HI Quality Archives - 2023 Thursday, Feb. 23, 2023Booking Holdings-BKNG booked a 36% increase in fourth quarter revenues to $4 billion with net income increasing 100% to $1.2 billion, and EPS up 114% to $31.92 per share. Travel bookings jumped 44% to $27.3 billion and room nights booked in the fourth quarter increased 39% from last year. For the year, Booking Holdings reported record revenues of $17.1 billion, up 56% from last year, with net income and EPS both traveling over 100% higher to $3.1 billion and $76.35, respectively. During the year, Booking Holdings generated a 110% return on shareholders’ equity and free cash flow increased 146% to $6.5 billion. The company returned $6.6 billion to shareholders via share repurchases, reducing the share count by 22% during the year. In addition, management announced a new $20 billion share repurchase program and expect to complete the program within the next four years as they plan to return all free cash flow to shareholders. Booking ended the year with $12.4 billion in cash, $11.9 billion in long-term debt and $2.7 billion in shareholders’ equity on its solid balance sheet. Management is encouraged by the continued strength and resiliency of demand from travelers last year and into the new year, with room nights booked in January 2023 up 26% compared to 2019 pre-pandemic levels, or up about 60% year-over-year.Genuine Parts-GPC reported fourth quarter sales revved ahead 15% to $5.5 billion with net earnings sliding 2% to $252.0 million and EPS dipping 1.9% to $1.77. Excluding discrete items totaling $39.6 million, or $0.28 per share, fourth quarter earnings and EPS increased 13.8% and 14.5%, respectively. By segment, Automotive sales increased 7.6% to $3.4 billion on an 8.2% comp store increase. Automotive results were driven by strong team execution amid favorable industry fundamentals including a lift in total U.S. miles driven on abating fuel prices, a reduction in mass transit ridership and increased airfares and an aging US auto fleet that reached an all-time high of 12.1 years in 2022. Industrial sales increased nearly 30% to $2.1 billion reflecting a 16.7% increase in comp store sales and a 14.3% contribution from the KDG acquisition, slightly offset by a 1.4% unfavorable foreign currency impact. The KDG acquisition integration is progressing at a better-than-expected pace with $30 million of synergies recognized in 2022 with at least $20 million more expected during the next two years. Despite the challenging macroeconomic and geopolitical environment, Genuine Parts reported a record 2022 with sales racing ahead 17% to $22.1 billion and net income and EPS increasing more than 30% to $1.18 billion and $8.31, respectively. Excluding discrete items, earnings and EPS increased 19.1% and 20.1%, respectively. During 2022, Genuine Parts generated an impressive 31.2% return on shareholders’ equity and $1.13 billion in free cash flow, up 13.6% from last year despite a 28% increase in capital expenditures to enhance data and digital capabilities including AI and supply chain productivity. During 2022, Genuine Parts returned $719 million to shareholders through dividends of $496 million and share repurchases of $223 million including $50 million purchased during the fourth quarter at an average cost per share of $172.41. The company increased its 2023 dividend by 6% to $3.80 per share, marking the 67th consecutive year of dividend increases. Genuine Parts ended the year with $653.5 million in cash, $3.1 billion in long-term debt and $3.8 billion in shareholders' equity on its solid balance sheet. Looking ahead to 2023, management expects sales to increase 4% to 6% from last year with EPS expected in the $8.80 to $8.95 range, up about 7% from last year. Free cash flow is expected in the $800 million to $1.0 billion range.Wednesday, Feb. 22, 2023The TJX Companies-TJX reported fourth quarter revenues rose 4.8% to $14.5 billion with net income charging 10.4% higher to $1.0 billion and EPS ringing up a 14.1% gain to $.89. Comparable store sales growth of 4% during the quarter was driven by 7% comp store sales growth at Marmaxx due to very strong sales of apparel and accessories. For the full year, revenues increased 2.9% to $49.9 billion with net income up 6.5% to $3.5 billion and EPS up 10% to $2.97. Return on shareholders’ equity for the year was a fancy 55%. Free cash flow for the year increased a dressy 31% to $2.6 billion with the company paying $1.3 billion in dividends and repurchasing $2.2 billion of its common stock. In fiscal 2024, the company expects to increase its dividend 13% and repurchase between $2 billion and $2.5 billion of its stock from its strong cash flows. Comparable store sales are expected to increase 2% to 3% in fiscal 2024 leading to revenues of $52.5 billion to $53.2 billion, representing 5%-7% growth. Operating margins are expected to expand 30-50 basis points leading to EPS in the range of $3.39-$3.51 for fiscal 2024. Fiscal 2024 is off to a great start, and management remains confident in improving profitability this year and reaching its pretax profit margin target of 10.6% in fiscal 2025. Longer term, TJX is on track to become an increasingly profitable $60 billion-plus revenue company. Tuesday, Feb. 21, 2023Genuine Parts Company-GPC announced today a 6% increase in its regular quarterly cash dividend for 2023. At its February 21, 2023 meeting, GPC's Board of Directors increased the cash dividend payable to an annual rate of $3.80 per share from $3.58 per share in 2022. The quarterly cash dividend of ninety-five cents ($0.95) per share is payable April 3, 2023 to shareholders of record March 3, 2023. GPC has paid a cash dividend every year since going public in 1948, and 2023 marks the 67th consecutive year of increased dividends paid to shareholders.Wednesday, Feb. 15, 2023Cisco Systems-CSCO reported fiscal second quarter revenues rose 7% to $13.6 billion with net income declining 7% to $2.8 billion and EPS down 6% to $.67. During the quarter, product revenue increased 9% to $10.2 billion and service revenue was up 2% to $3.4 billion. In addition, Cisco reported revenue growth in all geographies. The company posted 6% growth in annualized recurring revenue of $23.3 billion and subscription revenue growth of 15%. Free cash flow increased 48% during the first half to $8.4 billion. Cisco paid $3.1 billion in dividends and repurchased $1.8 billion of its stock, including 26 million shares in the second quarter at an average cost of $47.72 per share. In addition, Cisco announced a 3% increase in its dividend to be paid on April 26, 2023. The dividend increase reflects the strength of Cisco’s cash flow generation and management’s commitment to returning excess cash to shareholders. Cisco maintains a strong balance sheet and ended the quarter with $22.1 billion in cash and investments, $7.6 billion in long-term debt and $41.5 billion in shareholders’ equity. Management raised their full year outlook, driven by its growing recurring revenue base and remaining performance obligations, along with a healthy backlog and the steps they have taken to improve supply. For fiscal 2023, Cisco expects revenue growth of 9%-10.5% with EPS expected in the range of $2.85-$2.96, representing 1%-5% growth over last year.Friday, Feb. 10, 2023T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.35 trillion as of January 31, 2023, representing a 5.8% increase since year end. Preliminary net outflows for January 2023 were $5.7 billion. In a separate announcement T. Rowe Price raised its dividend by 1.7% from last year to $1.22 per share, marking the 37th consecutive year of dividend increases since the firm's initial public offering.Thursday, Feb. 9, 2023PepsiCo-PEP reported fourth quarter revenues rose 11% to $27.9 billion with net income and EPS each dropping 61% to $518 million and $.37, respectively. Core constant currency EPS increased 10%, while the decline in reported EPS reflects a $1.6 billion impairment charge, primarily related to its SodaStream business. During the quarter, organic revenue increased 14.6%, representing the fifth consecutive quarter of double-digit organic revenue growth. For the full 2022-year, revenue rose 9% to $86.3 billion with net income and EPS each increasing 17% to $8.9 billion and $6.42, respectively. Organic revenue growth accelerated to 14.4% for the full year, reflecting the geographical and category diversity of PepsiCo’s portfolio with both the global beverage and convenient foods businesses performing well. Return on shareholders’ equity during 2022 was a tasty 52%. Free cash flow decreased 20% during the year to $5.6 billion, primarily due to higher capital expenditures. The company returned $7.6 billion to shareholders through dividend payments of $6.1 billion and share repurchases of $1.5 billion. For fiscal 2023, the company expects a 6% increase in organic revenue, an 8% increase in constant currency EPS growth and total cash paid to shareholders of approximately $7.7 billion through dividend payments of $6.7 billion and share repurchases of $1 billion. PepsiCo announced a 10% increase in its annualized dividend to $5.06, representing the 51st consecutive year of dividend increases. In addition, PepsiCo expects an approximate 2-percentage-point foreign exchange translation headwind to impact reported net revenue and core EPS growth.Maximus-MMS reported fiscal 2023 first quarter sales increased a healthy 8.5% to $1.25 billion with net income falling 25% to $40.0 million and EPS down 23.5% to $0.65. Organic revenue grew 10.3%, driven by new or expanded programs in all three business segments on strong demand for services Maximus provides. Net income declined on tough comps from last year’s profitable short-term COVID response work and lower interest expense due to last year’s historically low interest rates. By segment, U.S. Federal Services revenue increased 6.2% to $618.2 million, owing to strong clinical services demand and higher revenue on a large, cost-plus contract. U.S. Services revenue increased 13.7% to $439.5 million, driven by contributions from new work wins in core areas such as eligibility support and clinical services. Outside the U.S. revenue increased 5%, or 16% organically, to $191.6 million, fueled by the U.K. Restart Programme which reached full run-rate during the quarter. During the quarter, Maximus used $134.7 million in cash flow from operations compared to $2.9 million used last year and free cash flow outflow was $150.4 million compared to a $9.2 million outflow last year. While the quarter’s cash flows were anticipated to be lower due to timing of tax payments, collections were lighter than expected, and as a result, DSO were 74 days on 12/31/2022, well above the targeted range of 60 to 70 days. During January, cash collections improved allowing for $75 million in debt reduction during January. Maximus returned $17.0 million to shareholders during the quarter via dividend payments with the company ending the quarter with $63.1 million in cash and equivalents, $1.49 billion in long-term debt and $1.58 billion in shareholders’ equity. Management’s capital allocation strategy is focused on paying down debt and making strategic acquisitions for long-term growth. Total pipeline opportunities of $30.5 billion, of which 74% represents new work, includes pending proposals of $6.0 billion, proposals in preparation of $1.7 billion and $22.8 billion in tracked opportunities. Under the Omnibus spending bill passed at the end of 2022, Medicaid eligibility redeterminations, which were halted by the COVID-19 public health emergency, will restart in 2023 on a proscribed timeline. Maximus teams are currently working with states to prepare for redetermination volume from 91 million Medicaid recipients which is expected to begin in the third quarter of fiscal 2023 with run-rate levels expected in the fourth quarter and extending into fiscal 2024. Given the ramp up in redeterminations volume and strong momentum from the first quarter, Maximus raised its fiscal 2023 guidance. Management now expects revenue to range between $4.85 billion and $5.0 billion, compared to prior revenue guidance of between $4.75 billion and $4.90 billion. Adjusted operating income is expected to range between $415 million and $440 million, compared to a previous range between $390 million and $415 million. Adjusted EPS is now expected to range between $4.00 and $4.30 per share, compared to prior guidance of between $3.70 and $4.00 per share. Free cash flow remains expected in the $225 million and $275 million range and reflects expected working capital increases as a result of higher revenue later in the fiscal year.Tractor Supply Company-TSCO announced that its Board of Directors declared a quarterly cash dividend of $1.03 per share of the Company’s common stock. This represents an increase of 12 percent versus the prior quarterly dividend rate of $0.92 per share. "Today’s announcement marks the 14th consecutive year of increasing dividend payouts by Tractor Supply. This increase demonstrates the Board’s confidence in our Life Out Here strategy and strong cash flow generation, as we continue to invest for future growth while returning capital to shareholders," said Cynthia Jamison, Tractor Supply’s Chairman of the Board.Google-GOOGL announced new ways its Maps are getting more immersive and sustainable, Immersive view is an entirely new way to explore a place — letting you feel like you’re right there, even before you visit. Using advances in artificial intelligence (AI) and computer vision, immersive view fuses billions of Street View and aerial images to create a rich, digital model of the world. And it layers helpful information on top like the weather, traffic, and how busy a place is. Say you’re planning a visit to the Rijksmuseum in Amsterdam. You can virtually soar over the building and see where things like the entrances are. With the time slider, you can see what the area looks like at different times of day and what the weather will be like. You can also spot where it tends to be most crowded so you can have all the information you need to decide where and when to go. If you’re hungry, glide down to the street level to explore nearby restaurants — and even take a look inside to quickly understand the vibe of a spot before you book your reservation. Roche-RHHBY announced that it has expanded its collaboration with Janssen Biotech, a unit of Johnson & Johnson-JNJ, to create companion diagnostics for targeted therapies, further strengthening research and innovation activities. The new, expanded agreement broadens opportunities for Roche and Janssen to collaborate in the precision medicine field with multiple companion diagnostics technologies, including immunohistochemistry, digital pathology, next generation sequencing, polymerase chain reaction and immunoassays. Monday, Feb. 6, 2023Sundar Pichai, CEO of Google and Alphabet-GOOGL, released a statement regarding their next steps in their artificial intelligence (AI) efforts. Here are a few highlights: AI is the most profound technology we are working on today. Whether it’s helping doctors detect diseases earlier or enabling people to access information in their own language, AI helps people, businesses and communities unlock their potential. And it opens up new opportunities that could significantly improve billions of lives. That’s why we re-oriented the company around AI six years ago — and why we see it as the most important way we can deliver on our mission: to organize the world’s information and make it universally accessible and useful. Two years ago we unveiled next-generation language and conversation capabilities powered by our Language Model for Dialogue Applications (or LaMDA for short). We’ve been working on an experimental conversational AI service, powered by LaMDA, that we’re calling Bard. And today, we’re taking another step forward by opening it up to trusted testers ahead of making it more widely available to the public in the coming weeks. Bard seeks to combine the breadth of the world’s knowledge with the power, intelligence and creativity of our large language models. It draws on information from the web to provide fresh, high-quality responses. Bard can be an outlet for creativity, and a launchpad for curiosity.Thursday, Feb. 2, 2023Despite lower COVID-related sales of about CHF 1 billion, Roche-RHHBY reported 2022 revenues edged up 1% to CHF 66.4 billion with net income declining 11% to CHF 12.4 billion and EPS down 5% to CHF 15.37. By segment, Pharmaceuticals division sales increased 1% to CHF 45.6 billion thanks to the continuing uptake of newer medicines including its haemophilia treatment, recently approved monclonal antibody treatment for macular degeneration, cancer immunotherapy and multiple sclerosis drug that offset the negative impact from biosimilar competition and lower sales of Actemra/RoActemra for COVID-19. Diagnostics sales dipped slightly to CHF 17.7 billion as growth in routine testing of 7% compensated for a drop in demand for COVID-19-related products. During 2022, Roche generated a healthy 44.4% return on shareholders’ equity and CHF 15.0 billion in free cash flow, down 13% from last year on higher taxes and working capital changes. During 2022, Roche returned CHF 7.8 billion to shareholders through dividend payments. The company announced a 2% increase in its dividend to CHF 9.50, marking the 36th consecutive annual dividend increase that has compounded at a 12.9% average annual rate since 1989. Roche ended the year with CHF 9.77 billion in cash and investments, CHF 21.4 billion in long-term debt and CHF 28.0 billion in shareholders equity on its healthy balance sheet. Looking ahead to the full 2023 year, sales and earnings are expected to decline in the low-single-digits with further increases in the dividend expected.Starbucks-SBUX reported first fiscal quarter sales increased 8% to a record $8.7 billion with net earnings increasing 5% to $855.2 million and EPS up 7% to $0.74. Global comparable store sales increased 5%, driven by a 7% increase in average ticket, partially offset by a 2% decline in comparable transactions. Americas comparable store sales increased 10%, primarily driven by a 1% increase in comparable transactions and a 9% increase in average ticket. International comparable store sales decreased 13%, driven by a 1% decline in average ticket and a 12% decline in comparable transactions. The company opened 459 net new stores during the quarter and ended the quarter with 36,170 stores, of which 51% and 49% were company operated and licensed, respectively. Operating margins decreased from 14.6% to 14.4% year-over-year, primarily driven by previously committed investments in labor including enhanced store partner wages and benefits, inflationary pressures and sales deleverage in China, partially offset by strategic pricing in North America and sales leverage across markets outside of China. Starbucks Rewards loyalty program 90-day active members in the U.S. increased to 30.4 million, up 15% year-over-year. During the quarter, Starbucks generated $1.1 billion in free cash flow and returned approximately $799.7 million to shareholders through dividend payments of $608.3 million and share repurchases of $191.4 million. The company has approximately 50.6 million shares available for purchase remaining under current authorization and the board of directors declared a cash dividend of $.53 per share, payable on February 24, 2023. The company had 51 quarters of consistent dividend payouts with a compound annual growth rate greater than 20%. The company expects to return approximately $20 billion to shareholders by the end of fiscal 2025 between dividends and share repurchases. Starbucks reaffirmed fiscal year 2023 guidance, expecting EPS growth on the high end of 15% to 20% range, global revenue growth in the range of 10% to 20%, global comparable store sales growth near the high end of 7% to 9% and global store growth of approximately 7%.Cognizant Technology Solutions-CTSH reported fourth quarter revenues edged up 1.3% to $4.8 billion with net income slipping 9.5% to $521 million and EPS down 7.3% to $1.02. Fourth quarter earnings includes a $59 million impairment of capitalized costs related to a large volume-based contract with a Health Sciences customer in anticipation of lower volumes. By segment, Financial Services revenue declined 4.3% to $1.5 billion and included a 180-basis point negative impact related to the previously disclosed sale of the Samlink subsidiary, partially offset by growth among public sector clients in the United Kingdom and insurance clients. Health Sciences revenue grew 4.1% to $1.4 billion, driven by digital services among pharmaceutical and healthcare payer clients. Products and Resources revenue grew 2.9% to $1.15 billion, fueled by digital services among logistics, automotive, utilities, consumer goods and travel and hospitality clients. Communications, Media and Technology revenue grew 5.4% to $784 million, powered by strength among digital native companies. Bookings during the fourth quarter grew 12% from last year and stood at $24.1 billion at year-end, representing a book-to-bill ratio of 1.2 times during 2022. For 2022, Cognizant reported revenues increased 5% to $19.4 billion with net income up 7.2% to $2.3 billion and EPS up 9% to $4.41. The company generated a solid 18.6% return on shareholders’ equity during 2022 and free cash flow of $2.2 billion. Cognizant repurchased 5.2 million shares for $300 million during the fourth quarter at an average cost per share of $57.69 and 19.0 million shares for $1.3 billion for the full year, leaving $2.8 billion authorized for future share repurchases. In addition, Cognizant Technology Solutions declared a quarterly cash dividend of $0.29 per share, a 7% increase from last year. First quarter 2023 revenue is expected to be in the $4.71 billion -$4.76 billion range, a decline of 1.5% to 2.5%, or a decline of 1.0% to flat in constant currency. Management intends to provide full year 2023 guidance in its next earnings release in early May.Alphabet-GOOGL reported fourth quarter revenues edged up 1% to $76.05 billion with net income falling 34% to $13.6 billion and EPS dropping 31.4% to $1.05. By segment, Google Advertising revenue declined 3.6% to $59.0 billion on a 1.6% drop in Google Search revenues to $42.6 billion, a 7.8% drop in YouTube ads to $8.0 billion and a 9% decline in Google Network revenue to $8.5 billion. Advertisers pulled back on spending as rising inflation and interest rates stoked concerns over consumer spending. Google Other, which includes the App Store, Pixel phones, Fitbit and Nest home products, revenues increased 7.8% to $8.8 billion while Google Cloud revenues increased 32% to $7.3 billion. With a 46% decline in Cloud’s operating loss to $480 million, the segment is well on its path to profitability. Other Bets, which includes health technology and Alphabet’s AI activities dubbed DeepMind, generated a loss of $1.6 billion during the quarter. Given advances made in Google’s artificial intelligence-based large language models, the company plans to shortly integrate AI across all its products and services, including Search during the coming months. For the year, Alphabet reported revenues clicked ahead 10% to $282.8 billion with net income falling 21% to $59.97 billion and EPS dropping 19% to $4.56. During 2022, Alphabet generated an impressive 23.4% return on shareholders’ equity and $60 billion in free cash flow, down 10% from last year. Alphabet returned $59.3 billion to shareholders through share repurchases and ended the year with $113.8 billion in cash and investments, $15 billion in long-term debt and $256 million in shareholders’ equity. Significant work is underway to improve all aspects of Alphabet’s cost structure including a workforce reduction of 12,000 roles for which it will record a charge of $1.9 billion to $2.3 billion during the current quarter. Alphabet will also take a $500 million charge for actions it is taking to optimize global office space. Sundar Pichai, CEO of Alphabet, remarked, “Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point, and I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond. There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel devices. We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet.”Apple-AAPL reported fiscal first quarter revenues declined 6% to $117.2 billion with net income down 13% to $30 billion and EPS down 10% to $1.88. On a constant currency basis, revenues would have risen in most of the company’s geographic markets. Significant foreign exchange headwinds, supply constraints from Covid-19 lockdowns in China, which impacted iPhone 14 Pro and iPhone 14 Pro Max availability during the important holiday season, and a challenging macro environment all impacted operations during the quarter. Production in China is now back where the company would like it to be. Services revenues increased 6% to $20.8 billion to set an all-time record during the quarter. Subscriptions to services increased by 150 million during the last 12 months to exceed 935 million subscriptions which is up fourfold over the last five years. Apple achieved a major milestone during the quarter as its active base of active devices crossed the 2 billion mark, hitting an all-time high for all major product categories and doubling from seven years ago. Free cash flow declined 32% during the first quarter to a still strong $30.2 billion due to the lower earnings and working capital changes. During the quarter, Apple paid $3.8 billion in dividends and repurchased 133 million shares of its common stock for $19.5 billion for an average cost of $146.43 per share. The company expects fiscal second quarter revenue performance to be similar to the first quarter with foreign exchange headwinds still significant but moderating. Services revenue is expected to grow year over year. Second quarter iPhone revenue performance is expected to accelerate from the first quarter. iPad and Mac revenue is expected to decline by double digits. The company expects gross margin to be between 43.5%-44.5% with operating expenses in the range of $13.7 billion to $13.9 billion and a tax rate of 16%.Wednesday, Feb. 1, 2023Texas Instruments-TXN provided an overview of their capital allocation strategy. Executives believe the best measure to judge a company’s performance over time is growth of free cash flow per share as that is what drives long-term value for shareholders. Since 2004, the company has compounded its free cash flow per share by 11% annually. The dividend has been increased for 19 consecutive years and compounded at an annual 25% annual rate. During the same time period, the company has reduced its share count by 47% through substantial share repurchases when the stock sells at a discount to its cash flow value. Texas Instruments has a great business model, a disciplined approach to capital allocation and a focus on efficiency. The business model is built around four sustainable competitive advantages: manufacturing and technology, a broad product portfolio, the reach of their market channels, and diverse and long-lived positions. After accretive investments in the business to grow free cash flow for the long term, the remaining cash is returned to shareholders over time via dividends and share repurchases. Meta Platforms-META reported fourth quarter revenues decreased 4% to $32.2 billion with net income declining 55% to $4.6 billion and EPS down 52% to $1.76. Fourth quarter results were negatively impacted by restructuring charges of $4.2 billion and foreign exchange rates. Had foreign exchange rates remained at 2021 levels, revenue would have been $2.01 billion higher. In the fourth quarter, ad impressions delivered across the Meta’s Family of Apps increased 23% and the average price per ad decreased by 22%. For the full year, Meta reported revenues decreased 1% to $116.6 billion with net income declining 41% to $23.2 billion and EPS down 38% to $8.59. These results include a $13.7 billion loss from the company’s Reality Labs, which includes augmented and virtual related consumer hardware, software and content, as the company invests in the metaverse, the immersive Internet. Return on shareholders’ equity was a still friendly 18.4% for the year. For the full year, ad impressions increased by 18% and the average price per ad decreased 16%. Facebook daily active users increased 5% during the year to a record 2 billion while monthly active users increased 2% to 2.96 billion. Free cash flow decreased 51% during the year to $19 billion, primarily due to a 68% increase in capital expenditures compared to the prior year. Meta repurchased $27.93 billion of its stock during the year and has $10.87 billion authorized for future share repurchases. In addition, Meta announced a new $40 billion increase to the share repurchase authorization. Meta ended the year with $40.7 billion in cash and investments, $9.9 billion in long-term debt and $125.7 billion in shareholders’ equity on its fortress balance sheet. Headcount increased 20% during the year to 86,482. The reported headcount includes a substantial majority of the approximately 11,000 employees impacted by the layoff Meta previously announced, who will no longer be reflected in the headcount by the end of the first quarter. Meta expects first quarter revenue to be in the range of $26-$28.5 billion. Full-year total expenses are expected to be in the range of $89-$95 billion, lowered from the prior outlook of $94-$100 billion due to slower anticipated growth in payroll expenses and cost of revenue. In addition, Meta now expects to record an estimated $1 billion in restructuring charges in 2023 related to consolidating their office facilities footprint. This is down from prior estimate of $2 billion, as Meta recorded a portion of the charges in the fourth quarter. For 2023, Meta expects capital expenditures to be in the range of $30-$33 billion, lowered from previous estimate of $34-$37 billion. The reduced outlook reflects the shift to a new data center that is more cost efficient and can support both AI and non-AI workloads.Tuesday, Jan. 31, 2023Stryker-SYK reported a healthy 10.7% increase in fourth quarter sales to $5.2 billion with net income and EPS declining 15% to $563 million and $1.47, respectively. Excluding a $216 million, or $0.57 per share, goodwill impairment charge and other items, fourth quarter EPS increased 10.7% from last year to $3.00. Organic sales increased 13.2% during the quarter, powered by 19.3% growth in MedSurg and Neurotechnology organic sales and 8.3% growth in Orthopaedics and Spine organic sales. For 2022, sales increased 7.8% to $18.45 billion with earnings and EPS up more than 18% to $2.36 billion and $6.17, respectively. During 2022, Stryker generated a 14.2% return on shareholders’ equity and $2.0 billion in free cash flow, down 25.6% from last year, on a jump in accounts receivable that will be collected during the current quarter and a 21% increase in inventories due to advanced purchases to mitigate the impact of supply chain issues and inflation. During 2022, Stryker returned $1.05 billion to shareholders through dividend payments. Given its focus on paying down debt taken on for the $3 billion Vocera Communications acquisition, Stryker did not repurchase any shares during 2022. Stryker ended the year with $1.9 billion in cash and investments, $11.8 billion in long-term debt and $16.6 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead to 2023, management expects continued macro-economic volatility caused by alleviating supply chain disruptions, inflationary risks and currency fluctuations. Despite the volatile macro-economic environment, Stryker has strong momentum in many parts of its business heading into 2023 and expects organic net sales growth in the range of 7.0% to 8.5% with adjusted EPS in the range of $9.85 to $10.15. Based on the steady progress of pricing actions, Stryker expects the impact of price to be between 0% and -0.5%.NVR, Inc.-NVR reported fourth quarter revenues increased 22% to $2.7 billion with net income increasing 36% to $454.7 million and EPS up 50% to $133.44. New orders decreased by 27% during the quarter to 4,153 units. The average sales price of new orders increased by 1% to $459,000. The cancellation rate in the fourth quarter was 18% compared to 10% in the prior year period. Settlements increased 13% during the quarter to 5,749 units and the average settlement price increased 9% to $464,000. The backlog of homes sold but not settled as of December 31, 2022, decreased on a unit basis by 28% to 9,162 units and decreased on a dollar basis by 25% to $4.33 billion year-over-year. Mortgage loan closings increased 3% to $1.52 billion during the quarter. For the full year, revenues rose 18% to $10.5 billion, with net income increasing 40% to $1.7 billion and EPS jumping 53% to $491.82. Return on shareholders’ equity was a strong 49% in fiscal 2022. During the year, the company repurchased 323 million shares for an average price of $4,635.71 per share and ended the year with $2.5 billion in cash, $915 million in long-term debt and $3.5 billion in shareholders’ equity on its sturdy balance sheet.PulteGroup-PHM reported fourth quarter revenues increased 19% to a record $5.1 billion with net income up 33% to $882 million and EPS jumping 48% to $3.85. Home sale revenues for the fourth quarter increased 20% to $5.1 billion, reflecting a 17% increase in average sales price to $571,000, along with a 3% increase in closings to 8,848 homes. New orders decreased by 41% during the quarter to 3,964 homes, as higher mortgage rates, reduced affordability, and lower consumer confidence, slowed demand and resulted in an increased number of previous buyers cancelling their contracts. The cancellation rate in the quarter was 32% compared to 11% in the prior year period. The company’s backlog at quarter end was 12,169 units, which is a decrease of 32% from the prior year. The dollar value of homes in backlog was $7.7 billion, which is a decrease of 22% over last year. Mortgage capture rate was 75% for the quarter, down from 85% last year. During the quarter, Pulte invested $1.1 billion in land acquisition and development and PulteGroup ended 2022 with 211,112 lots under control with 48% held through option. For the full-year, revenues increased 17% to $16.2 billion with net income increasing 34% to $2.6 billion and EPS up 48% to $11.01. Return on shareholders’ equity for 2022 was a lofty 29%. PulteGroup generated free cash flow of $556 million compared to $931 million last year, due to higher capital expenditures and inventories. During the quarter, PulteGroup repurchased 2.4 million shares of its common stock for $100 million, at an average price of $41.81 per share. In 2022, the company repurchased 24.2 million shares for $1.1 billion, at an average price of $44.48 per share. The 24.2 million common shares repurchased represent approximately 9.7% of shares outstanding at the beginning of 2022. In addition, the dividend payout rate per share increased 7% with the company paying dividends of $144 million during the year. The strong fourth quarter results allowed PulteGroup to lower its debt-to-capital ratio to 18.7%. The company ended the year with $1.2 billion in cash and investments, $2 billion in long-term debt and $8.9 billion in shareholders’ equity on its sturdy balance sheet.UPS-UPS reported fourth quarter revenues declined 3% to $27.0 billion with net income up 12% to $3.5 billion and EPS up 13% to $3.96. Fourth quarter results included a net benefit from a pension gain. On an adjusted basis, EPS increased 1%. While revenues increased domestically in the fourth quarter, they declined internationally and in supply chain solutions due in part to softness in China trade lanes and volume and market rate declines in air and ocean freight forwarding. For the full year, revenues increased 3% to $100.3 billion with net income and EPS each down 10% to $11.5 billion and $13.20, respectively. Return on shareholders’ equity was a robust 58.4% for the year with return on invested capital expanding to 31.3%. Free cash flow declined 14% during the year to $9.3 billion with the company paying $5.1 billion in dividends and repurchasing $3.5 billion of its common stock. Free cash flow is expected to top $8 billion in 2023. UPS announced a 6.6% increase in its dividend for 2023, which marks the 14th consecutive year of dividend increases, and announced a new $5 billion buyback program. UPS also plans to invest $5.3 billion in capital expenditures in 2023 to automate and expand operations further to improve productivity. For the full year 2023, UPS expects revenues to be between $97 billion to $99.4 billion with an adjusted operating margin between 12.8% and 13.6%. UPS executives said the company’s 2023 outlook reflects an expectation for the U.S. to face a mild recession in the first half of the year before a recovery in the second half. Trade growth worldwide is expected to slow this year as import demand weakens across major economies due to a recession in Europe and with China not recovering until later in the year. “We expect 2023 to be a bumpy year,” said Brian Newman, chief financial officer at UPS, citing rising interest rates, high inflation, Russia’s war in Ukraine, Covid-19 disruptions in China and labor negotiations in the United States.The rate of hourly wage growth for U.S. small businesses continued to decline to 4.66 percent year-over-year in January according to the latest Paychex | IHS Markit Small Business Employment Watch. Additionally, the one-month annualized earnings growth fell to 2.88 percent in January, the lowest level since December of 2020. Our small business wage data indicates that wage gains are moderating, as has been the aim of monetary policy by the Fed," said James Diffley, chief regional economist at IHS Markit. "Although small businesses have struggled in attracting and retaining employees over the past two years, the job index shows they continue to make gains in hiring with the easing of wage increases," said John Gibson, Paychex-PAYX president and CEO. "The wage index also shows that employees of small businesses are increasing their hours worked to increase their earnings."Friday, Jan. 27, 2023Gentex-GNTX reported fourth quarter revenues rose 18% to $493.6 million with net income up 2% to $86.2 million and EPS up 6% to $.37 as the company gained market share. For the year, revenues increased 11% to a record $1.9 billion with net income dropping 12% to $318.8 million and EPs down 9% to $1.36 due to a difficult operating environment impacted by customer order volatility, supply constraints and cost inflation in raw materials, labor and almost every other facet of the business. 2022 Full Display Mirror unit shipments grew by 49% year over year to 1.68 million units despite significant supply chain issues. Return on shareholders’ equity was a shiny 15.4%. Free cash flow declined 35% during the year to $191.8 million due primarily to capital expenditures more than doubling as the company invests for the future. Capital expenditures are expected to increase further in 2023 to a range of $200 million to $225 million. Gentex repurchased 4.04 million shares of its common stock at an average price of $28.19 per share during the year for a total of $113.9 million with 20.8 million shares remaining authorized for future share repurchases. Gentex expects 2023 revenues to approximate $2.2 billion with gross margin of 32%-33% and operating expenses of $260-$270 million with a tax rate in the range of 15%-17%. While margins are expected to improve in 2023, the expansion is expected to occur in the second half of the year. For fiscal 2024, revenues are expected to increase an additional 10% over 2023’s revenues with margins continuing to improve as gross margin is targeted in the 35%-36% range by the end of 2024. The improving revenue environment will be driven by expected 4% growth in light vehicle production each year over the next two years and the company’s expanding product portfolio. Improving margins will result from a better supply environment and internal cost controls, which should lead to increasing shareholder returns over the next two years.Thursday, Jan. 26, 2023Visa-V reported first quarter revenues rose 12% to $7.9 billion with net earnings increasing 6% to $4.2 billion and EPS up 8% to $1.99. During the first quarter, Visa saw stable payments volume and processed transaction growth and a continued cross-border travel recovery. Key business drivers during the quarter included a 7% increase in payments volume, a 22% jump in cross-border volume and a 10% increase in processed transactions. Excluding Intra-Europe, cross-border volume charged ahead 31%. During the quarter, Visa generated $4.2 billion in operating cash flow and $3.9 billion in free cash flow with the company returning over $4 billion to shareholders through dividend payments of $945 million and share repurchases of $3.1 billion at an average cost per share of $198.74. On January 24th, Visa announced a 20% increase in the quarterly dividend to $0.45 per share and has $14 billion remaining authorized for future share repurchase. Visa ended the quarter with $18.9 billion in cash and investments, $20.5 billion in long-term debt and $36.9 billion in shareholders’ equity on its sturdy balance sheet. For the second quarter, Visa expects constant dollar revenue growth in the mid-teens.Tractor Supply-TSCO rang up a 20.7% increase in fourth quarter sales to $4.0 billion with net earnings plowing ahead 22.4% to $270.9 million and EPS jumping 25.9% to $2.43. Fourth quarter sales included an extra week as part of the 53-week 2022 calendar which accounted for about 6.8 points of the 20.7% sales growth. Comparable store sales increased 8.6%, driven by comparable average ticket growth of 6.3% and comparable average transaction count increase of 2.3%. Comparable store sales growth reflects continued strength in every day, needs-based merchandise, including consumable, usable and edible “C.U.E.” products, winter seasonal goods and year-round product categories. Comparable store sales in the quarter benefited by about two percentage points from Elliott, the late December winter storm. During the quarter, the company saw a significant moderation in the rate of price increases from vendors and moderation in transportation costs that management believes peaked in the fourth quarter. For the year, Tractor Supply reported an 11.6% increase in sales to $14.2 billion with net income increasing 9.2% to $1.09 billion and EPS up 12.8% to $9.71. The company drove an impressive 53.3% return on shareholders’ equity during 2022 and generated $583.6 million in free cash flow. Tractor Supply returned $1.11 billion to shareholders in 2022 through dividends of $409.6 million and $700.1 million in share repurchases. The company ended 2022 with $202.5 million in cash, $1.16 billion in long-term debt and $2.04 billion of shareholders’ equity on its sturdy balance sheet. Looking ahead to 2023, management anticipates it will continue to operate in an ever challenging and changing macro environment. It expects the economy in the near to medium-term to remain resilient with flat to modestly positive real growth. Wages are increasing and consumers continue to tap pent-up savings to support spending. For fiscal 2023, management forecasts net sales of $15 billion to $15.3 billion with EPS in the $10.30 to $10.60 range. Comparable store sales growth is anticipated to be in the range of 3.5% to 5.5%. Capital expenditures are forecasted to be $700 million to $775 million, with about 80% for growth initiatives. The company remains committed to returning cash to shareholders through the combination of a growing dividend and share repurchases. For 2023, share purchases are expected in a range of $575 million to $675 million, estimated to reduce the weighted average shares outstanding by about 2%. During the earnings conference call Hal Lawton, CEO, remarked, “Whatever economic environment plays out this year or any year for that matter, we’re confident that our business will remain resilient and build on our strong track record of consistent and stable growth across all economic environments.”T. Rowe Price-TROW reported fourth quarter revenues declined 22% to $1.5 billion with net income and EPS plunging 64% to $266 million and $1.16, respectively. For the full year, revenues declined 15% to $6.5 billion with earnings and EPS dropping 49% to $1.6 billion and $6.70, respectively. Given the sharp earnings drop, return on equity declined to a still respectable 17.6% for the year. Net client outflows were $17.1 billion in the fourth quarter and $61.7 billion for the full year largely driven by growth equity strategies. The company’s ending assets under management as of year end declined 25% to $1.275 billion as stocks closed out their worst year since 2008 and the Bloomberg U.S. Aggregate Bond Index suffered its worst year since its inception in 1976. Recession worries and warnings of further rate hikes continued into year end. Whether central banks can achieve “soft landings” and tame inflation remains to be seen with the consensus expecting at least a modest economic downturn in the U.S. with perhaps deeper slumps ahead in Europe. The company’s balance sheet remains cash-rich and debt-free. T. Rowe Price paid an annual dividend of $4.80, which represents a 4.1% dividend yield at the current market price. During the year, the company repurchased 6.8 million shares for $855.3 million at an average cost of $125.78 per share, reducing its average shares outstanding to 224.3 million, the lowest year-end level since its IPO. Over its 85-year history, T. Rowe Price has successfully navigated uncertainty and market volatility. While headwinds are expected to persist in 2023, T. Rowe Price expects more constructive markets, improved performance, and traction in its growth initiatives to return the firm to positive organic growth over time.Mastercard-MA reported fourth quarter revenues rose 12%, or 17% on a constant currency basis, to $5.8 billion with net income up 6% to $2.5 billion and EPS up 9% to $2.62. During the fourth quarter, gross dollar volume grew 8%, on a local currency basis, to $2.1 trillion driven by cross-border volume growth of 31%. Switched transactions grew 8%. Other revenues increased 11% during the quarter, driven primarily by the company’s Cyber & Intelligence and Data & Services solutions. Rebates and incentives increased 14% primarily due to increased volumes and transactions and new and renewed deals. As of year end, the company’s customers had issued 3.1 billion Mastercard and Maestro-branded cards. For the full year, revenues charged 18% higher to $22.2 billion with net income up 14% to $9.9 billion and EPS up 17% to $10.22. Return on shareholders’ equity was greater than 100% thanks to strong earnings and a shrinking equity base reflecting substantial share repurchases. During the year, Mastercard repurchased 25.7 million shares at a cost of $8.8 billion or $342.21 per share and paid $1.9 billion of dividends. Free cash flow increased 19% during the year to $10.8 billion. Mastercard has $11.6 billion remaining authorized for future share repurchases. Mastercard ended the year with strong financial results and notable wins, with banks such as Citizens, Citi, Bank of America and Chase, which will help them continue to capitalize on the tremendous secular shift to digital payments. Low unemployment, elevated consumer savings, moderating energy costs and the opening of China, with global cross-border travel volume up 59% last year, has led to “remarkably resilient consumer spending” despite macroeconomic and geopolitical uncertainty. Mastercard will “manage with agility” if macroeconomic conditions change. For the full year 2023, the company expects revenues to grow at low double-digit rates with operating expenses up in the high-single digit range which should lead to operating margin expansion for the year.Wednesday, Jan. 25, 2023SEI Investments Company-SEIC reported fourth quarter revenue decreased 9% to $456.6 million with net income decreasing 23% to $112.2 million and EPS down 19% to $.83. Revenues from Assets under management (AUM), administration, and distribution fees declined primarily from the significant market depreciation during 2022. Average AUM decreased 11% from last year to $789.9 billion and AUM excluding LSV decreased 19% to $162.4 billion. During the fourth quarter, SEI generated $137.6 million in operating cash flow, or $1.01 per share, and free cash flow of $120.3 million with the company repurchasing $79.6 million of its shares at an average cost of $59.36 per share. For the full-year, SEI reported sales increased 4% to $1.99 billion with net income decreasing 13% to $475.5 million and EPS down 9% to $3.46. SEI generated an impressive 24% return on shareholder equity during 2022. SEI ended the year with $853 million in cash, no long-term debt and $1.95 billion in shareholders’ equity on its pristine balance sheet. Management believes the current environment presents growth opportunities and SEI remains focused on growth through new client signings, important recontracts, and successful delivery of solutions to their markets.Western Alliance Bancorporation-WAL banked a 25% increase in fourth quarter revenue to $701.2 million with net income up 19.1% to $289.8 million and EPS up 15.1% to $2.67. Net interest income increased 42% to $639.7 million on a 28% increase in total loans to $51.8 billion and a 65-basis point increase in net interest margin to 3.98%. Total deposits grew by 13% to $53.64 billion. Non-interest income declined 44% from last year’s fourth quarter to $61.5 million, pressured by lower mortgage loan production with the rise in interest rates. For the year, Western Alliance Bancorporation reported revenue of $2.54 billion, up 30.1% from 2021, with net income up 16.6% to $1.04 billion and EPS up 11.9% to $9.70. Net interest income increased 43% to $2.2 billion driven primarily from interest income on loan growth and higher loan yields, partially offset by increased interest expense from deposits, short-term borrowings and credit linked notes issued during the year. Non-interest income declined nearly 20% to $324.6 million due to an 18% drop in mortgage production. The bank’s provision for credit losses totaled $68.1 million, up from a $21.4 million benefit recorded last year, due to continued economic uncertainty and loan growth during the year. Non-performing loans to total assets were 0.14% and the bank’s still stellar efficiency ratio of 44.9% increased 4.7% from last year. During 2022, Western Alliance generated an impressive 19.5% return on shareholders’ equity and 1.62% return on average assets. Tangible book valued increased 6.4% to $40.25 and CET1 capital at 9.3% continued to exceed “well capitalized” levels. Asset quality remains strong with 27% of loans insured. Looking ahead to 2023, net interest margin is expected in the 4% to 4.1% range with net interest income expected to grow 20% to 25%. Loan growth is expected in the 10% to 15% range while deposits are expected to increase 13% to 17%. CET1 capital is expected to reach 9.75% to 10% and net charge-offs are expected to normalize given economic uncertainties.General Dynamics-GD reported fourth quarter revenue increased 5.4% to $10.85 billion with net income increasing 4.2% to $992 million and EPS increasing 5.6% to $3.58. Boosted by Russia’s invasion of Ukraine and the increased threat environment, General Dynamics ended the quarter with record backlog of $91.1 billion on a book-to-bill ratio of 1.2 times for the quarter and an estimated contact value of $127.7 billion. For the year, General Dynamics reported a 2.4% increase in revenue to $39.41 billion with net income up 4.1% to $3.4 billion and EPS up 5.5% to $12.19. By business segment, Aerospace, which includes Gulfstream and global aviation services, generated a 5.3% increase in revenue to $8.57 billion with operating margins of 13.2%. Segment backlog has increased for eight consecutive quarters and ended the year at $19.9 billion on a book-to-bill ratio of 1.5 times. Marine Systems revenue increased 4.9% from last year to $11.04 billion with operating margins of 8.1%. Segment backlog rose to $45.7 billion on a book-to-bill ratio of 1.1 times and included $5.1 billion for follow-on Columbia-class submarines and $535 million related to the Virginia-class submarines, both significant contracts awarded during the quarter. Combat Systems, producer of the Abrams tank, Stryker combat vehicles and weapons systems for naval, air and ground forces, reported revenues of $7.31 billion, flat compared to last year, with operating margins above 14% for the 10th consecutive year. Segment backlog declined slightly to $13.3 billion on a book-to-bill ratio of 1.1 times. Despite substantial supply chains disruptions, General Dynamics Technology segment reported flat revenue of $12.5 billion with operating margins of 9.8%. Segment backlog dipped slightly from last year to $39.6 billion on a book-to-bill ratio of 1.1 times. During 2022, General Dynamics generated a powerful 18.3% return on shareholders’ equity and free cash flow of $3.47 billion, or 102% of net income, up 2.4% from last year despite a 26% jump in capital expenditures related to timing of project spending. The company returned nearly $2.6 billion to shareholders during 2022 through dividends of $1.37 billion and share repurchases of $1.23 billion at an average cost per share just under $226. General Dynamics ended the quarter with $1.2 billion in cash, $9.2 billion in long-term debt and $18.6 billion in shareholders’ equity on its strong balance sheet. Looking ahead to 2023, management expects revenues in the range of $41.2 billion and $41.3 billion, up 4.7% from 2022, and EPS between $12.60 and $12.65, up 3.6% from 2022 at the mid-range.Automatic Data Processing-ADP reported fiscal second quarter revenues increased 9% to $4.4 billion with the company processing a 17% jump in net income to $813.1 million and an 18% gain in EPS to $1.95. These results reflected the strong growth in new business bookings, client revenue retention near record levels and continued healthy employment trends within ADP’s client base. Interest earned on funds held for clients (float income) increased 77% to $187 million, reflecting a 4% increase in the average client funds balance to $33.4 billion and a 90 basis points increase in the average interest yield to 2.2%. During the first half of the year, free cash flow increased 34% to $1.5 billion with the company paying $865.5 million in dividends and repurchasing $553.5 million of its common stock. ADP maintained its full year guidance for fiscal 2023 for 8% to 9% revenue growth and 15% to 17% adjusted EPS growth with margin expansion of 125 to 150 basis points. While ADP notes that job growth is slowing, the company does not see any broad-based softness in the labor market despite more than 50,000 layoffs announced recently in the technology sector.Tuesday, Jan. 24, 2023Microsoft-MSFT reported second quarter revenues increased 2% to $52.7 billion with net income declining 12% to $16.4 billion and EPS down 11% to $2.20. Revenue in Business Processes increased 7% to $17 billion driven by Office 365 and 21% growth in Dynamics 365 products. Revenue in Intelligent Cloud jumped 18% to $21.5 billion driven by Azure and other cloud services revenue growth of 31%. Revenue in More Personal Computing decreased 19% to $14.2 billion, primarily driven by a 39% decrease in Windows OEM and Devices revenue. Microsoft cloud revenue was $27.1 billion, up 22% year-over-year. Free cash flow during the first half of the year decreased 20% to $21.8 billion with the company paying $9.7 billion in dividends and repurchasing $11 billion of its common stock. The decrease in free cash flow was due to a 23% decline in working capital during the quarter. Excluding 16 points for a tax payment, working capital declined 7% as strong cloud billings and collections were more than offset by higher employee and supplier payments. Microsoft ended the quarter with $99.5 billion in cash, $44.1 billion in long-term debt and $183.1 billion in shareholders’ equity on its strong balance sheet. For the third quarter, Microsoft expects revenues in the range of $50.5 billion to $51.5 billion with cost of goods in the range of $15.65 billion and $15.85 billion and operating expenses in the range of $14.7 billion to $14.8 billion. For the full 2023-year, operating margin is expected to decrease roughly 2 points year-over-year, excluding the employee severance expenses of $800 million, impairment charges resulting from changes to Microsoft’s hardware portfolio, and costs related to lease consolidation activities. Management believes they are well positioned to be a leader in artificial intelligence ( AI) and recently announced that they will be the exclusive cloud provider for OpenAI. Microsoft will soon add support for OpenAI’s ChatGPT, enabling customers to use it in their own applications for the first time.Canadian National Railway-CNI reported fourth quarter revenue steamed 21% higher to C$4.54 billion with net income chugging ahead 18.2% to C$1.42 billion and EPS up 23.5% to C$2.10. Solid bulk volumes offset weakness in the Merchandise and Consumer Products segments while management’s disciplined approach to pricing led to rail-inflation-plus pricing on renewals. During the quarter, softness from the economic slowdown deepened in lumber, intermodal, chemicals and plastics. Canadian National’s new management team ushered in improvements in key operating metrics including a 6% increase in revenue ton miles (RTMs), a 15% increase in total freight revenue per RTM and a 20% increase in total freight revenue per carload. Reported operating efficiency improved by 40 basis points to 57.9%. For the full year, revenues increased 18% to C$17.1 billion with net income up 4.5% to C$5.12 billion and EPS up 7.8% to C$7.44. Canadian National delivered a stellar 23.9% return on shareholders’ equity during 2022 and free cash flow of C$3.9 billion with the company returning C$6.7 billion to shareholders through dividends of C$2.0 billion and share repurchases of C$4.7 billion. The company increased its dividend 8% for 2023, marking the 27th consecutive annual increase, and initiated a new share repurchase program to repurchase up to 32 million shares for about C$4 billion through the end of January 2024, reflecting a prudent repurchase approach amid a softening economy. The company ended the year with C$328 million in cash and equivalents, C$14.4 billion in long-term debt and C$21.4 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead to 2023, management expects a mild recession with negative North American industrial production. On the conference call, Tracy Robinson, CEO, stated, “Canadian National has dealt with recessions in the past and will deal with them in the future” and is well-positioned to increase volume greater than the change in industrial production. The company expects to deliver a low-single digit adjusted EPS growth during 2023 by focusing on growing with customers, driving further operating efficiencies and pricing above rail-inflation. Texas Instruments-TXN reported fourth quarter revenues declined 3% to $4.7 billion with net income declining 8% to $2 billion and EPS down 6% to $2.13. As expected, these results reflected weaker demand in all end markets except for automotive. For the full year, revenues rose 9% to $20.0 billion with net income up 13% to $8.7 billion and EPS chipping in 14% growth to $9.41. Return on shareholders’ equity was an impressive 60% for the year. Free cash flow dropped 6% during the year to $5.9 billion which represented 30% of revenue and reflected the quality of the company’s product portfolio as well as the efficiency of its manufacturing strategy. During 2022, the company paid $4.3 billion in dividends and repurchased $3.6 billion of its common stock. The dividend was increased 8% in the fourth quarter, marking the 19th consecutive year of dividend increases. As customers continue to reduce inventory, Texas Instruments expects weaker demand for its products to persist in the first quarter of 2023 with revenue expected in the range of $4.17 billion to $4.53 billion and EPS in the range of $1.64 to $1.90. 3M-MMM posted a 6.2% decline in fourth quarter sales to $8.08 billion with net income skidding 59.6% to $541 million and EPS sliding 57.7% to $0.98. Sales declined in all four 3M business segments during the fourth quarter compared to last year. 3M’s slower than expected sales growth was due to rapid declines in consumer-facing markets, such as consumer electronics and retail, a dynamic that accelerated in December as consumers sharply cut discretionary spending and retailers adjusted inventory levels. 3M also saw significant slowing in China due to COVID-related disruptions along with moderating demand among some industrial markets. Health care continue to be challenged in its recovery to pre-pandemic levels amid labor shortages and constrained hospital budgets. Fourth quarter earnings include an $800 million pre-tax charge related to the company’s decision to exit the PFAS forever chemical business by the end of 2025 that will ultimately result in total exit costs of between $1.3 billion to $2.3 billion. For the full year, 3M reported sales declined 3.2% to $34.2 billion with net income slipping 2.4% to $5.78 billion and EPS flat at $10.21. During 2022, 3M generated a remarkable $39.1% return on shareholders’ equity and free cash flow of $3.8 billion, down 34.4% from last year. 3M returned $4.8 billion to shareholders during 2022 through dividends of $3.37 billion and share repurchases of $1.46 billion. 3M ended the year with $3.89 billion in cash and investments, $14.0 billion in long-term debt and $14.8 billion in shareholders’ equity. In 2022, management made continued progress in its planned health care spinoff, which will create two world-class public companies better positioned to drive growth and value creation. In addition, management continued working through PFAS related litigation and toward a mediated resolution for Combat Arms litigation. Looking ahead, 3M expects market and macroeconomic challenges to persist in 2023. While supply chains are improving, management still sees headwinds for material availability and inflation, albeit at a lower level. Based on this outlook, organic sales growth is expected in the range of -3% to flat which includes price increases in the low-single-digits with adjusted EPS of between $8.50 to $9.00, down 13.4% from 2022 at the midpoint. Adjusted free cash flow conversion of 90 to 100% is expected for 2023. Given the outlook, 3M announced it will reduce about 2500 global manufacturing roles to further align the business with expected production volumes. The Justice Department, along with the Attorneys General of several states, filed a civil antitrust suit against Google for monopolizing multiple digital advertising technology products. Google’s parent, Alphabet-GOOGL, responded that, "DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow." This litigation will likely take years to resolve.Johnson & Johnson-JNJ reported fourth quarter revenues declined 4% to $23.7 billion, with net income decreasing 26% to $3.5 billion and EPS down 25% to $1.33. The decline in fourth quarter revenues was primarily driven by unfavorable foreign exchange and reduced COVID-19 vaccine sales. For the full year, revenues rose 1% to $94.9 billion with net income and EPS each down 14% to $17.9 billion and $6.73, respectively. Worldwide Pharmaceutical sales increased 2% during the year to $52.6 billion; MedTech sales increased 1% to $27.4 billion; and Consumer Health sales were relatively flat at $15 billion. During 2022, Johnson & Johnson generated approximately $17 billion in free cash flow and ended the year in a net debt position of $16 billion. The company invested $14.6 billion in research and development to advance its promising product pipeline and paid $11.7 billion in dividends during the year. In addition, JNJ repurchased $2.5 billion of its common stock, with approximately 50% of the repurchase program completed. The board of directors recently declared a cash dividend for the first quarter of 2023 of $1.13 per share, payable on March 7, 2023. The dividend currently yields a healthy 2.69%. For fiscal 2023, JNJ expects to report sales in the range of $96.9 billion to $97.9 billion, representing 4.5% to 5.5% growth, with adjusted EPS expected in the range of $10.45 to $10.65, representing 3% to 5% growth.Raytheon Technologies-RTX reported fourth quarter revenue rose 6% to $18.1 billion with net income and EPS more than doubling to $1.4 billion and $.96, respectively. On an adjusted basis for acquisition costs and non-recurring charges, EPS was up 18% in the fourth quarter. For the full year, revenues rose 4%, or 6% organically, to $67.1 billion with net income up 34% to $5.2 billion and EPS up 36% to $3.51. These solid results reflected the rapid commercial aerospace recovery with commercial aftermarket sales up 25%. During the year, Raytheon received $86 billion of new awards with a full year book-to-bill ratio of 1.28. The company ended the year with a near record backlog of $175 billion, of which $106 billion was from commercial aerospace and $69 billion was from defense. Return on shareholders’ equity for the year was 7.2%. Free cash flow dipped 3% during the year to $4.9 billion with the company paying $3.1 billion in dividends and repurchasing $2.8 billion of its common stock. Raytheon is well positioned to capture growing demand in the aerospace and defense markets in 2023 and expects to deliver sales growth and margin expansion along with strong free cash flow generation. Supply chain and labor inflation costs of about $2 billion are expected to be offset by increased pricing and cost reductions during the year. For the full year 2023, revenues are expected in the range of $72 billion to $73 billion, representing 7% to 9% organic growth, with adjusted EPS expected in the range of $4.90-$5.05, representing 3%-6% growth. Strong expected 20% operating profit growth will be partially offset by higher pension, tax and interest costs. Free cash flow for 2023 is expected to approximate $4.8 billion with the company targeting $3 billion in share repurchases for the year. Raytheon remains committed to returning at least $20 billion to shareholders post-merger through early 2024. During the second half of 2023, Raytheon plans to reorganize into three focused business segments which will be Collins Aerospace, Pratt & Whitney and Raytheon.Monday, Jan. 23, 2023Bank of Hawaii - BOH reported fourth quarter revenues increased 7.7% to $181.9 million with net income declining 4.2% to $59.3 million and EPS slipping 3.2% to $1.50. The net income decline reflects a small provision for credit losses during this year’s fourth quarter versus a $9.7 million benefit last year. Net interest income increased 11.4% from last year to $140.7 million on strong loan growth and a 26-basis point increase in net interest margin to 2.6%, boosted by the higher rate environment. Noninterest income declined 3.3% to $41.2 billion, pinched by market volatility and higher mortgage rates. Asset quality remains strong with 80% of the bank’s loan portfolio secured with high-quality real estate with a combined weighted average loan to value of 56%. Total deposits increased 1.3% from last year to $20.6 billion. While Bank of Hawaii’s total deposit cost increased 40-basis points to 0.46%, its deposit mix of low cost, long-tenured, sticky core deposits helped mitigate the cost associated with rising rates. During the quarter, Bank of Hawaii returned $15.0 million to shareholders through share repurchases at an average cost per share of $77.77. The Board increased the share repurchase authorization by $100 million with $135.9 million currently approved for future share repurchases. With the current $0.70 dividend, the stock yields an attractive 3.57%. For the year, total revenue increased 4.4% to $698.1 million with net income falling 13% to $217.9 million and EPS down 12.3% to $5.48. During 2022, Bank of Hawaii generated a solid 16.5% return on shareholders’ equity and 0.98% return on average assets. During the quarterly conference call, Peter Ho, CEO stated, “As we enter into 2023, the forward view on the economy is somewhat cloudy. Economic conditions, while buoyant currently, may possibly be tested in the coming days by the continued effects of tighter Fed policy. Asset values may also be challenged by higher rates. Bank of Hawaii remains well geared for potentially choppier waters. Our credit portfolio is the beneficiary of conservative underwriting standards not just of late, but over the course of many years. Our deposit base is a great source of strength, diversified, granular and long tenured. Our investment assets are both abundant, high quality and highly liquid.”Microsoft-MSFT said it is making a multiyear, multibillion-dollar investment in OpenAI, which could approximate $10 billion according to media reports. This will substantially increase its investment in the popular ChatGPT chatbot as Microsoft looks to expand the use of artificial intelligence in its products. Microsoft said the latest partnership builds upon the company’s 2019 and 2021 investments in OpenAI. Microsoft plans to incorporate artificial-intelligence tools into all its products and make them available as platforms for other businesses to build on, Chief Executive Satya Nadella said. Microsoft is incorporating artificial-intelligence software into its suite of products, ranging from its design app Microsoft Design to search app Bing. It also will help finance the computing power OpenAI needs to run its various products on Microsoft’s Azure cloud platform. Friday. Jan. 20, 2023Alphabet--GOOGL said it would cut its staff by 12,000, or 6% of its workforce, in its largest-ever round of layoffs. CEO Sundar Pichai acknowledged that the company "hired for a different economic reality than the one we face today."Thursday, Jan. 19, 2023Fastenal-FAST reported fourth quarter revenues rose 11% to $1.7 billion with net income increasing 6% to $245.6 million and EPS up 7% to $.43. Sales through Fastenal’s Digital Footprint accounted for 52.6% of sales in the fourth quarter, versus 46.4% in the fourth quarter of 2021. Management anticipates they will hit 65% of sales running through their digital footprint in 2023. For the full year, revenue rose 16% to $6.9 billion with net income and EPS up nearly 18% to $1.1 billion and $1.89, respectively. 2022 was a year of milestones for Fastenal, with eCommerce revenues surpassing $1 billion in sales, international sales exceeding $1 billion in sales and company-wide net earnings topping $1 billion. Fastenal reported that 79 of their top 100 customers are growing and 62% of their branches are growing. Return on shareholders’ equity for the year was an impressive 34%. Free cash flow increased 25% during the year to $767.2 million, with Fastenal returning $949.1 million to shareholders through dividends of $711.3 million and share repurchases of $237.8 million. Fastenal announced a 13% increase in its dividend for the first quarter of 2023. The company ended the year with $230 million in cash, $353 million in long-term debt and $3.1 billion in shareholders’ equity on its strong balance sheet. Fastenal noted that they experienced moderating demand and normalization of supply chains during the quarter. In addition, the company did not take any broad pricing actions in the fourth quarter, as price levels in the market remained stable.Monday, Jan. 18, 2023Microsoft-MSFT said it would eliminate 10,000 jobs, or about 5% of its workforce, and take a $1.2 billion ($.12 per share) charge to earnings in the second quarter of 2023, as its cloud-computing customers reassess their spending and the company braces for potential recession. At the same time, Microsoft is looking at adding to its $1-billion stake in OpenAI, the startup behind the Silicon Valley chatbot known as ChatGPT, which Microsoft plans to soon market through its cloud service.Friday, Jan. 13, 2023UnitedHealth Group-UNH reported healthy fourth quarter results with revenues rising 12% to $82.8 billion, net income increasing 17% to $4.8 billion and EPS up 18% to $5.03. For the full year 2022, revenues rose 13% to $324.2 billion as net income jumped 16% to $20.1 billion with EPS up 17% to $21.18. Return on shareholders’ equity for the year was a strong 25%, reflecting the company’s strong overall growth and efficient capital structure. The company delivered broad-based growth thanks to double-digit growth at both Optum and UnitedHealthcare driven primarily by serving more people and serving them more comprehensively. People served domestically by UnitedHealthcare grew by over 1.2 million in 2022. Free cash flow increased18% during the year to $23.4 billion with the company paying $6 billion in dividends and repurchasing $7 billion of its common shares. Cash paid for acquisitions during the year, including Change Healthcare, topped $21 billion with the acquisitions expanding the company’s capabilities. The company continues to see tremendous growth opportunities through its investments in technology and innovation. UnitedHealth Group affirmed its 2023 growth outlook with revenues expected to increase 10%-11% to a range of $357 billion to $360 billion with net earnings increasing 9%-12% to $23.15 to $23.65 per share. Cash flow from operations for the year is expected to increase to a range of $27 billion to $28 billion in 2023.Thursday, Jan. 12, 2023In addition to a leadership transition, Cognizant Technologies-CTSH revised its fourth quarter and full-year revenue expectations to approximately $4.8 billion and $19.4 billion, respectively, compared to prior expectations of $4.72-$4.77 billion for the fourth quarter and $19.3 billion for the full year. This reflects a year-over-year increase of approximately 1.3% (or 4.1% in constant currency1) for the fourth quarter and growth of approximately 5.0% (or 7.5% in constant currency) for full-year 2022. Additionally, the company now expects full-year 2022 Adjusted Operating Margin of approximately 15.3%, compared to prior guidance of 15.6%, and full-year 2022 Adjusted Diluted EPS of approximately $4.38-$4.40, compared to prior guidance of $4.43-$4.46. This updated guidance includes a negative impact on Adjusted Operating Margin of approximately 30 basis points and Adjusted Diluted EPS of approximately $0.08 from the impairment of certain capitalized costs related to a large volume-based contract with a Health Sciences customer. The impairment is principally driven by the company's expectation of lower volumes.T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.28 trillion as of December 31, 2022, reflecting a 25% decline for the year. Preliminary net outflows for the fourth quarter of 2022 were $17.1 billion, bringing preliminary year-to-date net outflows to $61.7 billion.Wednesday, January 4, 2023According to Accenture-ACN, growing consumer and business interest in the metaverse as a creator economy and tool to enhance day-to-day tasks is expected to fuel a $1 trillion commerce opportunity by the end of 2025. While gaming is appealing for 59% of metaverse users, only 4% of consumers see the metaverse as just a gaming platform. In fact, 70% say they intend to use the metaverse to access products and services across media and entertainment, fitness, retail, travel and healthcare. These preferences vary by age, with younger consumers more interested in media and fitness and those older in accessing health services in new ways. Still, what all have in common is a desire to enhance the things they already do every day, such as the experience of working-out at home (cited by 60%) or improving interactions with health professionals (55%).Texas Instruments-TXN introduced new automotive battery cell and pack monitors with the most accurate measurement capability available on the market, maximizing electric vehicle (EV) drive time and enabling safer operation. As EVs grow in popularity, advanced battery management systems (BMS) are helping overcome critical barriers to widespread adoption. With a focus on solving complex system design challenges, TI provides the most advanced, comprehensive portfolio of BMS devices, enabling automakers to create a safer, more reliable driving experience and accelerate EV adoption.Tuesday, January 3, 2023Paychex-PAYX reported that the rate of hourly wage growth for U.S. small businesses continued to decline to 4.95 percent year-over-year in December, as small business job growth remains steady. "Despite various headwinds including inflation, difficulties in staffing, and changing regulations, U.S. small businesses have continually proven to be innovative and resilient through the challenges presented to them since the start of the pandemic," said John Gibson, Paychex president and CEO. "As we enter 2023, small business owners and their employees are working more hours and finding ways to deal with inflation and higher credit costs."