HI-Quality Company Updates

Thursday, Oct. 21, 2021

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.