its assistance in helping small businesses file for the employee retention credit on tax forms and attain $60 billion as part of the pandemic’s Payroll Protection Program. Paychex received a 2021 Stevie Award as a winner for the Most Valuable COVID-19 Response. Free cash flow declined 18% year-to-date to $783.7 million due to lower earnings and working capital changes. During the past nine months, the company paid $670.5 million in dividends and repurchased 900,000 shares of common stock for $76 million at an average price of $84.44 per share. The company’s financial position remained strong with cash and investments of $1.1 billion, net debt of $804 million and shareholders’ equity of $3.0 billion as of quarter end. The company’s strong balance sheet and operational flexibility enabled Paychex to successfully manage through the ongoing impacts of the pandemic while protecting its cash flow and liquidity. With better than expected third quarter results, management raised their outlook for the full fiscal 2021 year with both revenue and adjusted EPS now expected in the range of -2% to flat. Early indications for fiscal 2022 point to service revenue growth of 6%-7% with interest income in the range of $55 million to $65 million and an operating margin of 37%.
Wednesday, March 31, 2021
Microsoft-MSFT said it has won a deal to sell the U.S. Army augmented reality headsets based on its HoloLens product and backed by Azure cloud computing services. The contract could be worth up to $21.88 billion over 10 years.
Walgreens Boots Alliance-WBA reported second quarter revenues rose 4.6% to $32.8 billion with net income from continuing operations up 6.3% to $922 million and EPS up 8.2% to $1.06. These results came in well ahead of management’s expectations despite the significant impact from COVID-19. Revenue growth reflected strong International segment growth aided by the company’s joint venture in Germany. The previously announced sale of the company’s Alliance Healthcare business for $6.5 billion is now reflected as discontinued operations in the financial statements until the divestiture is completed by fiscal year end. Free cash flow in the first half of the year increased 4.8% to $1.9 billion with the company paying $808 million in dividends. Proceeds from the sale of Alliance Healthcare are expected to be used to pay down debt and reinvested in the expansion of Village Medical at Walgreens locations which should approximate 40 locations by the end of the summer. Walgreens has administered more than 8 million vaccines to date, including 4 million in March. As vaccines become more available, Walgreens plans to administer 26 million to 34 million for the year depending on the supply. Given the better than expected first half performance and improved visibility into the second half with favorable international performance, better pharmacy margins and tax rates and the increased rollout of vaccines, Walgreens raised its adjusted EPS guidance from low single-digit growth to mid-to-high single-digit growth.
Private sector employment increased by 517,000 jobs from February to March according to the March ADP® National Employment ReportTM. "We saw marked improvement in March's labor market data, reporting the strongest gain since September 2020," said Nela Richardson, chief economist, ADP. "Job growth in the service sector significantly outpaced its recent monthly average, led with notable increase by the leisure and hospitality industry. This sector has the most opportunity to improve as the economy continues to gradually reopen and the vaccine is made more widely available. We are continuing to keep a close watch on the hardest hit sectors but the groundwork is being laid for a further boost in the monthly pace of hiring in the months ahead."
Tuesday, March 30, 2021
FactSet-FDS reported solid second quarter results with revenues rising 6% to $391.8 million and net income and EPS each up 9% to $96.6 million and $2.50, respectively. Annual Subscription Value (ASV) was $1.6 billion as of quarter end with organic growth up 5.5%. The operating margin expanded 90 basis points during the quarter to 29.6% because of reduced employee-related operating expenses due to the pandemic. During the quarter, client count increased 7% to 6,103 with user count up 12% to 153,355, primarily driven by an increase in wealth advisory users. During the quarter, FactSet was selected by the Royal Bank of Canada as their primary market and technology provider for their entire wealth management organization consisting of over 8,000 wealth management professionals. FactSet’s annual client retention improved to 90% year over year. Free cash flow increased 40% during the first half of the year to $201 million with the company paying $58.2 million in dividends and repurchasing $115 million of its common shares, including 222,000 shares repurchased for $71.5 million in the second quarter at an average price of $322.11 per share. The Board announced an increase of $206 million to the existing share repurchase program bringing the total available for future share repurchases to $350 million. For the full fiscal 2021 year, FactSet expects organic ASV to increase in the range of $70 million to $85 million with revenue expected to be in the range of $1.570 million to $1.585 million and EPS expected in the range of $10.05 to $10.45.
Wednesday, March 24, 2021
Intel-INTC provided a financial update and full-year 2021 business outlook. The company expects to exceed its previously communicated first-quarter 2021 non-GAAP revenue and earnings-per-share (EPS) guidance, driven by continued strong notebook demand. For the full-year 2021, Intel expects GAAP revenues of $76 billion and EPS of $4.00 and non-GAAP revenue of $72 billion and EPS of $4.55. Intel is working aggressively with supply chain partners and leveraging its manufacturing capabilities to help with the industry-wide component shortages. Intel plans to spend $19 to $20 billion on capital expenditures in 2021 with a major expansion of its semiconductor manufacturing capacity with plans for two new factories or fabs in Arizona. This expansion is expected to create over 3,000 permanent high-wage, high-tech jobs; over 3,000 construction jobs; and approximately 15,000 local long-term jobs.
Tuesday, March 23, 2021
Regeneron Pharmaceuticals-REGN said its COVID-19 antibody cocktail still reduced the risk of hospitalization and death by about 70% among COVID-19 patients at high risk of hospitalization when prescribed a lower dose. Regeneron said that in addition to cutting the risk of hospitalization and death, its study found that its cocktail reduced the duration of Covid-19 symptoms. In both the small and midsize dose treatment groups, it took a median of 10 days for Covid-19 symptoms to resolve, compared with 14 days in the placebo groups.
Thursday, March 18, 2021
Nike-NKE reported third quarter revenues increased 3%, or down 1% on a currency-neutral basis, to $10.4 billion with net earnings racing ahead 71% to $1.45 billion and EPS jumping 70% to $0.90. Excluding a $0.25 non-cash charge last year related to a distribution model change in South America, EPS increased 15%. By geography, North America sales declined 11% to $3.6 billion, largely due to global container shortages and U.S. port congestion which delayed the flow of inventory in the third quarter by more than three weeks, partially offset by NIKE Direct sales growth of 15%. EMEA sales declined 9% to $2.6 billion as 45% of NIKE-owned stores experienced mandatory COVID-19 related closures for the last two months of the quarter, partially offset by a 60% jump in digital sales. Today, about 65% of stores in EMEA are open or operating on reduced hours. Greater China revenues increased 42% to $2.3 billion, reflecting strong growth versus the third quarter of 2019 when sales were depressed by the impact of COVID-19, as well as continued strong digital sales growth of 44%. Asia Pacific & Latin America sales declined 8% to $1.3 billion. Nike ended the quarter with cash and short-term investments of $12.5 billion, boosted by proceeds from a corporate bond issuance in last year's fourth quarter and positive free cash flow, partially offset by cash dividends paid. NIKE continues a strong track record of investing to fuel growth and consistently increasing returns to shareholders, including 19 consecutive years of increasing dividend payouts. In the third quarter, Nike paid dividends of $434 million to shareholders, up 14% from last year. Nike temporarily suspended share repurchase activity in March 2020 to maximize liquidity during the COVID-19 pandemic. Prior to the temporary suspension of the share repurchase program, a total of 45.2 million shares had been repurchased under the program for approximately $4.0 billion. Nike expects to resume share repurchases under its existing share repurchase program in the fourth quarter of fiscal 2021.
Accenture-ACN reported strong second quarter results with revenues rising 9% to $12.1 billion and net income and EPS each up 17% to $1.4 billion and $2.23, respectively. Excluding a gain on investments during the quarter, adjusted EPS was up 10%. Operating income increased 11% to $1.65 billion with operating margin expanding 30 basis points to 13.7%. Growth was broad-based driven by 7% growth in North America and double-digit growth in Financial Services and Health & Public Services. Free cash flow jumped 92% during the first half of fiscal 2021 to $4 billion with the company paying $1.1 billion in dividends, an increase of 10%, and repurchasing $2 billion of its common shares. The company has $5 billion remaining authorized for future share repurchases. During the first half of the year, Accenture also acquired 19 companies for $1.1 billion with plans to complete at least $2 billion of acquisitions for the full year. COVID-19 hit a giant fast-forward button for businesses to securely move their businesses into the cloud through increased technology investments. As a result, Accenture’s engine of growth roared to life to meet this strong demand for its services. New booking increased 13% to a record $16 billion with record bookings in both consulting and outsourcing at $8 billion each. With outstanding second quarter financial results, Accenture returned to overall pre-pandemic growth ahead of expectations while continuing to gain market share. As a result, the company raised all its elements of its business outlook for fiscal 2021. Management now expects full year constant currency revenue growth of 6.5% to 8.5% with double-digit EPS growth in the range of $8.67 to $8.85. Free cash flow for the full year is expected in the range of $7 billion to $7.5 billion with the company returning at least $5.8 billion to shareholders through dividends and share repurchases.
Alphabet-GOOGL announced it will spend $7 billion this year on an expansion of its U.S. facility footprint, adding at least 10,000 jobs across a host of cities, among them Atlanta, Washington, D.C., Chicago, and New York. This positions Google as a major private sector contributor to the economic recovery from the COVID-19 downturn.
Monday, March 15, 2021
Facebook-FB has already connected over two billion people to authoritative COVID-19 information. Going a step further as access to COVID-19 vaccines expands, Facebook is helping 50 million people find out when and where they can get a vaccines through information and registration tools on Facebook, Instagram and WhatsApp. By working closely with national and global health authorities and using its scale to reach people quickly, Facebook is doing its part to help people get credible information, get vaccinated and come back together safely. Facebook plans to expand to other countries as vaccines are available more widely.
Regeneron Pharmaceuticals-REGN and Sanofi announced positive results demonstrating an overall survival benefit from the Phase 3 trial investigating the PD-1 inhibitor Libtayo (cemiplimab) monotherapy compared to chemotherapy, in patients previously treated with chemotherapy whose cervical cancer is recurrent or metastatic. The trial will be stopped early based on a unanimous recommendation by the Independent Data Monitoring Committee (IDMC), and the data will form the basis of regulatory submissions in 2021.
Thursday, March 11, 2021
Ulta Beauty-ULTA reported fourth quarter revenues declined 4.6% to $2.2 billion with net income down 23% to $171.5 million and EPS down 22% to $3.03. Results were better than expected in the fourth quarter with comparable store sales down 4.8%. Improving trends in consumer demand resulted in improving trends in sales, transactions and profitability. During the fourth quarter, the company opened two new stores and ended the year with 1,264 stores. For the full year, revenues dropped 17% to $6.2 billion with net income declining 75% to $175.8 million and EPS falling 74% to $3.11 as the company was adversely impacted by the pandemic with temporary store closures. Return on equity fell to 8.8% in 2020 due to the lower earnings. Free cash flow declined 18% to $658.5 million with the company repurchasing $115 million of its shares outstanding, including 147.8 million shares repurchased in the fourth quarter for $41.9 million at an average cost of $283.49 per share. As of 1/31/21, the company had $1.5 billion remaining authorized for future share repurchases. The company ended the year with $1 billion in cash, $1.6 billion in operating lease liabilities and $2.0 billion in shareholders’ equity. For fiscal 2021, the company plans to open 40 net new stores with revenues expected in the range of $7.2 billion to $7.3 billion on comparable store sales growth of 15% to 17%. The company expects operating margin to expand to 9%, driven b gross margin expansion with EPS expect in the range of $8.85-$9.30. The company expects to repurchase $850 million of its stock in fiscal 2021 with capital expenditures expected in the range of $200 million to $250 million. The company also announced its CEO transition plan for fiscal 2021.
Wednesday, March 10, 2021
Oracle-ORCL reported third quarter revenues increased 3% to $10.1 billion with net income up 95% to $5 billion and EPS up 113% to $1.68. Excluding a one-time tax benefit of $2.3 billion related to the transfer of assets between subsidiaries, adjusted net income increased 10% to $3.5 billion and EPS increased 20% to $1.16. Cloud services and license support revenues increased 5% to $7.3 billion while Cloud license and on-premise license revenues increased 4% to $1.3 billion. Oracle’s rapidly growing, highly profitable, multi-billion-dollar cloud ERP businesses helped drive subscription revenue, which now accounts for 72% of total revenue, up 5% during the quarter. Cloud ERP subscription revenue included 30% growth of Fusion ERP and 24% growth of NetSuite ERP as Oracle continues to win business from its competitors. Oracle’s Gen2 Cloud Infrastructure business grew revenue at a rate in excess of 100%. During the quarter, Oracle repurchased $4 billion of its shares at an average cost of $62.5 per share. Trailing twelve-month free cash flow increased 3% to $12.8 billion, up 3% from last year, and represented 100% of net income. Oracle’s board increased the quarterly dividend by 33% to $0.24 per share and the share buyback authorization by $20 billion. The company ended the quarter with $35.9 billion in cash and investments, $64 billion in long-term debt and $9.6 billion in shareholder equity. Looking ahead to the fourth quarter, Oracle expects revenues to increase 5% to 7%, or 1% to 3% in constant currency, with adjusted earnings expected to increase 7% to 11% to $1.28 to $1.32 per share. Fourth quarter capital expenditures are estimated at $1 billion as the company invests in its infrastructure to alleviate supply constraints.
T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.50 trillionas of February 28, 2021, representing a 2.1% increase since year end.
The United States plans to double its order of the single-shot Johnson & Johnson-JNJ coronavirus vaccine, procuring an additional 100 million doses. Merck has agreed to partner with J&J to produce its vaccine.
Thursday, March 4, 2021
Mastercard-MA reported that despite the inclement weather felt across many parts of the country this February, U.S. retail sales excluding automotive and gasoline increased 4.6% year-over-year when adjusted for Leap Year. Online sales grew 54.7% compared to 2020. With more people watching football’s big game from home, Grocery spend was up 30% the three days prior. That contributed to the Grocery sector growing +12.4% for the month. Also known for being the month of love, February saw Jewelry spend rise +5.9% and +63.1% online. Restaurant spend remained down (-13.5%) but has showed improvement over the past two months. Furniture & Furnishings (+8.6%) continued to post solid gains as seasonally cooler weather led to home improvements and décor projects. While Apparel sales were down -5.3% overall, Apparel e-commerce sales grew +47.3%. The infusion of stimulus payments in early January appeared to boost consumer spending in January and through early February, though the impacts have waned.
Fastenal-FAST reported February sales and daily sales each rose 1.5% to $437.7 million and $21.9 million, respectively. Sales inched up 0.6% for manufacturing customers and declined 14.4% for non-residential construction. Daily sales growth by product line during the month was 17.6% growth in safety products and declines of 2.1% and 2.4% for fasteners and other products, respectively. Total personnel declined 7.4% to 20,565.
Wednesday, March 3, 2021
Brown-Forman-BFB reported third quarter revenues rose 1% to $911 million with net income and EPS each down 5% to $219 million and $.45, respectively. Year-to-date underlying sales growth of 2% was driven by Jack Daniel’s Ready-to-Drinks (RTDs), the continued international launch of Jack Daniel’s Tennessee Apple and broad-based growth from Jack Daniel’s Tennessee Honey and Gentleman Jack. The company’s premium bourbons, led by Woodford Reserve and Old Forrester, maintained double-digit underlying net sales growth with growth in the tequila brands primarily driven higher by New Mix in Mexico. Year-to-date free cash flow increased 25% to $531 million, reflecting lower working capital requirements, with the company paying $253 million in dividends. Brown-Forman has paid cash dividends for 76 consecutive years with the dividend increased each year for the last 37 years. During the quarter, the company approved a $125 million capital investment to expand bourbon making capacity in Kentucky to meet anticipated future consumer demand. While near-term uncertainty remains due to the pandemic, the company is optimistic for the remainder of fiscal 2021 and beyond thanks to strong business and financial fundamentals.
Tuesday, March 2, 2021
Ross Stores-ROST reported fourth quarter revenues declined 4% to $4.2 billion with net income and EPS each dropping 48% to $238 million and $.67, respectively. Comparable store sales declined 6% during the quarter, reflecting the negative impact from the upsurge of COVID-19 during the peak holiday season. Lower traffic was incurred especially in California, the company’s largest state of operations, due to more stringent occupancy and operating hour restrictions. For the full fiscal year 2020, revenues declined 22% to $12.5 billion with earnings and EPS each down 95% to $85.4 million and $.24, respectively. Free cash flow increased 14% during the year to $1.8 billion with the company paying $101 million in dividends and repurchasing $177.7 million of its common shares. Ross Stores reinstated its quarterly dividend at a rate of $.285 per share reflecting the company’s strong cash position and management’s confidence in the company’s long-term prospects. For the first quarter of fiscal 2021, the company expects comparable store sales to be down 1% to down 5% compared to fiscal 2019, which management believes is a more relevant comparison given the extended closures in fiscal 2020 due to the pandemic. During the first quarter, EPS is expected in the range of $.74 to $.86, reflecting the deleveraging effect from the decline in comparable store sales, increased supply chain costs, higher wages and ongoing COVID-19 related expenses. With the continued roll out of vaccines, additional government stimulus and likely pent-up demand, Ross Stores expects comparable store sales to strengthen as they move though the year. However, earnings will continue to be affected by cost pressures and thus profitability is expected to be well below recent historical high levels. In fiscal 2021, the company expects to open 60 new locations consisting of 40 Ross Stores and 20 dd Discounts stores. Capital expenditures should approximate $700 million in 2021.
Monday, March 1, 2021
Berkshire Hathaway-BRKB reported the company’s net worth during 2020 increased 4% or $18.4 billion to $443.2 billion with book value equal to $287,031 per Class A share as of 12/31/20. Berkshire earned $42.5 billion in 2020, including $21.9 billion of operating earnings, $4.9 billion of realized capital gains, a $26.7 billion gain from an increase in the amount of net unrealized capital gains and an $11 billion loss from a write-down in the value of a few businesses, notably a $9.8 billion impairment charge related to Precision Castparts.
Berkshire’s four major equity investment holdings represent 68% of total equities, including American Express at $18.3 billion (down 3% in 2020 or $600 million), Apple at $120.4 billion (up 63% in 2020 or $46.7 billion), Bank of America at $31.3 billion (down 6% in 2020 or $2.1 billion), and Coca-Cola at $21.9 billion (down 1% or $200 million).
Berkshire’s revenues declined 4% during 2020 to $245.5 billion with operating earnings down 9% to $21.9 billion due to the adverse impact of the pandemic on operations especially in the manufacturing, service and retailing businesses. As the economy began to reopen in the second half of the year, these businesses experienced significant sequential increases in revenue and earnings as compared to the second quarter.
During 2020, Berkshire’s insurance underwriting generated $657 million in profits compared to $325 million in profits during 2019. Underwriting earnings from primary insurance offset underwriting losses from reinsurance. Underwriting results in 2020 reflected the effects of the pandemic, arising from premium reductions from the GEICO Giveback program, reduced claims for private passenger automobile insurance and increased loss estimates for certain commercial insurance and property and casualty reinsurance business. Insurance investment income declined 9% during the year to $5.0 billion, reflecting the significant decline in interest rates, resulting in lower interest income on substantial holdings of cash and U.S. Treasury Bills. Berkshire expects interest rates, which are historically low, to remain low. This will negatively affect earnings from fixed-income investments in 2021. As Buffett noted in the annual report with interest rates so low, bonds are not the place to be these days. Fixed-income investors worldwide face a bleak future. Dividend income increased 8% during the year due primarily to preferred dividends from the $10 billion investment in Occidental Petroleum. The float of the insurance operations approximated $138 billion as of 12/31/2020, an increase of $9 billion since year end 2019. The average cost of float was negative during 2020 as the underwriting operations generated pre-tax earnings of $838 million. This massive amount of float is expected to remain near its present level for many years.
Burlington Northern Santa Fe’s (BNSF) revenues declined 11% during 2020 to $20.2 billion with net earnings declining 6% to $5.2 billion reflecting the negative impact on volumes of the COVID-19 pandemic through the first half of the year. Volume was down at double-digit rates for industrial products and coal while agricultural products volume was up 4% for the year. Volumes sequentially improved and recovered overall to pre-pandemic levels by the end of the year. BNSF is an important part of the national and global supply chain. As an essential business, BNSF has continued to operate throughout the duration of the pandemic. However, the pandemic caused significant economic disruptions that adversely affected the demand for BNSF’s services. Berkshire believes BNSF’s fundamental business remains strong and has ample liquidity to continue business operations during this volatile period.
Berkshire Hathaway Energy reported revenues charged ahead 5% during 2020 to $21.0 billion. Net earnings rose 9% during the quarter to $3.1 billion reflecting increased tax benefits from renewable energy and increased earnings from the real estate brokerage business.
Berkshire’s Manufacturing businesses reported 2020 revenues declined 6% to $59.1 billion with operating earnings down 16% to $8.0 billion. The Industrial Products segment was especially hard hit with revenues down 16% and operating earnings plummeting 33%. Precision Castparts experienced lower sales across all its major markets due to the decline in aerospace sales related to the suspension of Boeing’s 737 Max aircraft and significant declines in the aerospace markets. The COVID-19 pandemic produced material declines in commercial air travel. Airlines responded by reducing and/or cancelling aircraft orders, which adversely impacted Precision Castparts’ business. The company is aggressively restructuring operations in response to the reduced volumes in the aerospace markets and reduced its workforce 40%. While restructuring actions are expected to contribute to improved margins in the future, Berkshire believes the effect of the pandemic on commercial airlines and aircraft manufacturers continues to be particularly severe. The level of aircraft production is currently expected to slowly increase beginning in the latter half of 2021. Berkshire took a non-cash $9.8 billion goodwill impairment charge related to Precision Castparts during the second quarter. Buffett acknowledged that he overpaid for Precision Castparts as he was too optimistic about the normalized profit potential of the company. Marmon and IMC also each reported a double-digit decline in pre-tax earnings during the year due to the pandemic. On a more positive note, both Building and Consumer products generated sales and earnings growth during the year thanks to growth at Clayton Homes, Forest River and Duracell.
Service and Retailing revenues declined 6% during the year to $75.0 billion with pre-tax earnings up 1% to $2.9 billion. The spread of COVID-19 had a significant negative impact on NetJets and FlightSafety operations due to lower demand for aviation services due to the pandemic. Thanks to strong demand for home furnishings along with lower costs at Berkshire Hathaway Automotive, Retailing operations reported increases in sales and earnings as stores reopened. McLane’s revenues decreased 7% during the year to $46.8 billion with pre-tax earnings declining 13% to $251 million reflecting an intensely competitive business environment which is expected to continue.
Berkshire’s balance sheet continues to reflect very significant liquidity and a very strong capital base of $443.2 billion as of 12/31/20, an increase of $18.4 billion during the year. Excluding railroad, energy and utility investments, Berkshire ended the year with $453.9 billion in investments allocated approximately 61.9% to equities ($281.2 billion), 4.5% to fixed-income investments ($20.4 billion), 3.8% to equity method investments ($17.3 billion), and 29.8% in cash and equivalents ($135.0 billion).
Free cash flow rose 18% during 2020 to $26.8 billion. During the year, capital expenditures declined 19% to $13.0 billion, including $9.8 billion in the capital-intensive railroad, utilities and energy businesses. Berkshire expects capital expenditures in 2021 to also approximate $9.8 billion for BNSF and Berkshire Hathaway Energy. During the year, Berkshire purchased a net $26.8 billion in Treasury Bills and fixed-income investments and sold a net $8.6 billion of equity securities, including the sale of all its airline investments, a sharp reduction in the Wells Fargo investment and the sale of several other bank investments. During the year, Berkshire invested $6 billion in five Japanese trading companies; more than $4 billion in a group of pharmaceutical stocks, including Merck and AbbVie; $4 billion in Chevron; and $8.7 billion in Verizon while adding several billion to the Bank of America investment. In July 2020, Berkshire Hathaway Energy reached an agreement with Dominion Energy to acquire substantially all of Dominion’s natural gas transmission and storage business. In connection with this transaction, on November 1, 2020, Berkshire paid $2.7 billion in cash and assumed $5.3 billion of Dominion debt. The acquisition of the remainder of the Dominion businesses is expected to close in early 2021. Smaller bolt-on acquisitions of $130 million were also made in 2020.
Berkshire revised its buyback policy which now permits Berkshire to repurchase shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett and Charlie Munger. During 2020, Berkshire repurchased a record $24.7 billion of its common stock. The share repurchases increased shareholders’ ownership in all of Berkshire’s businesses by 5.2%. These repurchases included 12,605,335 Class B shares acquired at an average price of $225.73 per share and 1,787 Class A shares purchased at an average price of $342,577 per share during December 2020. After year end, it appears Berkshire has acquired more than $4 billion of its common stock based on its lower share count on the 10-K as of 2/16/21. With Berkshire’s stock valuation still appearing attractively valued, we expect further share repurchases in 2021.
Maximus-MMS completed the acquisition of the Federal division of Attain, LLC for $430 million. Privately-owned Attain serves the U.S. Federal Government, with a strong reputation as an innovator with unparalleled technology services such as artificial intelligence and machine learning to support the mission-critical objectives of numerous federal agencies. The complimentary customer base of Maximus and Attain Federal offer meaningful opportunities for further expansion in the federal market. This business will be part of the U.S. Federal Services Segment and is expected to generate revenue of $120 million to $140 million for the remaining seven months of fiscal 2021. The transaction is expected to be slightly dilutive for fiscal 2021 and is expected to be accretive in fiscal 2022.
Regeneron-REGN announced detailed results from a Phase 2 proof-of-concept trial evaluating the investigational antibody cocktail REGN1908-1909 in cat-allergic patients with mild asthma. The trial met the primary endpoint of preventing early asthma reactions. The trial also met key secondary endpoints, including improved lung function and an increased amount of cat allergen that patients could tolerate following a single dose of treatment, from as early as the first assessment conducted at week 1.
Friday. Feb. 26, 2021
Johnson & Johnson-JNJ confirmed that the FDA Vaccines and Related Biological Products Advisory Committee (VRBPAC) unanimously voted to recommend Emergency Use Authorization (EUA) for the company’s single-shot COVID-19 vaccine candidate. The next step in the process is for the FDA to decide whether to grant an EUA for Janssen's COVID-19 vaccine candidate. The recommendation of the FDA Advisory Committee is non-binding, and the final decision on authorization is made by the FDA. If authorized by the FDA, the CDC Advisory Committee on Immunization Practices (ACIP) will then provide a recommendation on the use and roll-out of the Janssen COVID-19 vaccine candidate. The company is prepared to supply its vaccine immediately upon EUA and expects to deliver enough single-dose vaccine candidate by the end of March to enable the full vaccination of more than 20 million people in the US. JNJ plans to deliver 100 mlllion single-dose vaccines to the US during the first half of 2021.
Wednesday, Feb. 24, 2021
The TJX Companies-TJX reported fourth quarter sales declined 10% to $10.9 billion with net income and EPS both down 67% to $325.5 million and $.27, respectively. The fourth quarter results reflected the negative impact of temporary store closures due to the pandemic for about 13% of the quarter, primarily in Europe and Canada. This resulted in lost sales during the fourth quarter of about $1 billion and negatively impacted EPS by about $.18-$.21. Overall, open-only comp store sales decreased 3%, which was well above the company’s plan. During the quarter, TJX saw sales trends improve each month with positive comp store sales in January. HomeGoods double-digit comp store sales were especially strong as the store benefited from folks buying goods for their home due to remote working. Fourth quarter earnings results were also negatively impacted by a higher tax rate and a debt extinguishment charge of $.18 per share as the company refinanced its debt to lower its borrowing costs. For the full year, revenues declined 23% to $32.1 billion with net income and EPS each down 97% to $90.5 million and $.07, respectively. The lower sales for the year reflected the adverse impact of temporary store closures for approximately 24% of the year due to the COVID-19 pandemic. During the year, TJX’s free cash flow increased 40% to $4.0 billion as the company curtailed store openings due to the pandemic. In fiscal 2022, the company plans to open 122 new stores with capital expenditures planned in the range of $1.2 billion to $1.4 billion. The company ended the year with $10.5 billion in cash and is resuming its quarterly dividend at a rate of $.26 per share or 13% higher than the last dividend paid in March 2020. TJX currently has 690 stores that are temporarily closed due to government mandate in response to COVID-19. The company expects these stores to be closed for about 11% of the first quarter of fiscal 2022. Additional headwinds to fiscal 2022 results include continued COVID-19-related costs and higher freight, wage and supply chain costs. Due to continued uncertainty around the global pandemic, the company is not providing financial guidance for fiscal 2022.
Monday, Feb. 22,2021
Regeneron Pharmaceuticals-REGN and Sanofi announced that the U.S. Food and Drug Administration (FDA) has approved the PD-1 inhibitor Libtayo® for the first-line treatment of patients with advanced non-small cell lung cancer. "The approval of Libtayo to treat first-line advanced non-small cell lung cancer with high PD-L1 expression means physicians and patients have a potent new treatment option against this deadly disease," said Naiyer Rizvi, M.D., Price Family Professor of Medicine, Director of Thoracic Oncology and Co-director of Cancer Immunotherapy at Columbia University Irving Medical Center.
Friday, Feb. 19, 2021
Johnson & Johnson-JNJ announced that Janssen-Cilag International N.V. has submitted for Emergency Use Listing (EUL) to the World Health Organization (WHO) for the investigational single-dose Janssen COVID-19 vaccine candidate. "Our filing with the World Health Organization marks another important step in our effort to combat COVID-19 and also in our unwavering commitment to equitable access," said Paul Stoffels, M.D., Vice Chairman of the Executive Committee and Chief Scientific Officer of Johnson & Johnson. "If we are to end the global pandemic, life-saving innovations like vaccines must be within reach for all countries."
Maximus-MMS announced that it is now supporting seven state vaccination programs with COVID-19 vaccine information and hotline services to answer common questions, address concerns about the vaccine, resolve complaints, and coordinate vaccination appointments. State programs include California, Colorado, New York, and the District of Columbia. As the nation’s largest engagement center provider for government programs, multiple states have entrusted Maximus to provide additional support for handling the unprecedented volume of vaccination requests, reduce caller hold times, and manage case backlogs. Maximus continues to play a vital role in helping states slow the spread of the pandemic and address public health needs.
Walgreens-WBA has provided more than 3 million COVID-19 vaccinations across long-term care facilities, as well as additional vulnerable populations prioritized by state and local jurisdictions. Additionally, the company has completed COVID-19 vaccine first-dose clinics in all long-term care facilities that selected Walgreens as a vaccine provider. In addition to supporting long-term care facilities, Walgreens began in-store vaccinations in 17 states and jurisdictions as part of the Federal Retail Pharmacy Program on Feb. 12. The company administered nearly all 180,000 doses of the first weekly vaccine allotment within three days. Beginning Feb. 25, Walgreens will receive a weekly allocation of more than 480,000 COVID-19 vaccine doses.
Thursday, Feb. 18, 2021
Hormel Foods-HRL reported first quarter sales rose 3% to a record $2.5 billion driven by sales growth in all four business segments. Brands such as SPAM, SKIPPY, Hormel Black Label, Applegate, Columbus and Jennie-O delivered exceptional growth during the quarter. Net earnings and EPS each declined 9% to $222.3 million and $.41, respectively, reflecting incremental supply chain costs related to the pandemic. Free cash flow increased 27% during the quarter to $165 million with the company repurchasing $9 million of its common stock and paying $125.5 million in dividends, reflecting the company’s 370th consecutive quarter of dividend payments. During the quarter, the company announced the net $2.79 billion acquisition of the Planters snack nuts business, which is expected to close in the second quarter. The acquisition is expected to be financed through a combination of cash on hand, short-term debt and long-term debt. With the combined company’s strong cash flows, Hormel expects to repay significant amounts of the debt within 18-24 months while continuing to grow its dividend. Management is increasingly optimistic about generating sales and earnings growth in fiscal 2021 with the International segment expected to have a record year led by the continued strength in China, strides made in the global e-commerce business, a recovering foodservices business as restaurants open again and momentum in the deli and retail businesses. For fiscal 2021, Hormel expects sales in the range of $9.7 billion-$10.3 billion with EPS expected in the range of $1.70-$1.82. These results do not include the pending Planters acquisition.
Wednesday, Feb. 17, 2021
Genuine Parts-GPC reported fourth quarter sales dipped less than 1% to $4.3 billion with net income from continuing operations and EPS more than doubling to $171.6 million and $1.18, respectively. On an adjusted basis, EPS was up 20% in the fourth quarter. For the full year 2020, revenues declined 6% to $16.5 billion with net income from continuing operations and EPS both down more than 70% to $163.4 million and $1.13, respectively. Excluding impairment, restructuring and other one-time items, adjusted EPS in 2020 was down less than 1% to $5.27. Automotive sales represented 66% of total sales in 2020 with industrial sales accounting for 34% of sales. By geographic region, North America accounted for 75% of sales with Europe comprising 15% of sales and Australasia 10% of revenues. While the pace of economic recovery slowed in the fourth quarter due to the spike in COVID-19 cases, the company reported its 13th consecutive quarter of gross margin expansion and continued cost savings. Free cash flow more than tripled during the year to $1.9 billion thanks to the sale of accounts receivables, improved working capital trends and lower capital expenditures. During the year, the company paid $453 million in dividends and repurchased $96 million of its common stock thanks to the robust cash flows. The company began 2021 with an excellent balance sheet, including a strong cash position and ample liquidity to support growth plans. Genuine Parts announced a 3% increase in its dividend for 2021 to an annual rate of $3.26 per share, marking the 65th consecutive year of increased dividends. The company has paid a dividend every year since going public in 1948 with the dividend currently yielding a solid 3.3%. Management expects a solid start to 2021 with strong automotive sales, continued industrial recovery and improvements in operations as the world recovers from COVID-19. Accordingly, Genuine Parts expects 2021 sales growth of 4% to 6% with profit margins expanding leading to EPS in the range of $5.55 to $5.75. Cash flow from operations is expected in the range of $1.0 billion to $1.2 billion with capital expenditures expected in the range of $275 million to $325 million for the year.
Tractor Supply-TSCO announced that it has entered into an agreement to acquire Orscheln Farm and Home in an all-cash transaction for approximately $297 million, net of acquired estimated future tax benefits of $23 million. Orscheln Farm and Home operates 167 stores located in 11 states: Missouri, Kansas, Nebraska, Iowa, Indiana, Oklahoma, Arkansas, Texas, Kentucky, Illinois and Ohio. Tractor Supply’s preliminary estimates indicate the acquisition will be immediately accretive to earnings per share upon closing. The earnings accretion is anticipated to grow over time as planned synergies are achieved. Tractor Supply intends to fund the acquisition through existing cash on hand.
Under a new program from Mastercard-MA and Island Pay, the Bahamas Sand Dollar prepaid card gives people the option to instantly convert the digital currency to traditional Bahamian dollars and pay for goods and services anywhere Mastercard is accepted on the Islands and around the world. The digital Sand Dollar is issued by the Central Bank of The Bahamas and carries the same value and consumer protections as a traditional Bahamian dollar. The digital currency can be used to facilitate government disbursements, offer additional payment choices and build a more inclusive economy. In The Bahamas, there are 700 small islands and more than 5000 square miles of water. Cash money movement becomes costly, which makes a central bank digital currency (CBDC) a preferred digital payment in the region. In the future, the Sand Dollar will be offered to tourists. Island Pay’s technology platform, combined with Mastercard technology and wide merchant acceptance, has the potential to help reduce the operational distribution costs of cash and modernize the overall payments system in The Bahamas.
Thursday, Feb. 11, 2021
Hormel Foods-HRL announced that it has entered into a definitive agreement to acquire the Planters® snack nut portfolio from the Kraft Heinz Company. The proposed transaction is expected to close in the second quarter of calendar 2021. The acquisition includes the Planters®, NUT-rition®, Planters® Cheez Balls and Corn Nuts® brands. Hormel Foods will acquire the business for $3.35 billion in cash in a transaction that provides a tax benefit valued at approximately $560 million, equating to an effective purchase price of $2.79 billion. The Planters® snack nut portfolio net sales were approximately $1 billion in calendar year 2020 and are expected to grow at the company's long-term organic growth target. Operating margins are expected to be accretive to the Grocery Products business in 2022 and enhance margins and cash flows for the total company. Hormel Foods expects to attain synergies of approximately $50-60 million to be realized by 2024. "The acquisition of the Planters® branded business further demonstrates our disciplined financial approach to M&A," said Jim Sheehan, executive vice president and chief financial officer of Hormel Foods. "We expect this acquisition will responsibly leverage our balance sheet and will not compromise our disciplined capital allocation policy, especially our commitment to dividend growth."
PepsiCo-PEP announced fourth quarter revenues popped 9% higher to $22.5 billion with net income up 5% to $1.8 billion and EPS up 6% to $1.33. PepsiCo ended the year on a strong note with the global beverage business having accelerated while the global snacks and food business remained resilient. For the full year 2020, revenues rose 5% to $70.4 billion with net income down 3% to $7.1 billion and EPS down 2% to $5.12 reflecting the increased COVID-19 related costs. Return on shareholders’ equity in 2020 expanded to a tasty 52.9%. Free cash flow increased 18% to $6.4 billion during the year with the company paying $5.5 billion in dividends and repurchasing $2 billion of its common stock. PepsiCo announced a 5% increase in the dividend payment to an annualized $4.30 per share, which represents the 49th consecutive year of dividend increases. The company is not planning any large merger and acquisition activity or significant share repurchases in 2021. For 2021, PepsiCo expects a mid-single digit increase in organic revenue and a high-single digit increase in core constant currency EPS. Management assumes that vaccination efforts will accelerate during the year leading to gradual improvement in consumer mobility. At the same time, PepsiCo expects to sustain greater e-commerce activity due to more remote work arrangements.
Tuesday, Feb. 9, 2021
T. Rowe Price Group-TROW announced that its Board of Directors has declared a quarterly dividend of $1.08 per share payable March 30, 2021 to stockholders of record as of the close of business on March 16, 2021. The quarterly dividend rate represents a 20% increase over the previous quarterly dividend rate of $0.90 per share. This will mark the 35th consecutive year since the firm's initial public offering that the company will have increased its regular annual dividend.
In other news, T. Rowe Price reported preliminary month-end assets under management of $1.46 trillion as of January 31, 2021, which were relatively flat with year end.
Cisco Systems-CSCO reported second quarter revenues were relatively flat at $12 billion with net income and EPS each down 12% to $2.5 billion and $.60, respectively. These results reflect continued weakness in the enterprise (large company) segment as the pandemic continues to impact operations. Product revenue was down 1%, led by 10% growth in security products, with Service revenue up 2% during the quarter. Cisco continues to make progress on transforming to more software and subscription with 76% of software revenue sold as a subscription in the quarter. Revenue by geographic region was led by 2% growth in Europe and the Middle East. Free cash flow declined 4% during the first half of the year to $6.7 billion with the company paying $3 billion in dividends and repurchasing $1.6 billion of its common stock, including 19 million shares repurchased in the second quarter at an average price of $42.82 per share. Cisco also announced a 3% increase in its dividend, marking the 10th consecutive year of dividend increases. This reflects management’s confidence in future growth and the company’s financial strength with more than $30 billion in cash and investments on its quarter end balance sheet with $9.6 billion in long-term debt and $39.1 billion in shareholders’ equity. Cisco expects to close its acquisition of Acacia Communications for $4.5 billion in cash in the third quarter. Cisco is seeing encouraging signs of strength across its business segments with its technology expected to be a powerful engine for economic recovery and growth. For the third quarter of fiscal 2021, management expects revenue growth of 3.5% to 5.5% with EPS expected in the range of $.64 to $.69.
Regeneron Pharmaceuticals-REGN and Sanofi today announced that the U.S. Food and Drug Administration (FDA) approved the PD-1 inhibitor Libtayo® as the first immunotherapy treatment indicated for patients with advanced basal cell carcinoma (BCC) and accelerated approval in metastatic BCC. "With today's approval, Libtayo is now approved for both advanced cutaneous squamous cell and basal cell carcinomas, building a strong foundation in dermato-oncology," said Israel Lowy, M.D., Ph.D., Senior Vice President, Translational and Clinical Sciences, Oncology, at Regeneron. "Beyond skin cancers, we also continue to investigate the potential of Libtayo in other difficult-to-treat cancers, starting with non-small cell lung cancer where an FDA decision is expected by the end of February."
Friday, Feb. 5, 2021
Regeneron-REGN reported fourth quarter revenues rose 30% to $2.4 billion with net income jumping 45% to $1.1 billion and EPS up 48% to $10.24. Fourth quarter EYLEA sales increased 10% to $1.34 billion with Dupixent sales, which are recorded by Sanofi, up 56% to $1.17 billion in the quarter. During the fourth quarter, the company signed a new agreement with the U.S. government to provide up to 1.25 million additional doses of the REGEN-COV antibody cocktail which is expected to be delivered by the first half of 2021 resulting in payments of up to $2.625 billion to Regeneron. For the full year 2020, revenues rose 30% to $8.5 billion with net income increasing 66% to $3.5 billion and EPS jumping 65% to $30.52. Return on shareholders’ equity was an impressive 31.8% for the year. The company generated $2 billion in free cash flow during the year and completed its $1 billion share repurchase program. Regeneron announced a new $1,5 billion share repurchase program which will be executed opportunistically when management believe the share prices is less than the intrinsic value of the business. The first priority in capital allocation is investing in research and development with 30 product candidates in clinical development to diversify the revenue and earnings stream and provide for long-term sustainable growth. In 2021, management plans to invest $3.0 billion to $3.175 billion in research and development.
Thursday, Feb. 4, 2021
Fastenal-FAST reported that January sales declined 3.2% to $448 million with average daily sales up 6.5% to $22.4 million on two fewer business days. Manufacturing sales increased 4.8% with non-residential construction sales down 8.9%. Safety sales were up 26.1% with fastener sales dipping 0.2% and other sales up 3.9%.
Alphabet-GOOGL and BNY Mellon collaborate to help transform U.S. Treasury Market settlement and clearance process. The Bank of New York Mellon announced a collaboration with Google Cloud to help market participants better predict billions of dollars in daily settlement failures, generate significant capital and liquidity savings, and unlock operational efficiencies. The initiative, which helps to extend BNY Mellon's growing portfolio of emerging technology capabilities, will leverage Google Cloud's data analytics, artificial intelligence (AI) and machine learning (ML) technologies to develop new collateral management and liquidity solutions built on Google Cloud.
In other news, Google Cloud announced a new, multi-year, strategic partnership with Twitter. The company will deepen its initial work with Google and move its offline analytics, data processing, and machine learning workloads to Google's Data Cloud. This will allow Twitter to analyze data faster and improve the experience for people who use the service every day. Using Google's Data Cloud, Twitter will be able to democratize data access by offering a range of data processing and machine learning tools to better understand and improve how Twitter features are used.
Maximus-MMS reported first quarter revenue increased 15.6% to $945.6 million with net income up 9.1% to $64.1 million and EPS up 13.2% to $1.03. Growth was driven by new COVID-response work such as contact tracing, disease investigation, vaccination support, unemployment insurance support and other key initiatives. Year-to-date signed contracts as of 12-31-20 were $594 million with contracts pending (awarded but unsigned) totaling $1.1 billion. The sales pipeline at quarter end was $31.6 billion, comprised of $3.6 billion in proposals pending, $1.4 billion in proposals in preparation and $26.7 billion in opportunities tracking. Free cash flow increased 16% during the first quarter to $89 million with the company paying $17.2 million in dividends and repurchasing $3.4 million of its common stock. With a strong balance sheet and cash flows, liquidity is not a concern at the company. The capital allocation strategy is biased toward merger and acquisition activities to drive long-term organic growth while remaining committed to future dividends and opportunistic share repurchases. Based on recent awards, scope increases and contract extensions, Maximus raised their fiscal 2021 outlook for sales, earnings and cash flows with revenues now expected in the range of $3.4 billion to $3.525 billion, EPS expected in the range of $3.55 to $3.75 and free cash flow expected in the range of $310 million to $360 million.
Mastercard-MA SpendingPulse, which measures in-store and online retail sales across all forms of payment, reported that 2021 kicked off with retail gains across nearly all sectors and all 50 U.S. states. U.S. retail sales, excluding automotive and gasoline, increased 9.2% year-over-year, with online sales growing 62.1% compared to 2020. The momentum of a stronger-than-anticipated holiday season continued throughout the month, with consumer spending buoyed by an infusion of stimulus payments, particularly in the first two weeks of the year. Spending in and around the home remains a top consumer priority, with Furniture & Furnishings (+16.6%) posting its eighth straight month of solid gains. Home categories, along with Grocery, have seen some of the biggest category lifts following stimulus payments. Consumers are starting to refresh their wardrobes again with Specialty Apparel online sales up +52.5% in January. No sector has been a clearer bellwether of consumers’ mobility this past year than Gasoline sales, with negative year-over-year growth since mid-March 2020. While the declines eased over the summer months, Covid-19 restrictions as well as winter weather led to a further deterioration in gasoline demand in January. "We’re living in a digital world. For consumers, e-commerce has emerged as a lifeline and a lifestyle. January’s numbers are just further proof of this ongoing trend," said Steve Sadove, Mastercard senior advisor and former CEO of Saks, Inc. "A big, bright note from January is that consumers are spending. While we know that consumers are also saving their stimulus funds and paying down debt, these numbers show that stimulus is helping to boost sales for retailers around the country."
Wednesday, Feb. 3, 2021
Cognizant-CTSH reported fourth quarter revenues declined 2% to $4.2 billion with net income down 20% to $316 million and EPS down 18% to $.59. These results include the exit of a large financial services engagement in Europe. For the full year 2020, revenues were relatively flat at $16.7 billion with net income down 24% to $1.4 billion and EPS down 22% to $2.57. Return on shareholders’ equity for the year was 12.8%. Free cash flow increased 38% to $2.9 billion with the company paying $480 million in dividends and repurchasing $1.6 billion of its common stock. The company recently announced a new $2 billion share repurchase program and increased its dividend for 2021 by 9%. In 2021, the company expects revenues of $17.6 billion to $18.1 billion, representing growth of 5.5% to 8.5%. Adjusted operating margin is expected to expand from 14% in 2020 to 15.2% to 16.2% in 2021, resulting in adjusted EPS of $3.90-$4.02.
Biogen-BIIB reported fourth quarter revenues declined 22% to $2.85 billion with net income plummeting 75% to $357.9 million and EPS falling 71% to $2.32. A $331 million fourth quarter operating loss was offset by $684 million in other income, thanks to gains booked on strategic equity investments. Global revenues for multiple sclerosis (MS) drugs dropped 24% from last year’s fourth quarter to $1.8 billion as Biogen’s principal MS drug, TECFIDERA, fell off the U.S. patent cliff. Global sales of SPINRAZA, a treatment for spinal muscular atrophy (SMA), declined 8% to $498 million due to competition exasperated by COVID-19 as patients switched from Biogen’s drug that is injected into the spinal cord at specially equipped centers to competitors' oral treatments. Global sales of Biosimilars increased slightly from last year to $197 million. During the quarter, Biogen reported negative cash flows from operations of $367.1 million with $453 million in negative free cash flow, compared to positive free cash flow of $1.9 billion generated last year. For the year, Biogen reported revenues declined 6.5% to $13.4 billion with net income dropping 32% to $4.0 billion and EPS declining 21% to $24.80. During 2020, Biogen generated a healthy 37.4% return on shareholders’ equity and $3.8 billion in free cash flow, down 42% from last year. Biogen repurchased about 22.4 million shares of its shares during 2020 for $6.7 billion, or $298.17 per average share. Biogen ended the year with $3.4 billion in cash and marketable securities, $7.4 billion in long-term debt and $10.7 billion in shareholders’ equity. Looking ahead to 2021, management expects revenues in the $10.45 billion to $10.75 billion range, down 21% from 2020 at the mid-point, with non-GAAP EPS of $17.00 to $18.50, down 53% from 2020 at the mid-point.
The 3M-MMM Board of Directors declared a dividend on the company's common stock of $1.48 per share for the first quarter of 2021, an increase of 1 percent over the quarterly dividend paid in 2020. This marks the 63rd consecutive year 3M has increased its dividend. 3M has paid dividends to its shareholders without interruption for more than 100 years.
Private sector employment increased by 174,000 jobs from December to January according to the January ADP® National Employment Report™. "The labor market continues its slow recovery amid COVID-19 headwinds," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Although job losses were previously concentrated among small and midsized businesses, we are now seeing signs of the prolonged impact of the pandemic on large companies as well."
Check Point Software-CHKP reported fourth quarter revenue rose 4% to $563.8 million with net income relatively flat at $271 million and EPS up 6% at $1.95. Business grew across cloud, network and remote access security with subscriptions revenue growth of 10%. This reflects the importance of cyber security during these unprecedented times. The global pandemic and accelerated digital transformation created security challenges across all types of organizations and increased demand for the company’s cyber security services and products. For the full 2020 year, revenues rose 4% to $2.1 billion with net income up $846.6 million and EPS up 10% to $5.96. Return on shareholders’ equity for the year was a strong 24.4%. Free cash flow increased 5% to $1.1 billion during the year with the company repurchasing 11.4 million shares of its common stock during the year for $1.3 billion or an average price of about $114 per share. Check Point ended the year with an outstanding balance sheet with nearly $4 billion of cash and investments, no long-term debt and shareholders’ equity of $3.5 billion. For fiscal 2021, revenues are expected to increase to a range of $2.080 million to $2.180 million with EPS expected in a range of $5.55 to $5.95. Earnings will be adversely impacted by increased investments in growth opportunities, a weaker dollar and lower interest income to the tune of about $.52 per share.
Tuesday, Feb. 2, 2021
Alphabet-GOOGL reported fourth quarter results with revenues up 23% to $56.9 billion with net income jumping 43% to $15.2 billion and EPS up 45% to $22.30. For the full 2020 year, revenues rose 13% to $182.5 billion with net income up 17% to $40.3 billion and EPS up 19% to $58.61. Return on shareholders’ equity for the year was a solid 15.4%. This strong performance was driven by Search and YouTube as consumer and business activity recovered from earlier in the year. Google advertising revenue increased 22% in the fourth quarter, including 46% growth in YouTube ads. With consumers flocking to online shopping, advertisers are following them and increasing their advertising in a digital world. Google Cloud revenues increased 47% during the fourth quarter to $3.8 billion with full year cloud revenues growing 46% to $13.1 billion. The company ended the year with a $30 billion backlog for Google Cloud as companies are increasingly shifting their business to the cloud. A good example it the new strategic partnership Alphabet recently announced with Ford. The Google Cloud Platform will serve as Ford’s preferred cloud services provider. The tie-up includes plans for Google’s Android operating system to power all of Ford and Lincoln’s in-car infotainment systems by 2023. Alphabet’s free cash flow during the year increased 38% to $42.8 billion with the company repurchasing $31.1 billion of its common shares during the year. Alphabet ended the year with a fortress balance sheet with more than $157 billion in cash and investments, $25 billion in long-term debt and liabilities and $222.5 billion in shareholders’ equity.
In a pandemic year that no one will ever forget, UPS-UPS reported fourth quarte revenues rose 21% to a record $24.9 billion with growth across all business segments. Average daily volume increased 10.6% due to the best peak shipping season in corporate history as e-commerce sales increased significantly. Amazon is the company’s largest customer and accounted for 13% of total sales. Operating profit was up 1.6% to $2.2 billion with adjusted profit up 26%, which was much better than management expected. The company reported a fourth quarter net loss of $3.3 billion primarily due to a $5.6 billion non-cash pension charge and a $545 million impairment charge related to the decision to sell UPS Freight. The company plans to use the proceeds of the UPS Freight sale to pay down debt. For the full 2020 year, revenues increased 14% to $84.6 billion with operating profit relatively flat at $7.8 billion and net income and EPS each down 68% to $1.4 billion and $1.64, respectively, due to the charges. Free cash flow more than doubled during the year to $5.1 billion which includes $3.1 billion in pension contributions. UPS paid out $3.6 billion in dividends, an increase of 5.2% over the prior year. In 2021, the company plans to spend $4 billion on capital expenditures including a further investment in its vaccine distribution infrastructure. UPS has already delivered 36.5 million vaccines around the world. UPS expects to continue to increase its dividend in 2021 with no plans to repurchase shares. Long-term debt maturities of $2.5 billion during the year will be repaid when they come due to strengthen the balance sheet. While the company is not providing revenue or earnings guidance in 2021 due to the continued uncertainty around the pandemic, management does expect operating margins and return on invested capital to increase during the year.
Friday, Jan. 29, 2021
Gentex Corporation-GNTX reported record fourth quarter results with net sales accelerating 19% to $529.9 million, net income racing ahead 44% to $143 million and EPS jumping 49% to $0.58, the highest quarterly earnings in company history. Fourth quarter revenue growth was driven by a 14% increase in auto-dimming mirror unit shipments and strong advanced feature product mix. Unit growth was particularly strong for Full Display Mirrors® which grew at 96% and exterior auto-dimming mirrors, which increased 16%. This unit sale growth contrasts to the modest 3% growth in global light vehicle during the period. During the quarter, Gentex generated $120.7 million in free cash flow with the company repurchasing nearly $80 million shares at an average price of $31.82 per share. For the full year, Gentex reported sales declined 9% to $1.69 billion with net income falling 18% to $347.6 million and EPS dropping 15% to $1.41. Gentex shipped 1.053 million units of its Full Display Mirror® during 2020, a 42% increase compared to 2019, despite a 16% decline in global light vehicle production. In 2020 Gentex generated a 17.7% return on shareholders’ equity. Free cash flow of $412.8 million for the year declined 2% from 2019 due to the Covid-19 related reduction in overall business which compressed cash flows during the second quarter of 2020. Gentex returned $405.7 million to shareholders during 2020 through share repurchases of $288.5 million at an average cost of $27.10 per share and $117.2 million in dividends. The company ended 2020 with $612.6 million in cash and investments, no long-term debt and $2 billion in shareholder equity. Looking ahead to the full 2021 year, Gentex expects revenue in the range of $1.94 billion to $2.02 billion with 2022 sales anticipated to increase 4% to 8% above the 2021 estimates.
Johnson & Johnson-JNJ reported that its vaccine candidate was 72% effective in the US and 66% effective overall at preventing moderate to severe COVID-19, 28 days after vaccination. It was 85% effective overall in preventing severe disease and demonstrated complete protection against COVID-19 related hospitalization and death as of day 28. The vaccine protected against severe disease across geographies, ages, and multiple virus variants, including the variant observed in South Africa. The single-shot is compatible with standard vaccine distribution channels providing important tool in pandemic settings. Johnson & Johnson intends to file for U.S. Emergency Use Authorization (EUA) in early February and expects to have product available to ship immediately following authorization. It expects to ship 100 million doses in the United States by April with one billion doses shipped worldwide by the end of the year. “Johnson & Johnson embarked on the global effort to combat the COVID-19 pandemic a year ago, and has brought the full force of our capabilities, as well as tremendous public-private partnerships, to enable the development of a single-shot vaccine. Our goal all along has been to create a simple, effective solution for the largest number of people possible, and to have maximum impact to help end the pandemic,” said Alex Gorsky, Chairman, Board of Directors and Chief Executive Officer, Johnson & Johnson. “We’re proud to have reached this critical milestone and our commitment to address this global health crisis continues with urgency for everyone, everywhere.”
Biogen-BIIB and Eisai announced the FDA’s 3-month extension of the review period for the Biologics License Application for aducanumab, Biogen’s treatment for Alzheimer’s disease. As part of the ongoing review, Biogen submitted a response to an information request by the FDA, including additional analyses and clinical data, which the FDA considered a Major Amendment to the application that will require additional time for review.
Thursday, Jan. 28, 2021
Tractor Supply–TSCO reported fourth quarter sales plowed ahead 31% to $2.88 billion with net income declining 5.7% to $136 million and EPS down 5% to $1.15. Excluding a $0.49 non-cash impairment charge for the Petsense business acquired in 2016, EPS increased 36% to $1.64. Comparable store sales increased 27.3% versus an increase of 0.1% in the prior year’s fourth quarter, reflecting continued COVID-19 related demand across all major product categories as customers focused on the care of their homes, land and animals. Average transaction count and ticket sprouted up 14.3% and 13.0%, respectively, on strong demand for everyday merchandise, including consumable, usable and edible products and robust growth for seasonal categories. All geographic regions had hearty comparable store sales growth. In addition, the company’s e-commerce sales experienced triple-digit percentage growth for the third consecutive quarter. The company opened 80 new Tractor Supply stores and 9 new Petsense stores during the quarter, ending the year with 1,923 Tractor Supply Stores and 182 Petsense stores. For the full year, sales increased 27.2% to $10.62 billion with net income up 33% to $749 million and EPS up 37% to $6.38. Excluding the fourth quarter Petsense impairment charge, EPS increased 47% from 2019. Comparable store sales increased 23.1% during 2020 versus 2.7% in 2019. During 2020, Tractor Supply delivered a bountiful 38.9% return on shareholders’ equity and generated $1.1 billion in free cash flow, up a fruitful 85% from last year. The company returned $517.6 million to shareholders through shares repurchases of $343 million at $100.88 per average share and $174.7 million in dividends. Tractor Supply ended the year with more than $1.3 billion in cash, $984 million in long-term debt and $1.9 billion of shareholder equity on its fertile balance sheet. Reflecting confidence in the business and its robust cash flow, Tractor Supply increased the dividend by 30% to $0.52 per share, thereby moving the payout ratio closer to the targeted 30%. Looking ahead to 2021, management expects net sales in the range of $10.7 billion to $11 billion on a 2% decline to a 1% increase in comparable store sales with EPS in the range of $6.50 to $6.90.
SEI Investments-SEIC reported fourth quarter revenue rose 5% to $443.7 million with net income dipping 2% to $125.9 million and EPS up 2% to $.86, reflecting steady recovery from the pandemic’s impact on the markets the company serves. For the full year, revenues rose 2% to $1.7 billion with net income down 11% to $447.3 million and EPS down 7% to $3.00. Operating expenses increased during the year due to increased consulting and personnel costs. Return on shareholders’ equity for the year was an impressive 25.7%. The company ended the year with a strong balance sheet with more than $890 million in cash and investments and minimal long-term debt. During the year, the company generated $410 million in free cash flow and returned $529 million to shareholders through dividends and share repurchases, including 8 million shares of common stock repurchased for $424.7 million at an average price of $53.04. As of 12/31/20, SEI managed, advised or administered approximately $1.1 trillion in assets, an approximate 12% increase over the prior year reflecting new business and market appreciation. This included $369 billion in assets under management and $787 billion in client assets under administration.
Mastercard-MA reported fourth quarter revenue declined 7% to $4.1 billion with net income down 15% to $1.8 billion and EPS down 14% to $1.78. These results reflected consumer spending challenges due to the pandemic especially with reduced travel spending. During the fourth quarter, cross-border volume declined 29%. Gross dollar volume grew 1% during the fourth quarter to $1.7 trillion with 4% growth in switched transactions. For the full year, revenue declined 9% to $15.3 billion with net income down 21% to $6.4 billion and EPS down 20% to $6.37. Return on shareholders’ equity was 100% during the year. Free cash flow declined 11% during the year to $6.9 billion with the company paying $1.6 billion in dividends and repurchasing $4.5 billion of its common stock, including 3.1 million shares repurchased in the fourth quarter at a cost of $1.0 billion or an average price of about $322.58 per share. Mastercard has $9.5 billion authorized for future share repurchases. As effective vaccines begin across the globe, Mastercard sees consumer spending normalizing with some spending already returning to growth. Domestic travel is beginning to rise with cross-border travel expected to rebound sharply due to significant pent-up demand by consumers. Corporate travel is expected to come back more slowly as businesses increasingly use digital tools to conduct business.
T. Rowe Price-TROW reported fourth quarter revenue rose 18% to $1.7 billion with net income up 44% to $783.4 million and EPS jumping 49% to $3.33. For the full 2020 year, revenue rose 11% to $5.7 billion with net income up 11% to $2.4 billion and EPS rising 15% to $9.98. Ending assets under management increased 22% during 2020 to $1.47 trillion, which included net client inflows of $5.6 billion for the year and market appreciation. Return on shareholders’ equity in 2020 was an impressive 29.9%. T. Rowe Price ended the year with more than $4.2 billion in cash and discretionary investments and no long-term debt on its fortress balance sheet. During 2020, T. Rowe Price repurchased 10.9 million shares, or 4.6% of its outstanding shares, for $1.2 billion at an average price of $109.30 per share. In 2021, the company expects to spend about $265 million on capital expenditures with non-GAAP operating expense growth expected to range between 8%-12%.
Wednesday, Jan. 27, 2021
Apple-AAPL reported a shiny 21% increase in fiscal first quarter revenue to a record $111.4 billion with net income increasing a delicious 29% to $28.8 billion and EPS increasing 34% to $1.68 on fewer shares outstanding. These excellent results were fueled by double-digit growth in each product category, which drove all-time revenue records in each geographic segment and an all-time high in Apple’s installed base of active devices to 1.65 billion, including 1 billion iPhones. iPhone sales increased 17% to $65.6 billion on strong demand for the 5G-enabled iPhone 12. Boosted by pandemic-driven demand and the innovative, in-house designed M1 chip, Mac sales jumped 21% to $8.7 billion and iPad sales surged 41% to $8.4 billion. Wearables, Home and Accessories rose 30% to $13 billion, another record, with this segment--created with the launch of the Apple watch in April 2015--now the size of a Fortune 120 company. Services increased 24% to $16 billion as the number of subscribers surpassed management’s goal of 600 million subscribers at the end to 2020 by 20 million. By geography, Americas sales (42% of the total) increased 12%, Europe sales (25% of the total) increased 17%, Greater China (19% of the total) soared 57%, Japan (7% of the total) rose 33% and Rest of Asia sales (7% of the total) increased 11%. During the quarter, Apple generated $35.2 billion in free cash flow, up 24% from last year, with the company returning more than $28 billion to shareholders through dividend payments of $3.6 billion and share repurchases of $24.8 billion at an average cost per share of about $123.88. Apple ended the quarter with nearly $196 billion in cash and marketable securities, $99.3 billion in long-term debt and $66.2 billion in shareholders’ equity on its exceptionally strong balance sheet.
Stryker Corporation-SYK reported fourth quarter sales increased 3.2% to $4.3 billion with reported earnings and EPS declining nearly 22% to $568 million and $1.49, respectively. For 2020, Stryker’s sales decreased 3.6% to $14.4 billion with net earnings and EPS falling 23% to $1.6 billion and $4.20, respectively. By segment, Orthopaedics sales decreased 5.6% to $4.9 billion, primarily due to decreased unit volume and lower prices. MedSurg sales decreased 1.4% to $6.4 billion and Neurotechnology and Spine declined 4.7% to $2.9 billion, both being affected by decreased unit volume and lower prices. During 2020, Stryker generated a 12.2% return on shareholders’ equity and nearly $2.8 billion in free cash flow. The company returned $863 million in cash to shareholders in 2020 through dividend payments. Stryker ended the year with $3 billion in cash and investments, $13.2 billion in long-term debt and $13 billion in shareholders’ equity. In 2021, management expects organic net sales growth of 8% to 10% and adjusted EPS of $8.80 to $9.20. "In spite of COVID-19 outbreaks that intensified through the quarter, our teams showed good resilience and delivered a solid quarter of financial results," said Kevin Lobo, Chairman and Chief Executive Officer. "As we saw with prior pandemic spikes, the impacts were strongest in the businesses linked to deferrable procedures, but as evidenced by our guidance for 2021, we are optimistic about our prospects for the future. The Wright Medical integration is off to a strong start and we continue to advance innovation across the company.”
Facebook-FB reported fourth quarter revenue rose 33% to $28.1 billion with net income up 53% to $11.2 billion and EPS up 52% to $3.88. For the full year, revenue rose 22% to $86 billion with net income jumping 58% to $29.1 billion and EPS rising 57% to $10.09. Return on shareholders’ equity for the year was a friendly 22.7%. Approximately 2.6 billion people use one of Facebook’s apps each day, an increase of 15% over the prior year. Facebook’s business benefited from two broad economic trends during the pandemic including the shift towards online commerce and the shift in consumer demand towards products and away from services. These shifts provided a tailwind to the company’s advertising business in the second half of the year. Free cash flow for the year increased 11% to $23.6 billion with the company repurchasing $6.3 billion of its common shares. Facebook’s Board of Directors recently announced a new share repurchase program of up to an additional $25 billion. The company ended the year with a fortress balance sheet with nearly $62 billion in cash and investments, $9.6 billion in long-term operating lease liabilities and $128.3 billion in shareholders’ equity. Facebook expects to face significant uncertainty as the company manages through several cross currents in 2021, including platform changes and increased competition from Apple and regulatory issues. Total expenses in 2021 are expected in the range o f$68-$73 billion, driven by increased investments in talent and continued growth in infrastructure costs such as data centers, servers and office facilities. In 2020, headcount increased 30% to 58,604 with capital expenditures of $15.72 billion. In 2021, capital expenditures are expected to increase to $21-$23 billion, including delayed expenditures from 2020 due to the pandemic. m
General Dynamics-GD reported fourth quarter revenue declined 2.7% to $10.5 billion with net income down 1.8% to $1.0 billion and EPS dipping 0.6% to $3.49. On a sequential basis, General Dynamics saw strong improvements in earnings, margins and cash flow from the third quarter with earnings and EPS each up 20% and operating margin up 90 basis points to 12.3%. For the full 2020 year, revenue declined 3.6% to $37.9 billion with net earnings down 9.1% to $3.2 billion and EPS down 8.2% to $11.00. Return on shareholders’ equity for the year was a sturdy 20.2%. Free cash flow increased 45% for the year to $2.9 billion with the company paying $1,2 billion in dividends and repurchasing approximately four million shares of its common stock for $587 million at an average price of $148 per share. As good stewards of General Dynamics’ capital, management’s capital allocation strategy is to 1) invest in the business, 2) increase the dividend in a sustainable manner, 3) repay debt and 4) repurchase shares. Orders remained strong across the company with a book-to-bill of 1.8-to-1 for the fourth quarter and 1.1.-to-1 for the year. Backlog grew 10% in the fourth quarter to a record high $89.5 billion due to key awards across the business segments. Gulfstream had the best order quarter for the year in the fourth quarter despite the pandemic with further orders expected as travel increases during the economic recovery. Management’s outlook for 2021 is for revenues to increase 3% to $39 billion with EPS in the range of $11.00-$11.05. Free cash flow is expected to increase in 2021 from already strong levels, which may lead to further dividend increases and share repurchases.
ADP-ADP reported fiscal second quarter revenues increased 1% to $3.7 billion with net income dipping slightly to $647.5 million and EPS increasing slightly to $1.51 on fewer shares outstanding. Economic activity continued to trend positively during the quarter with sequential employment improvement and reduced quarterly declines in U.S. Pays Per Control, an employee growth metric for a broad subset of ADP’s client base. Record client retention supported steadily improving revenue, which, combined with continued cost control, resulted in earnings ahead of expectations. By business segment, Employer Services revenues declined 1% to $2.5 billion with new bookings declining 7%, in line with expectations. Interest on funds held for clients fell 23% to $105.4 million on a 50-basis point decline in average client funds yield and a flat Average Client Funds balance of $25.1 billion. PEO Services revenues increased 5% to $1.2 billion on a better-than-expected 2% decline in Average Worksite Employees paid to 571,000. During the first six months of fiscal 2021, ADP generated $1.1 billion in free cash flow, up 7.5% from last year with the company returning $1.26 billion to shareholders through dividend payments of $782 million and share repurchases of $475 million. ADP ended the quarter with $4.8 billion in cash and investments, $2 billion in long-term debt and $5.9 billion in shareholders’ equity on its strong balance sheet. Given the better-than-expected year-to-date performance, ADP upped its fiscal 2021 outlook with revenues expected to increase 1% to 3% (from down 1% to up 1% previously) and EPS down 2% to up 2% (from down 7% to down 3% previously).
Tuesday, Jan. 26, 2021
Microsoft-MSFT reported fiscal second quarter revenue increased 17% to $43.1 billion with net income increasing 33% to $15.5 billion and EPS up 34% to $2.03. Revenue in Productivity and Business Processes was $13.4 billion, up 13%, driven by a 21% increase in Office 365 Commercial revenue, a 7% increase in Office Consumer products and cloud services revenue with continued growth in Office 365 Consumer subscribers to 47.5 million. LinkedIn revenue increased 23%, Dynamics products and cloud services revenue increased 21% on a 39% increase in Dynamics 365 revenue. Revenue in Intelligent Cloud increased 23% to $14.6 billion on a 26% increase in server products and cloud services revenue, driven by Azure revenue growth of 50%. Revenue in More Personal Computing increased 14% to $15.1 billion on a 10% increase in Windows Commercial products and cloud services, a 2% increase in search advertising, a 40% increase in Xbox content and a 3% increase in Surface revenue. During the quarter, Microsoft generated $12.5 billion in operating cash flow, up 17% year-over-year, driven by strong cloud billings and collections. Free cash flow increased 17% year-over-year to $8.3 billion. The company returned $10 billion to shareholders during the quarter, up 18% compared to last year’s second quarter. Microsoft ended the quarter with over $132 billion in cash and short-term investments, $55 billion in long-term debt and $130 billion in shareholders’ equity on its strong balance sheet. Looking ahead to the third quarter, revenues are expected in the $40.3 billion to $41.3 billion range, up nearly 17% from last year at the midpoint.
Starbucks-SBUX reported first fiscal quarter sales decreased 4.9% to $6.7 billion with net earnings decreasing 29.8% to $622.2 million and EPS declining 28.4% to $0.53. These results reflected the adverse impact of the pandemic with reduced customer traffic and operating hours and temporary store closures. Global comparable store sales declined 5%, driven by a 19% decrease in comparable transactions, partially offset by a 17% increase in average ticket. Americas comparable store sales decreased 6% while International comparable store sales decreased 3%, both driven by a decrease in comparable transactions. The company opened 278 net new stores during the quarter and ended the quarter with 32,938 stores, up 4% from last year. Operating margins decreased from 17.2% to 13.5% year-over-year primarily due to the COVID-19 pandemic, partially offset by labor efficiency and the impact of pricing in the Americas. During the quarter, Starbucks generated $1.51 billion in free cash flow and returned approximately $528 million to shareholders through dividends. Starbucks ended the quarter with nearly $5.3 billion in cash and short-term investments and $14.6 billion in long-term debt. Starbucks is providing fiscal year 2021 guidance, expecting EPS in the range of $2.42 to $2.62, revenue in the range of $28 billion to $29 billion, global comparable store sales growth of 18% to 23% and expects to open approximately 2,150 new stores. “Our results demonstrate the continued strength and relevance of our brand, the effectiveness of the actions we’ve taken to adapt to the changes in consumer behavior and the steadfast commitment of our green apron partners to serve our customers and communities. We remain optimistic about our robust operating outlook for fiscal 2021 as well as our ability to unlock the full potential of Starbucks to create value for our stakeholders,” said Kevin Johnson, president and CEO.
F5 Networks – FFIV reported fiscal first quarter revenues increased nearly 10% to $624.6 million with net income declining 11% to $87.7 million and EPS declining 13% to $1.41. Product revenues, which accounted for 46% of total revenues, increased 23% on a 70% jump in software sales with subscriptions now accounting for 77% of software sales. Services sales increased 1% to $336.6 million. Digital transformation and migration to multi-cloud environments accelerated by COVID drove F5 Networks’ sales momentum during the quarter. By region, Americas sales (55% of the total) increased 14%, AMEA sales (26% of the total) increased 4% and APAC (19% of the total) increased 7%. By vertical, Enterprise sales accounted for 67% of total sales, Service Providers accounted for 14% and Government sales account for 18%, including 6% from the Federal government. During the quarter, F5 generated $132.7 million in free cash flow, up 9% from last year as a significant drop in capital investments more than offset lower income. While no shares were repurchased during the quarter, the company remains committed to repurchasing $500 million of its shares during 2021 through an accelerated share repurchase program. The company ended the quarter with $1.46 billion in cash and investments and $364 million in long-term debt on its weather-resistant balance sheet. For the second quarter of fiscal year 2021, F5 expects to deliver revenue in the range of $625 million to $645 million, up 9% from last year at the midpoint, with non-GAAP EPS in the range of $2.32 to $2.44, up 7% from last year at the midpoint.
Canadian National Railway-CNI reported fourth quarter revenue rose 2% to C$3.6 billion with net income and EPS each chugging 17% higher to C$1.0 billion and C$1.43, respectively. A strong finish to a challenging year was driven by momentum in volume demand that grew during the fourth quarter and continues to grow. Double-digit volume growth was experienced in the grain and fertilizer segment of the business with CNI generating 11 consecutive quarters of record grain shipments. For the full year, revenue declined 7% to C$13.8 billion with net income down 16% to C$3.6 billion and EPS down 14% to C$5.00 due to the adverse economic impact of the pandemic. Return on shareholders’ equity for the year was a solid 18.1%. Free cash flow increased 60% during the year to a record C$3.3 billion as capital expenditures were curtailed. With management increasingly optimistic about 2021, the company announced plans to invest C$3.0 billion in capital investments of which C$1.6 billion is planned toward track and railway infrastructure maintenance. Canadian National Railway is targeting to deliver EPS growth in the high single-digit range in 2021 with free cash flow in the range of C$3.0 billion to C$3.3 billion. Demonstrating confidence in the long-term financial health of the company, the Board of Directors announced a 7% increase in the dividend, which marks the 25th consecutive year of dividend increases, and plans to resume share repurchases in 2021 up to 14 million shares.
Johnson & Johnson-JNJ reported fourth quarter sales increased 8.3% to $22.5 billion with net earnings and EPS each decreasing 57% to $1.7 billion and $0.65, respectively, due primarily to nearly $3 billion in litigation expense. On an adjusted basis, earnings dipped 1% lower during the fourth quarter. For the full year, sales increased 0.6% to $82.6 billion with net earnings dipping 2.7% to $14.7 billion and EPS declining 2.1% to $5.51. By business segment, Pharmaceutical sales increased 8% to $45.6 billion driven by sales of Stelara, DARZALEX, IMBRUVICA, ERLEADA and TREMFYA. Medical Device sales decreased 11.6% to $23 billion due to the deferral of medical procedures as the result of the pandemic and Consumer sales increased slightly to $14 billion driven by Tylenol, PEPCID, ZYRTEC and LISTERINE mouthwash. During 2020, Johnson & Johnson generated approximately $20 billion in free cash flow and returned $10.5 billion to shareholders through dividends. Looking ahead to 2021, management expects sales to be in the $90.5 billion to $91.7 billion range, up 9.5% to 11%, with adjusted EPS expected in the $9.40 to $9.60 range, up 17.1% to 19.6%. “We continue to progress our COVID-19 vaccine candidate and look forward to sharing details from our Phase 3 study soon. Johnson and Johnson was built for times like these, and I am extremely confident in our ability to deliver lasting value and continued innovation in 2021 and for years to come,” said CEO Alex Gorsky. If the Phase 3 results prove successful, which should be disclosed early next week, JNJ is prepared to deliver 100 million doses of its vaccine by April in the United States alone. Approximately one billion doses will be delivered around the globe for the full year.
Raytheon Technologies-RTX reported fourth quarter revenues rose 40% to $16.4 billion with net income nosediving 88% to $135 million and EPS plunging 87% to $.10, reflecting the adverse effect of the pandemic on the aerospace sector. For the full year 2020, revenues were $56.6 billion with the company reporting a loss of $3.5 billion or ($2.29) per share. Due to the lower earnings, free cash flow declined 36% during the year to $2.5 billion with the company paying $2.7 billion in dividends. Backlog at the end of the year was $150.1 billion, including $82.8 billion from commercial aerospace and $67.3 billion from defense. Management’s outlook for 2021 is for sales of $63.4 billion to $65.4 billion with adjusted EPS of $3.40-$3.70. Free cash flow in 2021 is expected to increase to $4.5 billion. In December, the company authorized a $5 billion share repurchase program and plans to repurchase at least $1.5 billion of shares in 2021 while remaining committed to paying and growing its dividend. As the aerospace sector recovers, free cash flow should normalize in the $8 billion to $9 billion range. Air travel is not expected to return to the 2019 levels until 2023. With recent structural actions, Raytheon is well positioned for sustainable growth and profitability in 2021 and beyond and remains committed to returning $18 billion to $20 billion to shareholders in the next four years through dividends and share repurchases.
Regeneron-REGN reports positive interim data with REGN-COV antibody cocktail used as a passive vaccine to prevent COVID-19. “These data using REGEN-COV as a passive vaccine suggest that it may both reduce transmission of the virus as well as reduce viral and disease burden in those who still get infected," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer at Regeneron. "Even with the emerging availability of active vaccines, we continue to see hundreds of thousands of people infected daily, actively spreading the virus to their close contacts. The REGEN-COV antibody cocktail may be able to help break this chain by providing immediate passive immunity to those at high risk of infection, in contrast to active vaccines which take weeks to provide protection. There are also many individuals who unfortunately may be immunocompromised and not respond well to an active vaccine or are otherwise unable to be vaccinated, and REGEN-COV has the potential to be an important option for these individuals. Overall, the REGEN-COV development program has demonstrated definitive anti-viral activity and the collective data strongly suggest it can be effective both as a therapeutic and as a passive vaccine."
Regeneron and Columbia University have independently confirmed findings that REGEN-COV antibody cocktail retains its highly potent neutralizing capacity against the variants of the COVID-19 virus.
PepsiCo-PEP and Beyond Meat, Inc. announced they will form The PLANeT Partnership, LLC (TPP), a joint venture to develop, produce and market innovative snack and beverage products made from plant-based protein. The joint venture will leverage Beyond Meat's leading technology in plant-based protein development and PepsiCo's world-class marketing and commercial capabilities to create and scale new snack and beverage options. Financial terms of the partnership were not disclosed.
3M- MMM posted fourth quarter sales growth of 6% to $8.6 billion with net income and EPS increasing 43% to $1.4 billion and $2.38, respectively. Adjusted EPS increased 22% on a 250 basis point improvement in adjusted operating margin to 21.5%. During the fourth quarter, 3M delivered organic growth across all business groups and geographic areas even as the COVID-19 pandemic impacted 3M’s businesses in numerous ways. During the fourth quarter, end-market demand remained strong in personal safety, home improvement, general cleaning, semiconductor, data center and biopharma filtration. At the same time, several other end-markets continued to experience year-on-year declines due to COVID-19-related headwinds, including healthcare and oral care elective procedures, consumer electronics, hospitality, office supplies and healthcare IT. Total sales grew 12.7% in Safety and Industrial as the company ramped up respirator production capacity to 2.5 billion units, a four-fold increase from 2019. Consumer segment sales increased 10.6%, Health Care sales increased 5.4% and Transportation and Electronics increased 2.3%. For the full year, 3M reported a slight increase in sales to $32.2 billion with net income and EPS increasing 18% to $5.4 billion and $9.25, respectively. Adjusted EPS dipped 1.5% to $8.74. During 2020, 3M generated a healthy 18.2% return on invested capital and robust free cash flow of $6.6 billion, up 23% from last year. This strong free cash flow enabled the company to reduce net debt by $4 billion during 2020 while investing in growth drivers and returning $3.8 billion in cash to shareholders. 2020 marked the 62nd consecutive year of annual dividend increases for 3M shareholders. Management resumed providing financial guidance with projected 2021 sales growth of 5% to 8%, EPS in the $9.20 to $9.70 range and free cash flow conversion of 95% to 105%.
Monday, Jan. 25, 2021
Bank of Hawaii-BOH reported fourth quarter revenues declined 4% to $164.8 million with net income and EPS each down 27% to $42.3 million and $1.06, respectively. For the full year 2020, revenues were relatively flat at $680.7 million with net income down 32% to $153.8 million and EPS down 31% to $3.86. Despite the many challenges faced during the year due to the COVID-19 pandemic, loan balances grew 8.6% in 2020 and deposit balances reached another record high--growing 15.4% aided by fiscal stimulus checks being deposited at the bank. Total assets expanded to a record high of $20.6 billion at the end of the year with overall asset quality remaining stable and capital and liquidity remaining strong. The bank’s efficiency ratio improved for the year to 54.9%. Due to low interest rates, the return on assets declined to .79%, the return on equity declined to 11.4% and the net interest margin declined to 2.73%. While the Hawaiian unemployment rate remains elevated due to the pandemic’s impact on tourism, the Hawaiian real estate market for single family homes is solid with the median sales price rising 5.2% to $830,000 during the year. Nearly 80% of the bank’s loan portfolio is secured with quality real estate. In-person branch transactions have fallen sharply due to the pandemic with digital only transactions now representing 31% of total transactions compared to 22% a year ago. As a result, the bank plans to close 12 in-store format branches and sunset 50 ATM’s in 2021 which will result in a $6.1 million one-time cost but result in $5.1 million in annual savings. There were no share repurchases in the fourth quarter, but the Board declared a $.67 per share quarterly dividend to be payable on March 12, 2021 maintaining its unbroken record of dividend payments. The dividend currently yields a solid 3.2%.
UPS-UPS has entered into a definitive agreement to sell UPS Freight to TFI International Inc. for $800 million. The decision to sell UPS Freight was reached following a thorough evaluation of the UPS portfolio and aligns with the company’s “better not bigger” strategic positioning. UPS and TFI International will also enter into an agreement for UPS Freight to continue to utilize UPS’ domestic package network to fulfill shipments, for a period of five years. The transaction is expected to close during the second quarter of 2021. UPS expects to recognize a non-cash, pre-tax impairment charge of approximately $500 million for the year ended December 31, 2020.
Friday, Jan. 22, 2021
Walgreens-WBA has administered more than 1 million COVID-19 vaccinations across long-term care facilities and other vulnerable populations identified as part of state and jurisdiction distribution plans.
General Dynamics Information Technology (GDIT), a business unit of General Dynamics-GD, announced that it has been selected as one of three prime contractors on the U.S. Department of State's Global Support Strategy (GSS) 2.0 indefinite delivery, indefinite quantity contract vehicle (IDIQ). The IDIQ, awarded in fourth-quarter 2020, has a total estimated value of up to $3.3 billion over a 10-year period. Under the contract, GDIT will deliver overseas consulate support services to the Bureau of Consular Affairs in support of visa application and issuance at U.S. embassies and consulates throughout the world.
Thursday, Jan. 21, 2021
Intel-INTC reported fourth quarter revenues declined 1% to $20 billion with net income dropping 15% to $5.9 billion and EPS down 10% to $1.42. For the full 2020 year, revenues rose 8% to a record $77.9 billion with net income dipping 1% to $20.9 billion and EPS up 5% to $4.94. This was the fifth consecutive year of record revenues for Intel thanks to strong customer demand in the PC-centric business segment with fourth quarter PC unit growth up 33% led by record notebook sales. The company also achieved better-than-expected data-centric results, including record Mobileye revenues. Return on shareholders’ equity for the year was a strong 25.8%, reflecting the underlying profitability of the business. Free cash flow increased 25% during the year to a record $21.1 billion with the company repurchasing 274.6 million shares of its common stock for $14.2 billion at a price of about $51.71 per share while paying $5.6 billion in dividends. Intel announced a 5% increase in the dividend for 2021 at an annualized rate of $1.39 per share. For the first quarter of 2021, Intel is forecasting revenue of $17.5 billion with an operating margin of 30% and EPS of $1.10. These results reflect the exclusion of the NAND memory business due to its pending sale. The exit of the NAND and McAfee businesses are expected to generate approximately $12 billion in proceeds.
Wednesday, Jan. 20, 2021
UnitedHealth Group-UNH reported fourth quarter revenues rose 8% to $65.5 billion with net income and EPS each declining 38% to $2.2 billion and $2.30, respectively, due to rising COVID-19 costs. For the full 2020 year, revenues rose 6% to $257.1 billion, led by 21% revenue growth at Optum. Optum is expected to continue to generate doubled-digit growth in the years ahead due to the increase in the number of patients served and the range of healthcare services provided. UnitedHealth Group’s net income increased a healthy 11% to $15.4 billion with EPS up 12% to $16.88 in 2020. Return on shareholders’ equity for the full year was a wholesome 22.5%, reflecting the company’s strong overall operating performance and efficient capital structure. Free cash flow increased 23% to $20.1 billion with the company paying $4.6 billion in dividends and repurchasing $4.3 billion of its common shares during the year. The company affirmed its 2021 guidance for revenues approximating $280 billion and net earnings of $16.90 to $17.40 per share, which includes about $1.80 per share in potential unfavorable costs related to COVID-19. As healthcare normalizes, the company is entering 2021 with momentum and expects to emerge from this challenging time with a strong capital position which should enable continued dividend growth and share repurchases.
Fastenal-FAST reported fourth quarter revenues rose 6% to $1.4 billion with net income and EPS each fastening on 10% gains to $196.1 million and $.34, respectively. For the full 2020 year, revenue rose 6% to $5.6 billion with net income up 9% to $859.1 million and EPS up 8% to $1.49. Return on shareholders’ equity for the year was an impressive 31.4%. Free cash flow increased a strong 57% during the year to $933.7 million thanks to strong profits and working capital management. This enabled Fastenal to pay $803. 4 million in dividends, including a special $.40 per share dividend paid in December, reflecting the company’s high cash balances and favorable financial outlook. For 2021, Fastenal recently announced a 12% increase in its regular dividend to $1.12 per share on an annualized basis. Fastenal is seeing improved industrial activity as the company exits 2020.
Tuesday, Jan. 19, 2021
General Dynamics Information Technology (GDIT), a business unit of General Dynamics-GD, announced it has been awarded the United States Army Europe (USAREUR) Enterprise Mission Information Technology Services (EMITS) task order by the General Services Administration (GSA). The task order, awarded in fourth-quarter 2020, has a total estimated value of $695 million over a five-year period, inclusive of a three-month transition, one-year base period and four one-year options.
Wednesday, Jan. 13, 2021
Walgreens-WBA is expanding its financial services offering in partnership with Synchrony and Mastercard-MA, as part of its ongoing commitment to offer differentiated healthcare services and benefits to customers. In the coming months, Walgreens will launch credit cards, issued by Synchrony, as well as a prepaid debit card, both of which will be powered by the Mastercard network.
T. Rowe Price-TROW reported preliminary month-end assets under management of $1.47 trillionas of December 31, 2020, representing a 21.8% increase over the prior year.
Intel-INTC announced that its board of directors has appointed 40-year technology industry leader Pat Gelsinger as its new chief executive officer, effective Feb. 15, 2021. Gelsinger will also join the Intel board of directors upon assuming the role. He will succeed Bob Swan, who will remain CEO until Feb. 15. Intel expects its fourth-quarter 2020 revenue and EPS to exceed its prior guidance provided on Oct. 22, 2020. In addition, the company has made strong progress on its 7nm process technology and plans on providing an update when it reports its full fourth-quarter and full-year 2020 results as previously scheduled on Jan. 21, 2021.
Tuesday, Jan. 12, 2021
Regeneron Pharmaceuticals-REGN announced that the U.S. Department of Health and Human Services (HHS) and the Department of Defense (DOD) will purchase additional supply of the casirivimab and imdevimab antibody cocktail for use in non-hospitalized COVID-19 patients to meet the federal government's Operation Warp Speed goals. The government has said it will provide these doses at no cost to patients, though healthcare facilities may charge fees related to administration. Under the new agreement, the government will purchase all finished doses of the casirivimab and imdevimab antibody cocktail delivered by June 30, 2021, up to 1.25 million doses at a value of up to $2.625 billion. Under a previous agreement, Regeneron is already supplying doses to treat approximately 300,000 people, bringing the total potential purchase to over 1.5 million doses. "Patients in our antibody cocktail outpatient clinical trial experienced significant reductions in virus levels and required fewer medical visits for COVID-19, suggesting the therapy can help reduce the current burden on hospitals and healthcare systems," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer of Regeneron. "Additionally, as expected, the virus continues to mutate, with the possibility of developing resistance to any one antibody. The Regeneron cocktail of two antibodies, each targeting a different site on the virus, reduces the possibility of the virus becoming resistant."
Johnson & Johnson-JNJ CEO Alex Gorsky said that the company is in the “final stages” of analyzing the data from its 45,000-patient Phase 3 trial of the single-dose version of its vaccine. If positive, the results could accelerate the global Covid-19 vaccination effort, boosting the number of available doses to one billion this year and introducing a vaccine option that will be much easier for public health officials to handle.
Intel-INTC introduced four new PC processor families targeting business, education, gaming and mobile applications. It debuted more than 50 new processors as part of its 11th Gen Intel Core series. Intel also announced that has started production of its third-generation Xeon Scalable processors. The 10-nanometer processors, code-named Ice Lake, feature innovations that boost performance, security and operational efficiency within data centers.
Gentex-GNTX announced the acquisition of a new nanofiber sensing technology capable of detecting a wide variety of chemicals, from explosives to volatile organic compounds. “Our new Vaporsens technology can be used in a wide variety of markets and industries, with potential applications for automotive, aerospace, agriculture, chemical manufacturing, military & first responders, worker safety, food & beverage processing, and medical – anywhere chemical sensing is needed,” said Neil Boehm, Gentex’s chief technology officer
Thursday, Jan. 7, 2021
F5 Networks-FFIV announced the acquisition of privately held Volterra, the first universal edge-as-a-service platform, for approximately $440 million in cash and approximately $60 million in deferred consideration and assumed unvested incentive compensation to founders and employees. The acquisition is expected to close in the first fiscal quarter. With the addition of Volterra’s technology platform, F5 is creating an edge platform built for enterprises and service providers that will be security-first and app-driven with unlimited scale. In connection with the transaction, F5 raised its Horizon 2 (fiscal years 2021 and 2022) and long-term revenue outlook, and reiterated its Horizon 2 operating targets, including its commitment to achieving double-digit non-GAAP earnings per share growth. The company also reiterated its commitment to return $1 billion of capital over the next two years, including the initiation of a $500 million accelerated share repurchase in fiscal year 2021. In addition, F5 released a preview of its first quarter fiscal year 2021 financial results stating it expects GAAP and non-GAAP revenue in a range of $623 to $626 million, driven in part, by approximately 68% GAAP, and 70% non-GAAP, software revenue growth.
Walgreens Boots Alliance-WBA reported fiscal first quarter revenues increased 6% to $36.3 billion with the company reporting a loss of $308 million or ($.36) per share compared to $845 million in profits or $.95 per share in the prior year period. These results included a $1.73 per share charge related to the equity earnings in AmerisourceBergen. Adjusted EPS decreased 11%, which was better than management expected but reflected the adverse impact of COVID-19 on financial results. Free cash flow increased 13% during the quarter to $764 million with the company paying $405 million in dividends and repurchasing $100 million of its common stock. The company announced plans to divest its pharmaceutical wholesale business for approximately $6.5 billion with plans to use the cash proceeds to accelerate its investment in the VillageMD full-service primary care clinics within its stores. First quarter results exceeded expectations, reflecting strength in Boots UK and Boots Opticians. While the second quarter is expected to see higher adverse impacts from COVID-19 due to rolling lockdowns and a weaker cough, cold and flu season, the company maintained its full year guidance of low single-digit growth in adjusted EPS on a constant currency basis. Through restructuring efforts, Walgreens expects to deliver in excess of $2 billion in annual cost savings by fiscal 2022.
Wednesday, Jan. 6, 2021
Walgreens Boots Alliance-WBA and AmerisourceBergen announced strategic agreements under which AmerisourceBergen will acquire the majority of Walgreens Boots Alliance’s Alliance Healthcare businesses for approximately $6.5 billion, comprised of $6.275 billion in cash and 2 million shares of AmerisourceBergen common stock. Walgreens will be able to increase its focus on expanding its core retail pharmacy businesses, bringing even greater healthcare offerings to patients and customers and further accelerating its progress on its clear set of strategic priorities. In addition to this transaction, the two companies have agreed to strengthen their strategic partnership by extending and expanding their commercial agreements. Their U.S. distribution agreement will be extended by three years until 2029 and their partnership is being expanded to include a commitment to pursue additional opportunities in sourcing and distribution. Furthermore, Alliance Healthcare UK will remain the distribution partner of Boots until 2031. Together, these agreements are expected to create incremental growth, synergies and efficiencies. Effective from Walgreens Boots Alliance second quarter FY2021 earnings, the businesses sold will be classified as "businesses held for sale" with FY2020 revenues of approximately $19 billion, and adjusted EBITDA of approximately $540 million. Walgreens Boots Alliance expects FY2021 adjusted EBITDA to be in the range of $575 million to $580 million for these Alliance Healthcare businesses. The transaction will be slightly dilutive in the current financial year for Walgreens Boots Alliance but will be accretive longer-term.
Optum, a unit of UnitedHealth Group-UNH, and Change Healthcare, a health care technology leader, have agreed to combine. Change Healthcare will join with OptumInsight to provide software and data analytics, technology-enabled services and research, advisory and revenue cycle management offerings to help make health care work better for everyone. The agreement calls for the acquisition of Change Healthcare’s common stock for $25.75 per share in cash, or approximately $8 billion, and is expected to close in the second half of 2021. The acquisition is expected to be accretive to UnitedHealth Group’s net and adjusted earnings per share by approximately $0.20 and $0.50, respectively, in 2022, advancing strongly in subsequent years, inclusive of investments to accelerate technology, system and product integration and development activities to more quickly deliver the value of this combination to all health care system stakeholders.
Private sector employment decreased by 123,000 jobs from November to December according to the December ADP National Employment Report®. “As the impact of the pandemic on the labor market intensifies, December posted the first decline since April 2020," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "The job losses were primarily concentrated in retail and leisure and hospitality."
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