HI-Quality Company Updates

Saturday, Feb. 24, 2024

Warren Buffett paid tribute to Charlie Munger in the annual report, describing Charlie as the architect of Berkshire Hathaway. In 1965, Munger set the investment strategy for Berkshire when he advised Buffett “to buy wonderful businesses at a fair price rather than fair businesses at a wonderful price.” This has resulted in Berkshire becoming a great business with a diverse stream of earnings power and the highest net worth of any U.S. company. Thanks to its immense financial strength, “Berkshire is built to last.” Buffett provided his own advice to investors, “When you find a truly wonderful business, stick with it. Patience pays, and one wonderful business can offset the many mediocre decisions that are inevitable. “

Berkshire Hathaway-BRKB reported the company’s net worth during 2023 increased by 18.5%, or $87.8 billion, to $561.3 billion with book value equal to about $389,367 per Class A share as of 12/31/23. Berkshire boasts, by far, the largest shareholders’ equity of any U.S. company.

On a GAAP basis, Berkshire reported net earnings of $96.2 billion for the year compared to a $22.8 billion loss in the prior year. Investment gains and losses from changes in the market prices of Berkshire’s substantial equity investments will produce significant volatility in earnings and these investment unrealized “paper” gains or losses in any given period are usually meaningless. Berkshire’s five major equity investment holdings which represent about 79% of total equities held, include American Express at $28.4 billion (which charged 27% higher during 2023 or $6.0 billion); Apple at $174.3 billion (which jumped 46% during the year or a juicy $55.3 billion); Bank of America at $34.8 billion (which gained 2% or $600 million);  Coca-Cola at $23.6 billion (which fizzled 7% or -$1.8 billion) and Chevron at $18.8 billion (which was 37% lower or $11.2 billion in value, reflecting partial sales of the position during the year). Berkshire has resumed purchases of Chevron.

During 2023, Berkshire’s revenues rose 21% to $364.5 billion, aided by the contribution from Pilot Travel Centers which was consolidated into Berkshire’s results following the acquisition of Berkshire’s additional 41.4% ownership interest in the company, bringing Berkshire’s total ownership in Pilot to approximately 80% in 2023. Subsequent to year end, Berkshire acquired the remaining 20% interest in Pilot for $2.6 billion. Excluding the acquisition of Pilot, revenues rose 4% for the year. In 2023, Berkshire’s operating earnings increased 21% to $37.4 billion, primarily led by a turnaround in Berkshire’s insurance businesses.

During the year, Berkshire’s insurance businesses performed “exceptionally well” setting records in sales, float and underwriting profits. The insurance segment generated $5.4 billion from underwriting earnings compared to a loss of $30 million in the prior year due to improvements at GEICO, relatively low catastrophe losses, and the acquisition of Alleghany Insurance. Insurance investment income increased 48% during the year to $9.6 billion, reflecting higher interest income as short-term interest rates increased significantly. The float of the insurance operations increased $5 billion during the year to end 2023 at about $169 billion. The combined cost of float was negative during the year due to the $5.4 billion in underwriting gains. Berkshire’s insurance businesses have had an excellent underwriting record, operating at an underwriting profit for 18 of the last 20 years.

In 2023, Burlington Northern Santa Fe’s “earnings declined more than expected as revenues fell.” Burlington Northern Santa Fe’s revenues declined 7% during the year to $23.5 billion, reflecting lower volumes of 6% and average revenue per car/unit decreasing 0.6%, primarily due to lower surcharge revenue, partially offset by favorable changes in business mix. Net earnings rolled 14% lower to $5.1 billion for the year. The decrease was primarily due to lower overall freight volumes and higher non-fuel operating costs, partially offset by lower fuel costs.

An adverse regulatory environment led to a “severe earnings disappointment” at Berkshire Hathaway Energy.  While Berkshire Hathaway Energy’s revenues remained relatively flat at $26 billion for the year, net earnings declined 40% to $2.3 billion. The earnings decrease reflected lower earnings from the U.S. regulated utilities, increased wildfire loss estimates of $1.7 billion in 2023, as well as lower earnings from other energy businesses and real estate brokerage businesses.

Comparative operating results for Pilot Travel Center were detailed following the consolidation of the business with revenues and earnings highly dependent on fuel volumes, prices and margins. During the 11 months of consolidation in 2023, Pilot’s revenues traveled 22% lower to $56.8 billion as pre-tax earnings declined 55% to $1.1 billion due to significantly lower fuel prices as well as from lower fuel sales volumes. Pilot sold approximately 16.2 billion gallons of diesel fuel, gasoline and other fuel-related products in 2023 compared to 18.4 billion gallons in 2022.

Berkshire’s Manufacturing businesses reported 2023 revenues relatively flat at $75.4 billion with operating earnings up 2% to $11.4 billion. The Industrial products segment led the way for the year with revenues rising 13% to $34.9 billion and operating earnings increasing 17% to $5.7 billion thanks to improvements at Precision Castparts, IMC and Marmon including acquisitions as part of the Alleghany deal. The Building products segment revenue declined 10% to $26.0 billion and operating earnings declined 13% to $4.2 billion, primarily due to the significant increases in home mortgage rates slowing demand. The Consumer products segment revenue decreased 9% to $14.6 billion, reflecting lower revenues at Forest River as RV sales dropped due to higher interest rates, while operating earnings were up 3% to $1.6 billion, primarily due to the Jazwares acquisition and improved earnings of the apparel and footwear businesses. 

Service and Retailing revenues increased 1.0% during the year to $92.6 billion with pre-tax earnings increasing 3% to $5.2 billion. These results reflected the impact of acquisitions and improvements in aviation services.

Berkshire’s balance sheet continues to reflect significant liquidity and a very strong capital base of $561.3 billion as of 12/31/23. Excluding railroad, energy and utility investments, Berkshire ended the year with $570 billion in investments allocated approximately 62.1% to equities ($353.8 billion), 4.2% to fixed-income investments ($23.8 billion), 28.6% in cash and equivalents (to a record $163.3 billion) and 5.1% in equity method investments ($29.0 billion), which includes 26.7% ownership of Kraft Heinz and 27.8% ownership of Occidental Petroleum. Warren Buffett noted he has no plans to acquire Occidental Petroleum but plans to hold his position in the company indefinitely. Berkshire also plans to hold or increase his 9% stakes in five large Japanese trading companies which operate in a highly-diversified manner similar to Berkshire.  

Free cash flow increased 36% during the year to $29.8 billion due to higher earnings and favorable working capital changes. During the year, capital expenditures approximated $19.4 billion, which included $13.1 billion for BNSF and BHE, its railroad and utility and energy units. Berkshire expects capital expenditures for BNSF and BHE to approximate $14.3 billion in 2024.

During 2023, Berkshire paid cash of $16.5 billion to acquire equity securities and received proceeds of $40.6 billion from the sale of stocks, including the partial sales of Chevron, BYD, the Chinese electric vehicle manufacture, HPQ and several bank holdings. The equity sales generated $5.0 billion in after-tax realized gains during the year. In addition, Berkshire purchased a net $29.5 billion in Treasury Bills and fixed-income investments.  On September 1, 2023, Berkshire Hathaway Energy acquired an additional 50% interest in Cove Point LNG for $3.3 billion, which increased its interest to 75%.

Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett.  During 2023, Berkshire repurchased $9.2 billion of its common stock, including $2.2 billion during the fourth quarter. These repurchases included 103 Class A shares purchased at an average price of approximately $541,062 per share in December 2023.  

Thursday, Feb. 22, 2024

Booking Holdings-BKNG booked a 18% increase in fourth quarter revenues to $4.7 billion with net income decreasing 82% to $222 million, and EPS down 80% to $6.28 per share. On an adjusted basis, net income increased 18% to $1.1 billion, and EPS was up 29% to $32.00. Travel bookings jumped 16% to $31.7 billion and room nights booked in the fourth quarter increased 9% from last year. For the year, Booking Holdings reported record revenues of $21.4 billion, up 25% from last year, with net income increasing 40% to $4.3 billion and EPS traveling over 50% higher to $117.40. During the year, air travel tickets increased 58% with the company continuing to see a healthy increase in customers for flights. Free cash flow increased 13% to $7 billion with the company returning $10.4 billion to shareholders via share repurchases. In addition, management announced the initiation of a quarterly dividend of $8.75 per share, payable on March 28, 2024. Booking ended the year with $13.1 billion in cash, and $12.2 billion in long-term debt on its solid balance sheet. The company is expecting EPS growth of over 14% for 2024. Management continues to see resiliency in global leisure travel demand and is seeing a strong start to bookings in 2024, setting up for another potential record summer travel season.

Thursday, Feb. 16, 2024

Texas Roadhouse-TXRH reported fourth quarter revenues increased a meaty 15% to $1.2 billion, on 10% comparable sale growth, with net income and EPS up 21% to $72.4 million and $1.08, respectively. Average weekly sales increased 9% to $141,653 of which $17.8 million were to-go sales compared to $16.4 million in the prior year. Restaurant margin increased 75 basis points to 15.3% driven by higher sales partially offset by commodity inflation of 3.2%, wage and other labor inflation of 5.5% and higher general liability insurance expense. For the full year, revenues increased 15% to $4.6 billion on 10% comparable sales growth at company restaurants and 9.8% increase at domestic franchise restaurants. Net income increased 13% to $304.9 million and EPS increased 14% to $4.54. During the year, average weekly sales increased 9% to $143,837. Restaurant margin decreased 36 basis points to 15.4% primarily due to commodity inflation of 5.6%, wage and other labor inflation of 6.6% and higher general liability insurance expense partially offset by higher sales. Free cash flow declined 18% to $217.9 million primarily due to capital spent on new store openings. The company returned $197.2 million to shareholders through dividends of $147.2 million and share repurchases of $50 million for an average price per share of $109.88. The Company’s Board of Directors authorized the payment of a quarterly cash dividend of $0.61 per share, representing an 11% increase and will be distributed on March 26, 2024. During the quarter, 12 company restaurants and seven franchise restaurants were opened. For the full year, 30 company restaurants and 15 franchise restaurants were opened. Texas Roadhouse ended the year with $104.2 million in cash, no long-term debt and $1.1 billion in shareholders’ equity on its beefy balance sheet. The company has accelerated its 2024 development pipeline with 19 new company locations under construction. In 2024, capital expenditures are expected in the range of $340 million to $350 million. The company expects to open approximately 30 restaurants during the year. During the first 50 days of the first quarter, comparable store sales increased 6.8%. The company plans to implement a price menu increase of about 2.2% in late March. For the full 2024 year, Texas Roadhouse expects positive comparable sales growth, including the benefit of menu pricing action to help offset commodity inflation of 5% and wage inflation of 4% to 5%. In addition, management expects store week growth of 8%.

Wednesday, Feb. 15, 2024

Genuine Parts-GPC reported a solid fourth quarter as revenues rose 1% to $5.6 billion with net income motoring 26% higher to $316.9 million and EPS up 28% to $2.26.  For the full year, revenues increased 5% to $23.1 billion with net income increasing 11% to $1.3 billion and EPS up 12% to $9.33. This was the third consecutive year of double-digit earnings growth despite a challenging business environment. The value and benefit of the company’s diverse business was evident during the year as solid results from the company’s Industrial and International Automotive businesses offset softness in the U.S. Automotive business.  Return on shareholders’ equity for the year was an impressive 29.8%. Free cash flow declined 18% for the year to $922.9 million due to working capital changes. During the year, the company repurchased $261 million of its stock and paid $526.7 million in dividends. Genuine Parts announced a 5% increase in the dividend for 2024, which marked the 68th consecutive year of dividend increases. Genuine Parts is planning a global restructuring to improve the efficiency of the business which will result in costs of about $100 million to $200 million in 2024. The company’s outlook for 2024 is for sales growth of 3% to 5% with EPS in the range of $8.95 to $9.15.  Excluding the restructuring charge, adjusted EPS in 2024 is expected to range from $9.70 to $9.90, representing 4% to 6% growth.  The company expects to generate $1.3 billion to $1.5 billion in operating cash flow in 2024 or $800 million to $1.0 billion in free cash flow.

In a regulatory filing, Berkshire Hathaway-BRKB revealed it had pared its large position in Apple-AAPL last quarter by 10 million shares but continues to hold 905 million shares of Apple worth about $166 billion. Berkshire also purchased approximately another 20 million shares of Occidental Petroleum and 16 million shares of Chevron.

Tuesday, Feb. 14, 2024

Cisco-CSCO reported sales for the second quarter of fiscal 2024 fell 6% to $12.8 billion with net income declining 5% to $2.6 billion and EPS dipping 3% to $0.65. Overall product revenue was down 9% to $9.2 billion as customers have become more cautious amid an uncertain macroeconomic and geopolitical environment, and services revenue increased 3.5% to $3.5 billion, reflecting management’s focus on shifting to recurring subscription revenue. While Cisco saw growth in its security (up 3% to $973 million), collaboration (up 3% to $989 million), and observability (up 16% to $188 million) segments in the quarter, its core networking business saw revenue decline 12% to $7.08 billion. Orders declined 12% during the second quarter as customers work through installation of networking equipment inventory stockpiles. While that logjam may resolve itself during the second half of the fiscal year, weak spending by telecommunications and cable companies will likely persist. Reflecting the company’s shift to software and services, Cisco announced a reorganization with the expectation of laying off 5% of its global workforce of 84,900 resulting in a pre-tax charge of about $800 million, most of which will be recognized in the fiscal third and fourth quarters of 2024. In addition, the $28.0 billion acquisition of software maker, Splunk, is expected to be completed by April 30. During the quarter, Cisco repurchased $1.25 billion of its shares at an average cost per share of $49.54 and paid $1.58 billion in dividends. During the first six months of the fiscal year, Cisco generated $2.88 billion in free cash flow, down 66% from last year, due to timing of a large tax payment. Cisco returned $5.67 billion to shareholders during the first half of the fiscal year through share repurchases of $2.5 billion and dividends of $3.2 billion. The company announced a 3% increase in its dividend reflecting its commitment to delivering value to its shareholders and its confidence in the stability of its cash flow generation. Cisco ended the quarter with $25.7 billion in cash and investments, $6.7 billion in long-term debt and $46.3 billion in shareholders’ equity on its clean balance sheet. Looking ahead to the full fiscal year that ends in July, the company now expects revenue in the range of $51.5 billion to $52.5 billion, down from $57 billion in fiscal 2023, with EPS in the range of $2.61 to $2.73, down from $3.07 last year.  

Friday, Feb. 9, 2024

Pepsico-PEP reported fourth quarter sales dipped 0.5% to $27.85 billion with net income and EPS up more than 150% to $1.3 billion and $0.94, respectively. Excluding impairment, restructuring and recall charges, PepsiCo’s fourth quarter net income and EPS increased 6.6% to $2.46 billion and $1.78, respectively. North American food and beverage sales, which account for about 60% of total sales, declined during the quarter as multiple price hikes and tightening household budgets weighed on demand. For the year, PepsiCo sales bubbled up 6% to $91.5 billion with net earnings and EPS up 2% to $9.1 billion and $6.56, respectively. Excluding special items and foreign currency, PepsiCo’s EPS popped 14% for the year, the third consecutive year of double-digit core constant currency EPS growth. Organic sales increased 9.5% during 2023 on a 2% declined in convenient foods volume and a 1% decline in beverage volumes. For the year, PepsiCo delivered a 46.2% return on shareholders equity and $7.9 billion in free cash flow. The company returned $7.7 billion to shareholders during 2023 through dividend payments of $6.7 billion and share repurchases of $1.0 billion. PepsiCo ended the year with $10.0 billion in cash and investments, $37.6 billion in long-term debt and $18.6 billion in shareholders’ equity. Looking ahead to 2024, PepsiCo expects to deliver at least 4% organic revenue growth and at least 8% core constant currency EPS growth. The company also announced a 7% increase in the dividend for 2024, which represents the 52nd consecutive annual increase. The company also expects to repurchase about $1.0 billion worth of its shares during 2024.  


Thursday, Feb. 8, 2024

Molina Healthcare-MOH reported fourth quarter sales increased 10% to $9.05 billion with net income of $216.0 million and EPS of $3.70 compared to $56.0 million and $0.96, respectively, last year. Excluding last year’s $208.0 million charge related to the reduction in leased space to accommodate the move to a permanent remote work environment, net income increased 6% and EPS increased 7%. Fourth quarter medical cost ratio (MCR)—the percentage of premiums spent on medical expenses—increased 80 basis points to 89.1%, reflecting higher Medicare utilization of supplemental benefits, in-home services and high-cost drugs.  For the year, the company reported a healthy 7% revenue increase to $34.1 billion with net income up 37% to $1.2 billion and EPS up 39% to $18.77. Excluding last year’s impairment charge, net income and EPS increased 16% during 2023. The company’s MCR for the year was 88.1%, flat with last year. Year-end membership declined 5% to 5.0 million, owing to Medicaid redeterminations.  During 2023, Molina Healthcare generated an impressive 25.9% return on shareholders’ equity and $1.58 billion in free cash flow, up from $682.0 million last year. The growth in free cash flow was due to the growth in earnings from organic growth, new starts and acquisitions plus the net impact of timing differences in government receivables and payables. The company ended the year with $9.1 billion in cash and investments, $2.18 billion in long-term debt and $4.2 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead to 2024, management expects revenue to increase 16% to $39.6 billion with net income and EPS up 17% to $1.28 billion and $22.00, respectively. Membership is expected to increase 14% to 5.7 million.

Wednesday, Feb. 7, 2024

Fastenal-FAST reported January sales rose 6% to $639.9 million with average daily sales up 1.6%. The harsh winter weather is anticipated to have negatively impacted sales by 1.2% to 1.5%. Growth was experienced in all geographic regions during the month. By end market, manufacturing and other end markets experienced growth while non-residential construction and reseller markets contracted. By product line, safety and other products grew while fasteners contracted. Approximately 60% of the company’s Top 100 national accounts were growing in January compared to 78% last January. Total headcount was up 3.6% in the past year to 23,380.

Tuesday, Feb. 6, 2024

Cognizant-CTSH reported fourth quarter revenues dipped 2% to $4.8 billion with net income up 7% to $558 million and EPS up 9% to $1.11 as the company’s adjusted operating margin improved to 16.1% reflecting good cost controls. For the full year, revenues were relatively unchanged at $19.4 billion with net income down 7% to $2.1 billion and EPS off 5% to $4.21. Return on shareholders’ equity was a solid 16% in 2023. Full-year bookings increased 9% to $26.3 billion driven by new clients and large deals. Free cash flow declined 10% during the year to $2 billion with the company repurchasing $1.1 billion of its stock and paying $591 million of dividends. Cognizant has $1.8 billion remaining authorized for future share repurchases and increased its dividend 3% for 2024 to an annualized rate of $1.20 per share. Cognizant plans to continue to invest in generative AI, cloud, data modernization, digital engineering and the Internet of Everything to design and deliver solutions to its clients. Cognizant expects 2024 revenues in the range of $19.0 billion to $19.8 billion with operating margins expected to expand 20 to 40 basis points, leading to adjusted EPS in the range of $4.60 to $4.68.

Tractor Supply Company-TSCO announced that its Board of Directors declared a quarterly cash dividend of $1.10 per share of the company’s common stock. This represents an increase of 7 percent versus the prior quarterly dividend rate of $1.03 per share. "The strong and consistent cash flow of Tractor Supply supports our 15th year of consecutive dividend increases. This increase reflects our Board’s continued confidence in our Life Out Here strategy to generate shareholder value, while investing for our future," said Edna Morris, Tractor Supply’s Chairman of the Board.

Thursday, Feb. 1, 2024

Roche Group-RHHBY reported sales declined 7% to CHF 58.7 billion with net income and EPS declining 9% to CHF 12.36 billion and CHF 18.57, respectively.  The strong Swiss franc weighed on the value of overseas sales which account for most of Roche’s sales. On a constant exchange rate (CER) basis, 2023 sales increased 1% with net income increasing 7% and EPS up 6%. Pharmaceutical sales declined 2%, or up 6% on a CER basis, to CHF 44.6 billion, owing to ongoing high demand for newer drugs partially offset by a decline in a trio of established cancer drugs facing biosimilar competition and dwindling demand for Ronapreve used to treat COVID-19. Excluding Ronapreve, Roche’s pharmaceutical sales increased 9% at CER. Eye medicine Vabysmo continued to be the top growth driver increasing 324% to CHF 2.36 billion, followed by Roche’s MS treatment, Ocrevus, which grew sales 13% to CHF 6.38 billion, Hemlibra for haemophilia A with a 16% sales increase to CHF 4.15 billion and Polivy, a blood cancer treatment, with a 108% sales increase to CHF 837 million. With 82 new molecular entities (NMEs) and a total of 146 projects, Roche has a promising pipeline with a wide variety of therapeutic approaches including Inavolisib to treat breast cancer, Xolair to treat food allergies and CT-388, a GLP-1/GIP agonist with best-in-class potential in treating obesity. Diagnostic division sales declined 20% to CHF 14.1 billion, or down 13% at CER, owing to difficult comps with last year’s high demand for COVID-19 tests. Excluding last year’s COVID-related sales of CHF 4.1 billion in 2022 and this year’s sales of CHF 800 million, the diagnostic division rang up a 7% in sales on strong demand for its base business offerings across all regions. During 2023, Roche Group generated a healthy 39.2% return on shareholders’ equity and CHF 12.4 billion in free cash flow with the company returning CHF 7.9 billion to shareholders through dividend payments. The company increased its dividend by 1% to CHF 9.60 per share for 2024. Roche ended the year with CHF 10.5 billion in cash and investments, CHF 24.8 billion in long-term debt and CHF 33.3 billion in shareholders’ equity on its strong balance sheet. Looking ahead to 2024, group sales are expected to grow in the mid-single-digits on continued strong base business growth in both divisions with COVID-19 sales declining by CHF 1.1 billion and loss of exclusivity negatively impacting sales by about CHF 1.6 billion. EPS growth is expected to be broadly in line with sales with further increases in the dividend on the horizon. The first quarter of 2024 is the final quarter impacted by declining COVID-19 related sales.

Apple-AAPL reported first quarter sales for fiscal 2024 increased 2% to $119.6 billion with net earnings up 13% to $33.9 billion and EPS up 16% to $2.18 to an all-time high. Product sales of $96.5 billion were flat with last year despite one less selling week during this year’s first quarter. By product, iPhone sales increased 6% to $69.7 billion on the strong adoption of the new iPhone 15. While sales in Greater China declined 13%, Apple’s products represented four of the top six smartphone models in urban China during the quarter. Sales in India grew double digits to a record. Mac sales returned to growth during the quarter, booting up a 1% increase to $7.78 billion despite one less selling week. iPad sales fell 25% to $7.0 billion on difficult comps with last year when the new iPad was launched. Wearables, Home and Accessories sales dropped 11% to $11.95 billion on difficult comps with last year’s launch of the second generation AirPod Pro and the launch of the Series 8 and SE watches. Services revenues increased 11% to an all-time high of $23.1 billion on the heels of Apple’s record 2.2 billion installed base, up from 2 billion last year, as consumers increase their engagement with Apple’s ecosystem. Apple is poised to launch Apple Vision Pro, a revolutionary spatial computer that seamlessly blends digital content with the physical world making it a promising tool for large enterprises like Nike, Walmart, Stryker, SAP and Bloomberg to increase productivity. Gross margin of 45.9% increased from 43.0% last year, boosted by sales leverage and mix, partially offset by currency headwinds. Apple generated $37.5 billion in free cash flow during the quarter, representing a shiny 111% of reported net income, a sign of high-quality reported earnings. Apple returned almost $27 billion to shareholders during the quarter through dividend payments of $3.8 billion and share repurchases of $20.14 billion at average cost of $180.30 per share. Apple also retired an additional 6 million shares under the 2019 ASR. Apple ended the quarter with $172.6 billion in cash and investments, $95.1 billion in long-term debt and $74.1 billion in shareholders’ equity on its AA+ balance sheet. Looking ahead to the second quarter, Apple expects iPhone sales to be flat compared with last year when excluding $5 billion in sales added post-COVID to replenish inventories and Services are expected to grow double-digits. Gross margins are expected in the 46% to 47% range with operating expenses in the $14.3 billion to $14.5 billion range and the tax rate coming in at 16%.   


Meta Platforms-META reported strong fourth quarter results with revenues surging 25% to $40.1 billion and net income and EPS each more than tripling to $14.0 billion and $5.33, respectively, as the company lapped restructuring charges in the prior year to set up its “year of efficiency.” During the quarter, Meta experienced strong engagement trends across its apps as over 3.1 billion people, an increase of 8%, used one of the company’s apps, such as Facebook, Instagram, Reels, Threads, Messenger and/or WhatsApp, at least once a day. Meta is seeing sustained and strong growth in Reels, a TikTok alternative, as people reshare Reels 3.5 billion times every day.  More than 130 million users are now active on Threads, a Twitter (X) alternative. In the fourth quarter, ad impressions delivered over this Family of Apps, increased by 21% and the average price per ad increased by 2%. Family of Apps ad revenue increased 24% to $38.7 billion during the quarter as ad revenue growth benefitted from online commerce, gaming, entertainment and media strength.  Reality Labs crossed over the $1 billion revenue milestone for the first time during the quarter with Quest 3 and Quest 2 both performing well. Reality Labs’ operating losses are expected to continue to increase meaningfully as Meta invests heavily in its development efforts in augmented reality/virtual reality.  For the full year, Meta reported revenues rose 16% to $134.9 billion with net income jumping 69% to $39.1 billion and EPS advancing 73% to $14.87. Meta’s “year of efficiency” delivered these strong results as the company focused on reducing costs and improving productivity, which led to a 22% decline in headcount by year end to 67,317. Return on shareholders’ equity improved to a likable 25.5%. Free cash flow spurted 130% higher to $43.8 billion  with the company repurchasing $20 billion of its stock. Meta has $30.9 billion remaining authorized for future share repurchases and announced an expansion of its share buybacks by an additional $50 billion.  In addition, Meta initiated a $.50 per share quarterly dividend payable on March 26, 2024, given its robust cash flows. The company ended the year with a fortress balance sheet with more than $91 billion in cash and investments, $18.4 billion in long-term debt and $153.2 billion in shareholders’ equity. Meta expects first quarter revenue to be in the range of $34.5 billion to $37 billion. Full year total expenses are expected to be in the range of $94 billion to $99 billion. Capital expenditures are expected to increase significantly and be in the range of $30 billion to $37 billion in 2024 driven by investments in servers and data centers as the company invests in the growing demand for artificial intelligence (AI) capacity.

Tractor Supply-TSCO reported fourth quarter sales declined 8.6% to $3.66 billion with net income down 8.5% to $248 million and EPS declining 6.2% to $2.28. Last year’s fourth quarter included an extra sales week as part of the 53-week calendar in 2022, which negatively impacted sales performance by about 5.6%. Unseasonably warm weather if thought to have negatively impacted sales by about 400 basis points from last year. The decrease in net sales was also attributable to a decline in comparable store sales, partially offset by positive sales contributions from new stores. Comparable store sales decreased 4.2%, driven by a comparable average ticket decline of 1.5% and a comparable average transaction count decline of 2.7%. Comparable store sales performance reflects continued strength in year-round consumable, usable and edible (“C.U.E.”) categories, offset by softness in cold weather products, discretionary categories and, to a lesser extent, big ticket items as consumers shifted post-COVID spending from goods to services. In the fourth quarter of 2022, comparable store sales benefited by approximately 200 basis points from a late December winter storm. Gross profit decreased 5.2% to $1.29 billion while gross margin increased 129 basis points to 35.3% from 34.0% last year, boosted by ongoing lower transportation costs and disciplined product cost management, modestly offset by negative product mix. For the year, Tractor supply rang up a 2.5% sales increase to $14.56 billion with net income up 2% to $1.11 billion and EPS up 4% to $10.09. During 2023, Tractor Supply generated an impressive 51.5% return on shareholders’ equity, $1.3 billion in operating cash flow and $580.2 million in free cash flow as the company continued to invest in new stores and remodels, two new distribution centers and technology. During 2023, Tractor Supply returned over $1.0 billion to shareholders through dividends of $449.6 million and share repurchases of $594.4 million. The company ended the year with $397.1 million in cash, $1.7 billion in long-term debt and $2.15 billion in shareholders’ equity. Looking ahead to 2024, management expects sales in the $14.7 billion to $15.1 billion, up 2% at the midpoint from 2023 on comparable store sales of -1% to +1.5% with net income in the $1.06 billion to $1.13 billion range, down 1.4% at the midpoint and EPS in the range of $9.85 to $10.50, up almost 1% at the midpoint.

Wednesday, Jan. 31, 2024

ADP-ADP reported second quarter revenues rose 6% to $4.7 billion as net income increased 8% to $878.4 million with EPS up 9% to $2.13. Interest on funds held for clients increased 20% to $225 million as the average yield on client funds increased 50 basis points to 2.8% on the average client funds balance of $32.6 billion. Free cash flow decreased 17% to $1.2 billion during the first half due to changes in working capital. ADP paid $1.0 billion in dividends and repurchased $505 million of stock during the first half of the year and still held $1.6 billion in cash and investments as of 12-31-23. ADP expects full year 2024 revenues to increase 6% to 7% with margins expanding 60 to 70 basis points leading to adjusted EPS growth of 10% to 12%.

Mastercard-MA reported fourth quarter revenues charged ahead 13% to $6.5 billion with net income up 11% to $2.8 billion and EPS up 13% to $2.97.  The revenue jump was driven by growth in Mastercard’s payment network thanks to resilient consumer spending during the holiday season as labor markets remained strong and continued growth in revenues from Mastercard’s value-added services and solutions. Payment network net revenue increased 9% on 10% growth in gross dollar volume to $2.4 trillion, 18% growth in cross-border volume and 12% growth in switched transactions. Value-added services and solutions net revenue increased 19% on continued growth of cyber and intelligence solutions, the continued scaling of fraud and security solutions and identity and authentication solutions, as well as continued growth in marketing, data analytics, consulting and loyalty solutions. Fourth quarter operating margins declined 320 basis points from last year on a 21% increase in total operating expenses due to a pre-tax litigation charge of $308 million and an increase in personnel costs. For the year, Mastercard reported revenues increased 13% to $25.1 billion with net income increasing 13% to $11.2 billion and EPS up 15% to $11.83. During 2023 Mastercard generated a stellar 26.4% return on assets and $11.6 billion in free cash flow, representing an impressive 104% of reported earnings. During the year, Mastercard returned $11.2 billion to shareholders through dividends of $2.2 billion and share repurchases of $9.0 billion, including $1.8 billion repurchased during the fourth quarter at an average cost per share of $400.00. During the first four weeks of January, Mastercard repurchased an additional $586.0 million shares at an average cost per share of $418.57. Mastercard ended the year with $8.6 billion in cash, $14.3 billion in long-term debt and $6.9 billion in shareholders’ equity on its sturdy balance sheet. Given the strong U. S.  labor market and rising wages along with slowing but still elevated inflation, market share gains plus the secular trend with global payments shifting from cash to card, Mastercard expects 2024 sales and expenses to grow in the low-double-digits range with the first quarter revenues expected to be in the lower end of the range due to tough comparisons with last year.  


Tuesday, January 30, 2024

Stryker-SYK reported a healthy 11.8% increase in fourth quarter sales to $5.8 billion with net income and EPS increasing over 100% to $1.14 billion and $2.98, respectively. Excluding regulatory and legal matters and other special items, net income and EPS increased 15% to $1.3 billion and $3.46, respectively. Commercial execution, including many successful product introductions was excellent across the business segments and regions. Globally, for both the fourth quarter and the full year, Stryker generated double-digit organic sales growth in instruments, endoscopy, medical, neuro cranial, hips, knees and trauma and extremities. For the year, Stryker reported sales increased 11% to $20.5 billion with net income and EPS increasing 34% to $3.17 billion and $8.25, respectively. Excluding one-time items, Stryker’s net income and EPS increased 14% to $4.1 billion and $10.60, respectively. During 2023, Stryker generated an impressive 17.0% return on shareholders’ equity and $2 billion in free cash flow with the company returning $1.14 billion to shareholders through dividend payments. Stryker ended the year with $3.0 billion in cash and investments, $10.9 billion in long-term debt and $18.6 billion in shareholders’ equity on its solid balance sheet. Based on the company’s momentum from 2023, strong procedural volumes, healthy demand for capital products and a stabilizing macro-economic environment, it expects 2024 organic net sales growth to be in the range of 7.5% to 9.0% and adjusted EPS to be in the range of $11.70 to $12.00.

Microsoft-MSFT reported second quarter revenues increased 18% to $62 billion with net income and EPS each jumping 33% to $21.9 billion and $2.93, respectively. Revenue in Productivity Business Processes increased 13% to $19.2 billion driven by Office 365 and 27% growth in Dynamics 365 products. Revenue in Intelligent Cloud increased 20% to $25.9 billion driven by Azure and other cloud services revenue growth of 30%. Revenue in More Personal Computing increased 19% to $16.9 billion, primarily driven by 15 points of net impact from the Activision acquisition. Microsoft cloud revenue was $33.7 billion, up 24% year-over-year. Free cash flow during the first half of the year increased 37% to $29.8 billion with the company paying $10.6 billion in dividends and repurchasing $8.8 billion of its common stock. Microsoft ended the quarter with $94.4 billion in cash and investments, $44.9 billion in long-term debt and $238.3 billion in shareholders’ equity on its strong balance sheet. For the third quarter, Microsoft expects revenues in the range of $60 billion to $61 billion with cost of goods in the range of $18.6 billion and $18.8 billion and operating expenses in the range of $15.8 billion to $15.9 billion. For the full 2024-year, Microsoft expects operating margin to expand 1 to 2 points.  "We’ve moved from talking about AI to applying AI at scale," said Satya Nadella, chairman and chief executive officer of Microsoft. "By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”

Alphabet-GOOGL reported fourth quarter revenues increased 13% to $86.3 billion with net income surging 51% to $20.7 billion and EPS jumping 56% to $1.64. These strong results were driven by ongoing strength in Search with Google Search revenues up 13% during the quarter to $48.0 billion, led by growth in retail advertising. YouTube ads revenue rose 16% during the quarter to $9.2 billion on an increase in direct response and brand ads. Revenues in Google subscriptions, platforms and devices jumped 23% during the quartet to $10.8 billion as momentum in subscriptions to YouTube continued with both YouTube Music and YouTube TV performing exceptionally well. Subscriptions to the NFL Sunday ticket scored a touchdown. Google Cloud revenues rose a lofty 26% to $9.2 billion thanks to growing demand for generative AI as the company expands its relationships with other companies. Other Bets revenues nearly tripled during the quarter to $657 million thanks to Waymo and generative AI advances in healthcare. Google is launching the Gemini era, which will fuel the next generation of advances in generative AI as the technology can run on everything from data centers to mobile devices. For the full year, Alphabet’s revenues increased 9% to $307.4 billion with net income jumping 23% to $73.8 billion and EPS rising 27% to $5.80. Return on shareholders’ equity for the year improved to an impressive 26%. Free cash flow rose 16% during the year to $69.5 billion with the company repurchasing $61.5 billion of its stock. Alphabet ended the year with a fortress balance sheet with nearly $142 billion in cash and investments, $13 billion in long-term debt and $283 billion in shareholders’ equity.  Alphabet expects healthy profitability to continue in 2024 as the company prioritizes its products, optimizes AI and streamlines its operations with headcount down 4% at year end. Alphabet will continue to heavily invest in servers and data centers to support the growing demand for AI  with capital expenditures expected to increase notably over the $32.3 billion invested in 2023.

Starbucks-SBUX brewed up an 8.2% increase in first quarter sales to a record $9.4 billion with net income steaming up 19.8% to $1.02 billion and EPS jolting up 21.6% to $0.90. Global comparable store sales increased 5%, driven by a 3% increase in transactions and a 2% increase in average ticket.  North America and U.S. comparable store sales increased 5%, driven by a 4% increase in average ticket and 1% increase in comparable transactions while International comparable store sales increased 7%, driven by a 11% increase in comparable transactions and 3% decline in average ticket. China comparable store sales increased 10%, driven by a 21% increase in comparable transactions and 9% decline in average ticket as consumers became cautious. Active U.S. Starbucks rewards membership increased 13% to 34.3 million. Starbucks opened 549 net new stores in the quarter, ending the period with 38,587 stores, including 16,466 and 6,975 stores in the U.S. and China, respectively. Operating margin expanded by 140 basis points, driven by sales leverage and in-store operating efficiencies as management’s reinvention efforts bear fruit.  Operating efficiencies were partially offset by investment in store partner wages and benefits as well as costs associated with reinvention efforts.  During the quarter, Starbucks generated $1.79 billion in free cash flow, representing a stellar 175% of reported net income. The company returned $1.9 billion through dividend payments of $648.1 million and share repurchases of $1.27 billion at an average cost of $101.56 per share. During the fourth quarter, Starbucks declared a cash dividend of $0.57, up 5.6% from last year and marking the 55th consecutive quarter of dividend payouts with a CAGR of about 20%. Starbucks ended the quarter with $3.6 billion in cash and $13.6 billion in long-term debt.  Given expected headwinds, Starbucks revised its full year global revenue growth in the range of 7% to 10%, down from the previous range of the low end of 10% to 12%. Full year global and US comp growth is now expected in the range of 4% to 6%, down from the previous range of 5% to 7%. China comp growth is now expected in the low-single-digits for the balance of the year, revised from the previous range of 4% to 6% in the second through fourth quarters with higher comp in the first quarter. Full year global store growth is projected at approximately 7% with EPS growth in the range of 15% to 20%.  Starbucks expects EPS to be the lowest in second quarter and meaningfully below full fiscal year guidance ranges due to the ongoing headwinds that are expected to stabilize in the second half of the fiscal year.

PulteGroup-PHM reported fourth quarter sales declined 15.5% to $4.29 billion with net income down 19.4% to $711.0 million and EPS down 14.8% to $3.28 on fewer shares outstanding. Average sales price declined by 2% during the quarter to $547,000 and closings were down 14% to 7,615 homes. The company experienced a significant increase in buyer activity as interest rates moved lower from a multi-decade peak of nearly 8% in late October to 6.6% at year-end, resulting in robust December activity. As a result of increasing demand, the company began building more spec homes to ensure adequate supply during the spring 2024 selling season. Net new orders increased 57% in the fourth quarter to 6,214 homes, bringing the total backlog of homes to 12,146 homes (flat with 12/31/2022) with a value of $7.3 billion ($601,021 average selling price) at year-end. Pulte’s cancellation rate dropped to 9% of beginning backlog, from 11% in 2022. For the year, PulteGroup reported a slight increase in sales to $16.1 billion with net income dipping slightly to $2.6 billion and EPS increasing 6.4% to $11.72 on fewer shares outstanding. The company generated a robust 25.1% return on shareholders’ equity during 2023. For the year, Pulte generated $2.1 billion in free cash flow with the company returning $1.14 billion to shareholders through dividends of $142.5 million and share repurchases of $1.0 billion at an average cost per share of $72.50, including $300 million repurchased during the fourth quarter at an average cost per share of $83.03 per share. During 2023, PulteGroup reduced its shares outstanding by 6.1%. Since initiating its share repurchase program in 2013, the company has reduced its share count by almost 50% at an average cost per share of $32.16, representing a great investment for shareholders given that the stock currently trades over $100 per share. Reflecting its confidence in its future cash flow generation and its ongoing commitment to return excess cash to shareholders, PulteGroup announced a $1.5 billion increase in its share repurchase program, bringing the total authorized to $1.8 billion. The company also increased its dividend by 25% for 2024. PulteGroup ended the year with $1.8 billion in cash, $1.96 billion in long-term debt and $10.4 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead to the future, PulteGroup expects to increase unit sales volume in the 5% to 10% range with 2024 falling toward the bottom of the range given that it walked away from land options at the end of 2022 due to falling demand. These forfeited land options flow through to 2024 sales. Given years of stifled building in the aftermath of the Great Recession and the lack of existing homes for sale due to years of historically low mortgage rates, the company is optimistic about future demand for new homes and its ability to profitably supply that demand.


UPS-UPS reported disappointing fourth quarter results that capped off a difficult year due to a challenging macroeconomic environment, as soft demand led to overcapacity in the industry, along with the adverse impact of labor negotiations during the year which resulted in a diversion of volume to competitors and higher labor costs.  During the fourth quarter, revenue declined 8% to $24.9 billion with net income and EPS each plunging 53% to $1.6 billion and $1.87, respectively. For the full year, revenues declined 9% to $90.6 billion with net income falling 42% to $6.7 billion and EPS dropping 41% to $7.80. Return on shareholders’ equity declined to 38.7% with free cash flow down 46% to $5.1 billion. During the year, UPS paid $5.4 billion in dividends and repurchased $2.3 billion of its stock. UPS modestly increased its dividend for 2024 by less than 1% to an annualized rate of $6.52 per share, marking the 15th consecutive year of dividend increases. UPS is taking actions to deal with the challenging environment, including laying off 12,000 employees for $1 billion in cost savings and considering the sale of its Coyote truck load brokerage business due to volatile financial results. For the full year 2024, UPS expects revenues to increase, primarily in the back half of the year, to a range of $92.0 billion to $94.5 billion with an adjusted operating margin in the range of 10.0% to 10.6% compared to 10.9% in 2023. The company expects free cash flow in the range of $4.5 billion to $5.3 billion after investing$4.5 billion in capital expenditures. Dividend payments should approximate $5.4 billion in 2024.

Friday, Jan 26, 2024

Western Alliance Bancorporation-WAL reported fourth quarter net revenue declined 4.7% to $682.2 million with net earnings and EPS declining 50% to $144.7 million and $1.33, respectively.  The bank’s efficiency ratio deteriorated to 66.8% from 46.9% during last year’s fourth quarter owing to an increase in deposit costs and a $66.3 million FDIC Special Assessment partially offset by a $39.3 million benefit from repaying the Bank Term Funding loan at a discount. Total deposits grew nearly 3% from last year to $55.3 billion while loans dipped 3% to $50.3 billion, resulting in a loan to deposit ratio of 91%. Management aims to bring that number to the mid-80s level with loans expected to grow by $500.0 million per quarter and deposits growing by $2.0 billion per quarter during 2024. Net interest margin dropped to 3.65% from 3.98% last year on higher deposit interest expense. Asset quality remained strong with non-performing assets representing 0.40% of total assets and annualized charge-offs to average loans outstanding of 0.06%. Commercial real estate loans accounted for 19% of the bank’s total loans with 23% of the loans carrying a loan to value ratio under 40%. Office building loans accounted for 25% of commercial loans and 5% of total loans with 80% carrying a loan to value ratio greater than 51%. Return on assets and return on tangible equity were 0.84% and 11.9%, respectively, compared to 1.67% and 27.0% last year. For the year, Western Alliance reported net revenue increased 3.1% to $2.6 billion with net income and EPS falling more than 30% to $722.4 million and $6.54, respectively. Net interest income increased 5.5% to $2.3 billion and non-interest income fell 13.5% to $280.7 million. During 2023, Western Alliance generated an 11.9% return on shareholders’ equity. The bank ended the year with $14.6 billion in cash, $8.1 billion in long-term debt and $6.1 billion in shareholders’ equity. With a CET1 ratio of 10.8%, Western Alliance exceeds “well capitalized” levels. Tangible book value increased 16.2% from last year to $46.72 per share and has grown at an average compound annual growth rate of 19.5% since the end of 2013. Looking ahead to 2024, management expects net interest income to increase between 5% and 10%, non-interest income to increase 10% to 20%, non-interest expense to increase 0% to 2% and net charge-offs to increase 10 to 15 basis points. Capital ratios will continue to strengthen with the CET1 ratio expected to exceed 11%.  

Gentex-GNTX reported fourth quarter revenues increased 19% to $589.1 million with net income roaring 36% higher to $116.9 million and EPS up 35% to $.50. These strong results reflected a 6% increase in light vehicle production in the company’s primary markets and a 330-basis improvement in gross margin to 34.5% as price increases helped offset inflation pressures. For the full 2023 year, Gentex reported a 20% increase in revenues to a record $2.3 billion with net income motoring 34% higher to $428.4 million and EPS reflecting a shiny 35% gain to $1.84. Full Display Mirror shipments increased 45% during the year to 2.44 million units. Return on shareholders’ equity expanded to a pleasing 18.5% on a cash-rich, debt-free balance sheet. For the full year, the company paid $112.2 million in dividends and repurchased 4.93 million of its shares at an average price of $29.61 per share for a total of $144.7 million, including 2.22 million shares repurchased in the fourth quarter at an average price of $30.76 per share. Gentex has 15.9 million shares remaining authorized for future share repurchases. In 2024, Gentex expects revenues in the range of $2.45 billion to $2.55 billion. Gentex expects gross margins to continue to improve in 2024 which will help them achieve a 35% to 36% targeted gross margin by the end of the year.  The 2024 record revenues and profitability should lead to increased shareholder returns over the next several years.

Thursday, Jan. 25, 2024

Despite economic and geopolitical uncertainty during 2023, LVMH Group-LVMUY rang up another record year with sales increasing 9% to €86.2 billion, net earnings increasing 7.7% to €15.2 billion and EPS up 8.2% to €30.33. Revenue growth was strong across all business groups, with the exception of wines and spirits, and the business gained market share worldwide. Europe, Japan and rest of Asia all generated double-digit organic sales growth. By business Maisons, or groups, Fashion and Leather Goods rang up €42.2 billion in sales, up 9.1% from last year, and generated profit margins of 39.9%, boosted by an exceptional level of profitability maintained by Louis Vuitton and Christian Dior Couture. Wines and Spirits sales declined 7% to €6.6 billion on the normalization of post-COVID Hennessy cognac sales and a mixed recovery in China. The group generated robust operating margins of 31.9% on firm price increases. Perfumes and Cosmetics delivered sales of €8.3 billion on remarkable growth in J’adore and Miss Dior and generated operating margins of 8.6%. Watches and Jewelry sales increased 3% to €10.9 billion, highlighted by the spectacular transformation of Tiffany, the iconic New York jewelry house, strong momentum from Bulgari sales and further innovation in watches. The group generated impressive operating margins of 19.8%. Selective retailing, which includes Sephora and DFS, rang up a 20.4% sales increase, driven by another record-breaking year for Sephora and recovery at DFS with the reopening of borders, though DFS sales remain below 2019 levels. The group generated operating margins of 7.8%. During 2023, LVMH Group generated an exquisite 24.9% return on shareholders’ equity and free cash of €8.1 billion, down 20% from last year on a 51% increase in operating investments to grow the business. During 2023, LVMH Group returned €9.1 billion to shareholders through dividend payments of €7.6 billion and share repurchases of €1.5 billion at a cost equivalent to $167.49 per ADR. Over the past five years, dividends per share have grown at an average annual 17% pace. LVMH ended the year with €7.8 billion in cash, €11.2 billion in long-term debt and €61.0 billion in shareholders’ equity on its refined balance sheet. Looking ahead to 2024, leadership plans to further expand LVMH’s global leadership by focusing on the creativity, quality and distribution of its products, continuing to grow its Maisons by enhancing desirability and fostering the firm’s entrepreneurial spirit.


Visa-V reported fiscal first quarter revenues increased 9% to $8.6 billion with net income charging 17% higher to $4.9 billion and EPS jumping 20% to $2.39 as consumer spending remains resilient. The company is off to a solid start for fiscal 2024 driven by relatively stable growth in overall payments volume and processed transactions, plus strong growth in cross-border volume. During the first quarter, payments volume increased 8%, processed transactions rose 9% and cross-border volume increased 16%, as travel has more than surpassed pre-pandemic levels. Free cash flow declined 15% to $3.3 billion during the quarter due primarily to a sharp increase in cash used for client incentives. During the quarter, the company paid $1.1 billion in dividends and repurchased 14 million of its class A shares for $3.4 billion at an average cost of $239.45 per share. The company has $26.4 billion remaining authorized for future share repurchases. Visa reaffirmed its outlook for the full 2024 fiscal year with revenue growth expected in the low double-digit range and EPS growth in the low-teens.

Wednesday, Jan. 24, 2024

General Dynamics-GD reported fourth revenues flew ahead by 7.5% to $11.67 billion with net income gaining 1.3% to $1.01 billion and EPS up 1.7% to $3.64, representing the highest quarterly EPS and revenue in the company’s history. By business segment, Marine Systems generated the strongest growth at 15% to $3.4 billion, followed by Aerospace at 12% to $2.7 billion, Combat Systems up 8.5% to $2.4 billion and Technologies dipping 3.1% to $3.2 billion.  A pair of contract modifications for the Columbia-class submarine program buoyed Marine Systems results, while the wars in Ukraine and the Middle East drove increased orders for armored vehicles and munitions in the Combat Systems unit. After initially expecting FAA certification this past summer, the company is confident that its new G700 Gulfstream jet will receive certification during the current quarter, unlocking a "surge of deliveries", according to CEO Phebe Novakovic. Operating margins declined 30 basis points to 11.0%, pressured by lingering supply chain issues. Orders remain strong and broad-based, pushing General Dynamics’ backlog to nearly $93.6 billion, the highest year-end total in company history. This resulted in a book to bill ratio of 1.1 times for the second year in a row. Total estimated contract value of total backlog was $132 billion at year-end. For the year, General Dynamics generated revenues of $42.3 billion, up 7.3% from last year, with net income dipping 2.2% to $3.3 billion and EPS down 1.4% to $12.02. During 2023, General Dynamics generated a solid 15.6% return on shareholders’ equity and $3.81 billion in free cash flow, representing an impressive 115% of net income. During the year, the company returned $1.86 billion to shareholders through dividends of $1.4 billion and $434.0 million in share repurchases. General Dynamics ended the year with $1.9 billion in cash, $8.75 billion in long-term debt and $21.3 billion in shareholders’ equity. In 2024, the company expects revenues in the $46.3 billion to $46.4 billion range, up 9.5% from 2023, with EPS in the range of $14.35 to $14.45, up nearly 20% from 2023.

ResMed-RMD reported second quarter revenues rose 12.5% to $1.2 billion with net income and EPS each dropping 7.2% to $208.8 million and $1.42, respectively. During the quarter, the company recorded restructuring charges and masks with magnets safety notification expenses, which should be behind them for the remainder of the year. On an adjusted basis, EPS rose 13.3% to $1.88. These results reflect double-digit growth across the company’s combined device, masks and accessories, and residential care software businesses as well as cost discipline to support an acceleration in profitability. Free cash flow more than quadrupled to $505 million during the first half of the year thanks to higher earnings and stable working capital needs with the company paying $141.3 million of dividends and resuming its share repurchase program with 335,000 shares repurchased during the last quarter for $50 million at an average cost of $149.25 per share. The company plans to continue to repurchase approximately $50 million of its stock per quarter. The company’s capital allocation strategy is to reinvest about 6%-7% of revenues in research and development for future growth, make strategic acquisitions, pay a meaningful and sustained dividend and opportunistically repurchase shares.  ResMed remains a market leader in a very large and growing market for sleep and breathing health. The company revealed the results of a sleep apnea study of 529,000 patients who were prescribed a GLP-1 drug (for weight loss). The study found that they were 10% more likely to initiate PAP (positive airway pressure) therapy, as they became more engaged in their health which is good news for ResMed.


Tuesday, Jan. 23, 2024

Canadian National Railway-CNI reported fourth quarter revenues dipped 1.6% to $4.471 billion with net income steaming ahead 50% to $2.13 billion and EPS surging 57% to $3.29. Excluding a $112 million after-tax property sale gain and a $713 million net deferred income tax recovery, fourth quarter net income declined 8.1% to $1.3 billion and EPS fell 3.8% to $2.02. The revenue decline was attributed to a decrease in container storage fees and a lower fuel surcharge as record potash shipments and strong refined petroleum and natural gas liquids, partially offset by freight rate increases and lower grain and international intermodal shipments. Fourth quarter car velocity chugged ahead by 4% to 215 miles per day and was among the best in recent history, indicative of a strong overall network health.  Same store pricing continued to exceed rail cost inflation, supported by strong service with Local Service Commitment defined as the percentage of cars that successfully completed their daily average operating plan increasing 11% to 93%. For the year, revenues declined 1.6% to $16.83 billion with net income increasing 10% to $5.12 billion and EPS up 14.7% to $8.53. Excluding the aforementioned forth quarter special items, adjusted income declined 6.5% to $4.8 billion and EPS dipped 2.4% on fewer shares outstanding to $7.28. During 2023, Canadian National Railway generated a stellar 28.0% return on shareholders’ equity and $3.8 billion in free cash flow with the company returning over $6.6 billion to shareholders through dividend payments of $2.07 billion and share repurchases of $4.55 billion. Canadian National Railway’s board approved a 7% increase in the 2024 dividend, marking the 28th consecutive year of dividend increases. In addition, the board approved a new Normal course issuer bid (NCIB) that permits the company to purchase up to 32 million shares (about 5% of outstanding shares) over a 12-month period beginning February 1, 2024. Canadian National ended the year with $475 million in cash, $16.1 billion in long-term debt and $20.1 billion on shareholders’ equity on its strong balance sheet. Looking ahead to 2024, management expects to deliver 10% growth in adjusted EPS and return on invested capital of 15% to 17%.

Texas Instruments-TXN reported fourth quarter revenues declined 13% to $4.1 billion with net income and EPS each down 30% to $1.5 billion and $1.49, respectively. These results reflected increasing weakness across industrial sectors and a sequential decline in automotive. For the full year, revenues declined 13% to $17.5 billion with net income and EPS each down 25% to $6.5 billion and $7.07, respectively. Return on shareholders’ equity was an impressive 39% for the year. Free cash flow dropped 77% during the year to $1.3 billion, primarily due to lower earnings and higher capital expenditures. During 2023, the company paid $4.5 billion in dividends and repurchased $293 million of its common stock. The dividend was increased 5% in the fourth quarter, marking the 20th consecutive year of dividend increases.  As customers continue to reduce inventory, Texas Instruments expects weaker demand for its products to persist in the first quarter of 2024 with revenue expected in the range of $3.45 billion to $3.75 billion and EPS in the range of $0.96 to $1.16.

RTX-RTX reported fourth quarter revenues increased 10% to $19.9 billion with income from continuing operations relatively flat at $1.4 billion and EPS up 9% to $1.05, on lower shares outstanding. For the full 2023 year, revenues increased 3% to $68.9 billion with net income from continuing operations dropping 39% to $3.2 billion and EPS down 36% to $2.23.  Given the lower earnings, return on shareholders’ equity fell to a subpar 5.3%. These results reflect the issues with the previously disclosed Pratt powder metal matter resulting in engine recalls. RTX is making consistent progress on resolving the powder metal matter. On an adjusted basis, EPS increased 6% for the year to $5.06.  Demand for RTX’s products remains strong as air traffic has surpassed pre-pandemic levels. Commercial aerospace aftermarket sales were up 23% for the year. On the defense side of RTX’s business, the increasing global threats have led to $51 billion of new awards with a book-to-bill ratio of 1.24. Overall, RTX ended the year with a record backlog of $196 billion, which increased 12%, including $118 billion from commercial aerospace and $78 billion from defense. Free cash flow increased 12% during the year to $5.5 billion with RTX paying $3.2 billion in dividends and repurchasing $12.9 billion of its common stock during the year, including $10 billion in accelerated share repurchases in the fourth quarter. RTX has returned $29 billion in cash to shareholders since the merger, achieving significant progress toward its capital return commitment of between $36 billion to $37 billion through 2025. The company’s outlook for full year 2024 is for sales of $78 to $79 billion with adjusted EPS in the range of $5.25 to $5.40. Free cash flow is expected to approximate $5.7 billion in 2024 and accelerate to $7.5 billion in 2025.

Johnson & Johnson-JNJ reported fourth quarter sales increased a healthy 7.3% to $21.4 billion with net income up 28% to $4.1 billion and EPS up 39% to $1.70. Adjusted earnings from continuing operations-- which excludes expenses related to litigation, amortization, restructuring and one-time items plus income from unrealized security gains—increased 2.4% to $5.6 billion and adjusted EPS increased 11.7% on fewer shares outstanding to $2.29. By business segment, Innovative Medicine sales increased 4.2%, or 9.5% operationally when excluding the COVID-19 vaccine business, to $13.7 billion, driven by oncology, immunology and pulmonary hypertension sales. Innovative Medicine operating margins dipped slightly to 37.4% on an increase in R&D investments. MedTech sales increased a strong 13.3% to $7.67 billion, powered by procedure growth, new product sales and the acquisition of Abiomed.  MedTech operating margins declined 9% to 15.5%, squeezed by an $84 million charge to reorganize its orthopedic business and exit certain markets while increasing its reach into global growth markets, expenses related to the Abiomed acquisition, inflationary impact on inventories moving through cost of goods sold and AI expenses.  For the year, Johnson & Johnson reported sales increased 6.5% to $85.2 billion with net income dropping 18.6% to $13.3 billion and EPS falling 15.3% to $5.20. Excluding charges related to talc litigation and other special items, net income and EPS increased 6.8% and 11.1%, respectively. J&J continues to pursue paths to achieve a final resolution to the talc litigation including a recent agreement in principle with 43 State Attorneys General to resolve talc claims. During 2023, Johnson & Johnson generated free cash flow of about $18.0 billion and returned $14.3 billion to shareholders through share repurchases of $2.5 billion through its now completed $5 billion share repurchase authorization and $11.8 billion in dividends. In addition, J&J reduced its share count by 7% during 2023 without using cash via its tax-free exchange of Kenvue shares. During 2023, Johnson & Johnson increased its dividend by 5.3%, marking the 61st consecutive year of dividend increases. The company plans to continue increasing its dividend as an important piece of its capital allocation strategy. J&J ended the year with $23 billion in cash and marketable securities and $29 billion in long-term debt on its strong balance sheet. The company’s robust free cash flow and strong AAA-rated balance sheet enables it to invest in the business, make acquisitions to fuel growth while also returning cash to shareholders. Looking ahead to 2024, management expects sales to increase 4.5% to 5.5% to $87.8 billion to $88.6 billion with adjusted EPS up 7.4% at the mid-point to a range between $10.55 to $10.75.

Friday, Jan. 19. 2024

Paychex-PAYX announced that the company’s board of directors have authorized the purchase of up to $400 million of its common stock beginning February 1, 2024. The authorization expires May 31, 2027.

Thursday, Jan. 18, 2024

Fastenal-FAST reported fourth quarter sales increased 3.7% to $1.76 billion with net income up 8.5% to $266.4 million and EPS up 8.4% to $0.46. Revenue growth was driven by higher to Onsite sales and sales to large customers. Despite 14 months of falling manufacturing activity represented by an average PMI of 46.9 during the quarter, Fastenal’s daily sales grew by 3.7% on strength in Warehousing sales to support retailer-oriented customers during the holiday shopping season, product mix and easier comps. For the year, Fastenal’s sales increased 5.2% to $7.35 billion with net earnings up 6.3% to $1.16 billion and EPS up 6.7% to $2.02. During 2023, Fastenal delivered an exceptional 34.5% return on shareholders’ equity and a 64% increase in free cash flow to $1.26 billion, representing an impressive 109% of net income. Fastenal’s jump in free cash flow was fueled by the absence of last year’s supply chain constraints, slower business activity and internal process improvements. Fastenal’s strong free cash flow and sturdy balance sheet enabled it to return $1.02 billion to shareholders during 2023, including a special dividend of $0.38 per share in December.  Believing that cash belongs to shareholders, leadership paid the special dividend after determining it has ample cash to fund its growing operations in 2024 and beyond. This special dividend comes on the heels of special dividends paid in December 2008 at the depth of the great recession, December 2012 when the country found itself on the edge of a fiscal cliff and in December 2020 at the depths of the pandemic. During the past ten years, Fastenal has returned over $6.2 billion to shareholders through cash dividends of $5.4 billion and share repurchases of $827.9 million at an average cost per share of $26.03. In addition, the company announced an 11.4% increase in its quarterly cash dividend to $0.39 per share. Fastenal ended the year with $221.3 million in cash, $200.0 million in long-term debt and $3.35 billion in shareholders’ equity on its sturdy balance sheet.

Wednesday, Jan. 17, 2024

After settling litigation, Berkshire Hathaway-BRKB has acquired Pilot Corporation’s remaining 20% interest in Pilot Travel Centers and now owns 100% of Pilot Travel Centers. While terms were not disclosed for the latest purchase, Berkshire originally paid $2.8 billion for 38.6% of the truck-stop operator in 2017, then paid another $8.2 billion to boost its stake to 80% last January. Pilot grew from a single gas station in 1958 into the fifth-largest private company in America with more than 750 locations across the US and Canada. Under the Pilot Flying J, Pilot Travel Centers, and Mr. Fuel brands, it provides services like gas pumps, fast-food restaurants, parking, laundry, and showers to truck drivers and other motorists. It sells about 14 billion gallons of fuel and $3 billion worth of food and merchandise a year. Pilot's revenues jumped from about $20 billion in 2017 to $42 billion in the first nine months of last year, and the company now generates over $1 billion in annual pre-tax earnings.

Friday, Jan. 12, 2024

UnitedHealth Group-UNH reported fourth quarter revenues increased a healthy 14% to $94.4 billion with net income increasing 14.6% to $5.46 billion and EPS up nearly 16% to $5.83. UNH’s medical care ratio – the percentage of premiums used to cover claims - increased 220 basis points from last year’s fourth quarter to 85%. This increase was driven by a year-end uptick in RSV vaccinations and higher COVID costs that aren’t expected to impact 2024 costs as well as increased costs related to outpatient orthopedic and cardiac procedures for seniors. For the full year, revenues increased 15% to $371.6 billion on double-digit growth at both Optum and UnitedHealthcare, driven by serving more people more comprehensively across offerings. Net income increased 11% to $22.4 billion and EPS increased 12.7% to $23.86. Full year medical care ratio was 83.2% compared to 82% last year on elevated outpatient care for seniors during the fourth quarter and business mix. During 2023, UNH generated a healthy 23.7% return on shareholders’ equity and $25.7 billion in free cash flow, representing a robust 1.11% of net income. The company returned $14.8 billion to shareholders’ during 2023 through dividends of $6.8 billion and share repurchases of $8 billion. UNH ended the year with $77.2 billion in cash and investments, $58.3 billion in long-term debt and $94.4 billion in shareholders’ equity. Management affirmed its prior guidance of 2024 with revenues in the $$400 billion to $403 billion range and EPS between $27.50 and $28.00. This guidance excludes the impact of the sale of the company’s operations in Brazil that will result in a $7 billion, mostly non-cash charge, on accumulated foreign currency losses and a $6 billion dip in full year revenues. Given pricing and benefit design actions, management forecasts its medical care ratio in the range of 83.5% to 84.5%.

Wednesday,  Jan. 10, 2024

In partnership with Oxford Economics, Cognizant-CTSH revealed findings from its new economic impact study New Work, New World, which predicted that 90% of jobs will be disrupted in some way by generative AI (gen AI), setting the stage for a profound shift in how we approach work, productivity and economic growth. Generative AI offers the potential to improve operational efficiency, create new revenue streams, innovate products and services, and ultimately redefine businesses. AI adoption is expected to skyrocket over the next decade with economic advancement soaring. Generative AI technology could boost U.S. productivity by 1.7%-3.5% and grow the U.S. GDP between $477 billion and $1 trillion in annual value over the next 10 years, based on business adoption rates. Half of all jobs (52%) are predicted to significantly change as generative AI is integrated to automate job tasks. As a result, approximately 9% of the current U.S. workforce may be displaced, with 1% potentially struggling to find new employment based on historical economic shifts.

Monday, Jan. 8, 2024

Johnson & Johnson-JNJ announced it has entered into a definitive agreement to acquire Ambrx Biopharma, Inc., a clinical-stage biopharmaceutical company with a proprietary synthetic biology technology platform to design and develop next-generation antibody drug conjugates (ADCs), in an all-cash merger transaction for a total equity value of approximately $2.0 billion, or $1.9 billion net of estimated cash acquired. Ambrx is advancing a focused portfolio of clinical and preclinical programs designed to optimize efficacy and safety of its candidate therapeutics in multiple cancer indications, including metastatic castration-resistant prostate cancer metastatic HER2+ breast cancer and renal cell carcinoma.

Stryker-SYK announced that it surpassed $20 billion in annual sales for the first time in its history during the month of December, 2023.

Friday, Dec. 29, 2023

UnitedHealth-UNH entered into an agreement to sell its operations in Brazil to a private investor. The company expects to close the sale in the first half of 2024. Upon closing, the company expects to record a charge of approximately $7 billion, which will be excluded from adjusted earnings, the majority of which is non-cash and due to the cumulative impact of foreign currency translation losses. In connection with the action, the company's 2024 net earnings outlook will be impacted by the expected charge, while the company is reaffirming the 2024 adjusted earnings outlook of EPS in the range of $27.50-$28.00.

Thursday, Dec. 21, 2023

Nike-NKE reported second quarter sales increased 1% to $13.4 billion with net income jumping 19% to $1.6 billion and EPS up 21% to $1.03. Nike Direct revenues increased 6% during the quarter to $5.7 billion with the strongest Black Friday sales ever. The company continues to gain market share. Gross margin increased 170 basis points during the quarter to 44.6% driven by strategic pricing actions and lower ocean freight rates.  During the quarter, inventories declined 14% to $8 billion with free cash flow growth accelerating. The company ended the quarter with cash of about $9.9 billion, down $700 million, reflecting dividends paid during the second quarter of $523 million, up 9% from the prior period, and share repurchases of $1.2 billion at an average cost per share of $100.84 per share. As Nike looks ahead to a softer second-half revenue outlook, the company is identifying up to $2 billion in cumulative cost savings over the next three years by simplifying its product line and increasing automation to drive great efficiency. As part of this commitment to streamline its organization, the company expects to take pre-tax restructuring charges of approximately $400 million to $450 million that will be largely recognized in the third quarter of fiscal 2024, primarily associated with employee severance costs. Given macro headwinds in Europe and China  resulting in cautious consumer spending,  softer digital sales, a promotional market environment  and a stronger U.S. dollar, the company lowered its revenue outlook for the full fiscal 2024 to just 1%,  but maintained its earnings outlook given disciplined expense management and the expectations for gross margin to expand 140-150 basis points for the full year.

Paychex-PAYX reported second quarter total revenue increased 6% to $1.3 billion with net income and EPS each up 9% to $392.7 million and $1.08, respectively.  Return on shareholders’ equity on a trailing 12-month basis was  a highly profitable 47%. The company is still seeing strong demand for its services in a tight labor market. While the company is not seeing any signs of recession, small businesses continue to show moderation in both wage inflation and job growth, especially among seasonal workers. The company’s revenue retention remains above pre-pandemic levels with client retention improving year-over-year. Free cash flow increased 41% during the first half of the year to $924.9 million on the higher earnings and favorable working capital changes. Paychex paid $642.1 million in dividends during the first half and repurchased 1.5 million of its common stock for $169.2 million at a cost of about $112.80 per share. The company’s consistent free cash flow generation supports its industry-leading dividend payout ratio. For fiscal 2024, Paychex expects revenue growth of 6%-7% and raised its adjusted EPS growth outlook to 10%-11%.

Tuesday, Dec. 19, 2023

FactSet-FDS reported first fiscal quarter revenue rose 7.4% to $542.2 million with net income increasing 8.6% to $148.5 million and EPS up 9.1% to $3.84. Organic revenue grew 7.2% to $541.4 million, primarily due to higher Wealth sales and increased sales of data. Annual Subscription Volume (ASV) plus professional services was $2.2 billion at 11/30/23 compared to $2 billion a year ago. The company’s operating margin expanded to 34.9% compared with 34.1% a year ago driven by a decrease in professional fees, personnel and facilities costs partially offset by higher technology related expenses. Client count increased by 24 clients in the past three months to end the quarter at 7,945, primarily driven by an increase in private equity/venture capital, corporate and wealth clients. User count increased by 17,111 to 207,083 primarily driven by an increase in wealth management users. Annual ASV retention was greater than 95%. When expressed as a percentage of clients, annual retention was 90%. Free cash flow increased 56% during the first quarter to $138.7 million with the company returning $97 million to shareholders through dividend payments of $37.1 million and share repurchases of $59.9 million at an average cost per share of $440.67. The company still has $240.1 million authorized for future share repurchases. FactSet updated its financial outlook for fiscal 2024 with revenue expected in the range of $2.2 billion to $2.21 billion (down from $2.21 billion to $2.23 billion) and EPS expected in the range of $13.95 to $14.35 (down from $14.20 to $14.70). As part of FactSet's continuing focus on cost optimization, the company expects to take a $10 to $15 million charge during the second quarter of fiscal 2024. Cost reduction items will include both variable costs and personnel-related costs.

Accenture-ACN reported first quarter revenues rose 3% to $16.2 billion with net income relatively unchanged at $1.97 billion and EPS up 1% to $3.10. On a geographic basis, North America revenues declined 1% to $7.6 billion, EMEA revenues increased 2% to $5.88 billion, and Growth Markets increased 5% to $2.98 billion. Revenue growth by industry groups was led by 12% growth in Health and Public Services to $3.4 billion while Communications, Media and Technology revenues declined 11% to $2.7 billion. New bookings in the quarter increased 14% to $18.4 billion with 30 clients with quarterly bookings of more than $100 million. Accenture leads the industry in generative AI with over $450 million in new bookings. Free cash flow increased 8% during the quarter to $429.6 million with the company paying $810 million in dividends, a 15% increased from the prior period, and $1.2 billion in share repurchases at an average cost of $315.79 per share. The company has $5.4 billion authorized for future share repurchases. For fiscal 2024, the company continues to expect revenue growth to be in the range of 2% to 5% in constant currency with EPS in the range of $11.41 to $11.76, representing growth of 6% to 9% as operating margins are expected to expand 110 to 130 basis points. Free cash flow for 2024 is expected in the range of $8.7 billion to $9.3 billion with the company expecting to return at least $7.7 billion in cash to shareholders through dividends and share repurchases.

Monday, Dec. 18, 2023

Molina Healthcare-MOH announced that on December 13, 2023, the Company amended its purchase agreement for the acquisition of Bright HealthCare’s California Medicare business. The purchase price for the transaction, net of certain tax benefits, is reduced from the previously announced $510 million to approximately $425 million, and now represents 23% of expected 2023 premium revenue of $1.8 billion. As previously stated by Molina, the acquisition adds $1.00 per share to new store embedded earnings and is expected to close on or about January 1, 2024.

Thursday, Dec. 14, 2023

Berkshire Hathaway-BRKB  bought another 10,482,162 shares of Occidental Petroleum worth approximately  $589 million and now holds a stake of 238.5 million shares worth $13.6 billion in the energy company, or a 27% interest in the business.

Roche Holding-RHHBY completed its $7.1 billion acquisition of Telavant and the rights in the US and Japan to RVT-3101, a promising new therapy in development for people suffering from inflammatory bowel disease, including ulcerative colitis and Crohn’s disease. An additional payment of $150 million in cash is payable upon the completion of a near-term milestone.


Tuesday, Dec. 12, 2023

Alphabet-GOOGL lost an antitrust case after a jury decided that Google maintains a monopoly in its app store’s distribution and payments market, following a case brought by Fortnite-developer Epic Games. A judge will decide next year what remedies Epic will be awarded. Epic originally said in its lawsuit that it wasn’t seeking monetary damages or favorable treatment from Google but did want it to open up its Android ecosystem. Google has said it intends to challenge the decision. Epic had previously lost its antitrust case against Apple.

Monday, Dec. 11, 2023

Oracle-ORCL reported second quarter revenues increased 5% to $12.9 billion with net income jumping 44% to $2.5 billion and EPS up 40% to $.91. Growth was driven by Oracle’s Cloud Revenue which rose 25% during the quarter to $4.8 billion. Demand for the company’s Cloud Infrastructure and Generative AI services is increasing at an “astronomical rate.” The cloud businesses are now at nearly a $20 billion-dollar annual revenue run rate.  As a measure of demand, Oracle’s total Remaining Performance Obligations climbed to over $65 billion—exceeding annual revenue. Oracle is in the process of expanding 66 of their existing cloud datacenters and building 100 new cloud datacenters in countries around the world to meet the growing demand. In the next few months, the company is turning on 20 new Oracle cloud datacenters collocated with and connected to Microsoft Azure. Oracle will accelerate its capital expenditures in the second half of the year to increase the datacenter capacity with capital expenditures for the full year expected to approach $8 billion. Free cash flow during the first half of the year increased 53% to $4.7 billion with the company paying $2.2 billion in dividends and repurchasing $600 million of its stock, including four million shares in the second quarter for $450 million at an average price of $112.50 per share. For the third quarter, Oracle expects revenues to increase 6%-8% with non-GAAP EPS expect in the range of $1.35-$1.39, representing 10%-14% growth.

Thursday, Dec. 7, 2023

Alphabet’s-GOOGL Google is rolling out an upgraded version of its generative AI platform Bard, called Gemini, across the U.S. and in more than 170 countries which promises to be its “most capable” model yet. Google claims Gemini is the first AI model to beat “human experts” in its range of intelligence tests. Google said Gemini will be “multi-modal”, meaning it will be able to operate and combine different types of information across words, pictures, video and sound. Gemini is also the most flexible model yet — able to efficiently run on everything from data centres to mobile devices. Google said it will be building in safeguards while working “collaboratively” with governments and experts to help head off the mounting risks from AI.

Wednesday, Dec. 6, 2023

Brown-Forman-BFB reported second quarter revenues rose 1% to $1.1 billion with net income and EPS each up 6% to $242 million and $.50, respectively. While growing less than management expected due to slowing trends in whisky and tequila consumption, the company delivered strong gross margin expansion and continued to invest strongly behind their brands. The company expects their premium portfolio and broad geographic footprint will position the business for accelerated growth in the second half of the year. Free cash flow dropped substantially during the first half of the year to $93 million due to working capital changes. During the first half, the company paid $197 million in dividends and repurchased $42 million of its stock. Through the end of November, Brown-Forman has repurchased $181 million of its $400 million share buyback authorization. Brown-Forman also increased its dividend 6%, marking 40 years of consecutive dividend increases. The company has paid dividends for 80 straight years. An evolving global macroenvironment continues to create a challenging operating environment which tempered expectations for the balance of the year. Brown Forman now expects organic net sales growth in the 3% to 5% range with organic operating income growth in the 4% to 6% range. Capital expenditures are planned in the range of $250 million to $270 million. The company expects a $.12 per share accretive impact to EPS from the sale of Finlandia Vodka. The company also does not expect any additional tariffs imposed on American whiskey this year from Europe as trade negotiations continue.

Fastenal-FAST reported November net and daily sales each increased 3.8% to $600 million and $28.6 million, respectively. Daily sales growth by geography was led by Canada/Mexico with 8.6% growth. Daily sales growth by product line was led by Safety with 10.8% growth while fastener sales declined 3%. Total personnel increased 3.7 to 23,204.

Tuesday, Dec. 5, 2023

Mastercard-MA announced that its Board of Directors has declared a quarterly cash dividend of 66 cents per share, a 16 percent increase over the previous dividend of 57 cents per share. The cash dividend will be paid on February 9, 2024 to holders of record of its Class A common stock and Class B common stock as of January 9, 2024. The Board of Directors also approved a new share repurchase program, authorizing the company to repurchase up to $11 billion of its Class A common stock.The new share repurchase program will become effective at the completion of the company’s previously announced $9 billion program (December 2022). As of December 1, 2023, the company had approximately $3.5 billion remaining under the current approved share repurchase program.

 

Stryker-SYK announced that its Board of Directors has declared a quarterly dividend of $0.80 per share payable January 31, 2024 to shareholders of record at the close of business on December 29, 2023, representing an increase of 6.7% versus the prior year and previous quarter. “We continue to deliver strong growth and solid financial performance, and aligning with our capital allocation strategy we are raising our dividend 6.7%,” said Kevin Lobo, Chair and Chief Executive Officer.

Given the company’s confidence in its future growth prospects and the strength of its pipeline, Johnson & Johnson-JNJ provided long-term financial targets and expects at least 3% operational sales growth in 2025, despite a STELARA biosimilar entry in the United States and 5%-7% operational sales CAGR from 2025-2030. In the MedTech business, the company expects to grow operational sales in the upper range of its markets, which are projected to grow 5%-7% through 2027 and generate one-third of sales from new products in 2027. The company’s Innovative Medicine industry-leading pipeline is expected to deliver more than 20 novel therapies and more than 50 product expansions by 2030. In addition, by 2030, Johnson & Johnson’s Innovative Medicine pipeline and portfolio are expected to deliver 5%-7% operational sales growth from 2025-2030. With robust free cash flow generation and a healthy balance sheet, the company intends to continue its focus on its capital allocation strategy including continued investment in R&D, increasing dividends on an annual basis, executing strategic business development initiatives for inorganic growth and assessing share repurchases, when appropriate. In 2024, JNJ expects operational sales growth in the range of 5-6% and adjusted operational earnings per share growth of 7.3% at the midpoint with a range of $10.55-$10.75. The company’s 2024 guidance range reflects an approximate $0.15 dilutive impact to adjusted operational EPS associated with the previously announced acquisition of Laminar, Inc. 

Monday, Dec. 4, 2023

Roche-RHHBY announced the entry into a definitive merger agreement to acquire Carmot Therapeutics, Inc., a privately owned US company based in Berkeley, California for $2.7 billion in cash with an additional $400 million paid depending on the achievement of certain milestones. Carmot’s R&D portfolio includes clinical stage subcutaneous and oral incretins with best-in-class potential to treat obesity in patients with and without diabetes, as well as a number of preclinical programs. “We are encouraged by the clinical data for the lead asset CT-388, which demonstrated substantial weight loss in Phase 1b. These data suggest the potential for a differentiated profile to treat obesity and its associated diseases”, says Levi Garraway, Roche’s Chief Medical Officer and Head of Global Product Development. “The broad Carmot portfolio offers different routes of administration and opportunities to develop combination therapies that treat obesity and potentially other indications.”

We were deeply saddened to learn of the passing of Charles T. Munger, the Vice Chairman of Berkshire Hathaway, who died last week about one month shy of his 100th birthday.  After attending my first Berkshire Hathaway meeting more than 25 years ago, I immediately fell in love with Charlie’s wisdom, wit, and curmudgeonly manner of answering shareholder questions. I still fondly recall the annual meeting I received his autograph, which is a prized possession.

Warren Buffett, CEO of Berkshire Hathaway, said: “Berkshire Hathaway could not have been built to its present status without Charlie’s inspiration, wisdom and participation.” In fact, Buffett has said his greatest investment accomplishment was, “Recruiting Charlie!” In 1972, Charlie Munger helped shape Berkshire’s investment philosophy during the acquisition of See’s Candies with the lesson that: “It is better to buy a good business at a fair price than a fair business at a good price.”

Charlie Munger was a great exemplar and teacher to millions of long-term investors, including us. In reviewing our notes from the Berkshire Hathaway annual meetings that we summarized every June in our newsletter for the past quarter century, I have included a few timeless lessons Warren and Charlie imparted to us over the years:

1997

Insurance is Berkshire Hathaway’s most important business activity and provides a major opportunity for the company’s continued outstanding performance. Buffett forewarned shareholders to occasionally expect a huge loss from this business. Charlie grumbled that if Berkshire must write out a check for $1 billion, it will be “irritating,” but certainly won’t put them out of business, since it will be a tiny fraction of their liquid assets.

1998

During the dot-com mania, Warren and Charlie noted it was very tough to allocate capital since they were not finding bargains as they looked around the world. While Berkshire continually seeks ways to sensibly deploy its growing capital, Buffett noted, “It may be some time before we find the opportunities that get us truly excited.” Buffett asserted, “We will wait indefinitely for good values to reappear.” When turning to Charlie to respond, Charlie dryly retorted, “I have nothing to add.” This common refrain always made the crowd laugh.

1999

Buffett was asked about the Long Term Capital Management (LTCM) debacle that helped cause a sharp decline in the stock market when the hedge fund imploded. He noted that super bright, extremely talented people, who had their own net worth at risk, caused the problem because of too much leverage. Charlie added, “This will not be the last convulsion we see in derivatives.” Buffett was called to see if he would be interested in helping bail out LTCM. He was on vacation in Yellowstone Park at the time and made an unaccepted bid for LTCM. He showed shareholders a picture of him on his cell phone negotiating the deal in front of an erupting Old Faithful. Buffett joked the picture should be dubbed, “The Geezer and the Geyser.”

2000

Berkshire’s insurance business provided the company with over $25 billion in float. (Today, float approximates $167 billion!) Float is the insurance premiums that Berkshire gets to invest before losses have to be paid out, an interval that sometimes extends for many years. Charlie noted, “I’ve been amazed by the growth and cost of our float. It’s wonderful to grow billions of dollars of float at a cost well below Treasury rates.” Warren and Charlie’s remarkable skill in investing Berkshire’s growing float has resulted in the incredible compounding of Berkshire’s net worth over the years.

2001

Charlie commented that Berkshire is willing to lay off large sums of money for good businesses run by smart people when the businesses can be acquired at a reasonable price. He noted that if Berkshire borrows money at 3% through its insurance business and earns 13% returns from its operating businesses, that’s a pretty good position to be in. He wryly added, “You don’t need more intelligence than that at corporate headquarters.”

2002

In the prior year, Berkshire’s net worth declined for the first time since 1965 due to a $2 billion insurance loss related to the 9/11 terrorist acts. Buffett openly criticized himself for having recognized the potential for huge monetary damages from terrorist acts but failing to price it in Berkshire’s insurance policies. Charlie added, “Sept. 11 has made us less weak, foolish and sloppy. We now are facing reality with more intelligence.” Since Sept. 11, Berkshire is either excluding terrorist risks or pricing it into policies issued but excluding nuclear, chemical or biological events.

On a lighter note, Berkshire acquired Fruit of the Loom. Buffett quipped that the idea to buy the company came from Charlie when he called and said, “Warren, we have to get in women’s underwear!” Warren figured since Charlie was 78, “It is now or never!”

 

2003

Munger has adopted an approach to business and life that he refers to as worldly wisdom. Munger believes that by using a range of different models from many different disciplines—psychology, history, mathematics, physics, philosophy, biology, and so on—a person adds a tremendous interlocking strength to our understanding of how the world works. Charlie stated, “Economics involves too complex a system… economics should emulate physics’ basic ethos, but its search for precision in physics-like formulas is almost always wrong in economics.”

2004

Berkshire Hathaway’s cash on the balance sheet tripled last year to $30 billion. (Today, it tops $318 billion!) Charlie presciently remarked that much of Berkshire’s future value will be determined by how well they deploy the growing amounts of cash with the hope that they will invest it as well as they have in the past.

2005

Despite expressing concerns about the trade deficit, U.S. dollar, pensions, hedge funds, real estate and potential terrorist activity, Buffett said, “Overall, I’m an enormous bull on the U.S. This is the most remarkable success story in the history of the world. It does not make sense to bet against America. If you can buy very good businesses at attractive valuations, it is crazy to sit out of the market due to macro factors.”Charlie added that the best time to buy into a well-run company is when there is “a batch of bad news.”

 

2006

Warren Buffett explained that investing is not that complicated. Investors just need to “find the best pockets of undervaluation, have the courage of their conviction and buy when others are paralyzed by fear.” He further added that investors don’t need a ton of ideas—just one idea worth a ton.” He quoted Ben Graham: “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.” He further instructed investors to focus on what is “important and knowable” and pay heed to Graham’s wise observation that “the market is there to serve you, not instruct you.” Charlie more succintly summarized, “We simply try to buy things for less than they’re worth.”

2007

Warren Buffett favors businesses where he “knows the answers.” If he can’t determine what the nature of a business will look like in 5-10 years, he won’t invest in it. When you invest in great businesses, you don’t need  huge margins of safety. Charlie added that margin of safety boils down to getting more value than you are paying. Buffett seeks businesses with high returns on capital and  good management that can be held for a long time. Both Charlie and Warren emphasized staying within your circle of competence when investing. Charlie said Berkshire throws almost all investment decisions into the “Too Hard” pile and only focuses on making easy investment decisions.

2008

In the midst of the Great Financial Crisis, Charlie exclaimed that it is crazy to allow companies to get too big to fail, especially in today’s “culture of greed and overconfidence in algorithms.” It is “demented” to allow derivative accounting to have become embedded in the financial system. It is too easy for financial institutions to report earnings and assets that are “good until reached for.” Charlie continued, “Wall Street believes in the tooth fairy. The accounting profession utterly failed us.”

2009

Buffett stated Berkshire’s competitive advantage is its business model and culture, which is very difficult to copy. Other competitive advantages include Berkshire Hathaway’s loyal shareholders, managers who understand business differently and Berkshire’s ability to provide private businesses with a good home. Berkshire’s culture is deeply embedded in the CEO’s of its various companies and will continue. This will provide long-lasting advantages to Berkshire even without Buffett and Munger around. Charlie added that many companies in the U.S. are “run stupidly.” When they focus on quarterly earnings management, they make terrible business decisions. This is not the case at Berkshire. The “stupid practices” of the rest of the world will give Berkshire a competitive advantage well into the future.

2010

Following the Great Financial Crisis, Charlie exclaimed, “If all derivatives vanished from the face of the earth, it would be a safer place.” He added that if he were in charge of financial reform, he would make “Paul Volker look like a sissy!” He would reduce the activites of the investment banks. He noted we should not have financial statements that no one can understand. “Crazy complexity is unproductive!” He added that if you give banks the flexibility “to do whatever they damn please, they will go plumb crazy, which is what they did.”

On the increase in government debt and inflation concerns, Charlie bluntly stated, “If I can be an optimist when I’m nearly dead, surely the rest of you can handle a little inflation!”

2011

When asked about investing in gold as an inflation hedge, Buffett said, “If you take all of the gold in the world and put it into a cube, it would be about 67 feet on a side, and you could get a ladder and get up on top of it. You can fondle it, you can polish it, and you can stare at it. But it isn’t going to do anything. All you can hope is that someone down the road will pay you more for it down the road.” Charlie agreed, “There’s something peculiar in buying an asset that will only really go up if the world goes to hell.” Buffett concluded that a smarter and safer strategy to beat inflation would be to concentrate your efforts on investing in businesses that have little debt, the ability to increase prices and a history of paying strong dividends.

2012

Given the news of Buffett’s prostate cancer, he was asked how he was feeling. He replied, “I feel terrific. I love what I do. I have more fun every day, a good immune system and a great diet,” as he munched on See’s peanut brittle and chugged cherry Cokes throughout the meeting. His radiation treatments will not involve hospitalization, and the survival rate is 99.5%. Charlie joked that he resented all the attention and sympathy Buffett was receiving as he believed that he had more prostate cancer than Buffett, but he just doesn’t get tested for it. Both see the prostate cancer as a non-event for Berkshire. In a post-Buffett/Munger Berkshire Hathaway, the culture is unlikely to change with a well-thought out succession plan in place. Charlie added that the first $200 billion of market capitalization was hard for Berkshire to create, but the second $200 billion will be pretty easy to achieve given the momentum of Berkshire’s businesses. Buffett agreed that Berkshire has the businesses in place to take Berkshire’s market capitalization to $400 billion in the future. (Today, Berkshire’s market capitalization tops $777 billion!)

2013

Buffett believes the Berkshire brand will continue to generate attractive returns without Buffett having to be at the helm. Charlie noted that in the early days, Berkshire earned attractive returns because Buffett was a value investor who had little competition. Today, Berkshire earns attractive returns because Berkshire is a good home for good companies again with little competition. Charlie added that Berkshire’s ability to “stay sane when others like to go crazy” is a competitive advantage.

2014

Charlie emphasized that Berkshire’s business model “has legs” and will go on for a long time. It is a credible business model with enough advantages to last a long time. He said, “Berkshire will keep doing what we are doing and learn from our mistakes.” The momentum and ecosystem are in place. He advised young folks, “Do not be too eager to sell Berkshire stock.”

2015

Over the past 50 years, Berkshire Hathaway’s stock has compounded at a glittering 21.6% annual rate versus the 9.9% annual return of the S&P 500 (with dividends reinvested). If you had invested $10,000 in the S&P 500 index 50 years ago, you would now have more than $1.1 million. In contrast, if you had invested the same $10,000 with a young whippersnapper named Warren Buffett, you would now have over $182 million. This windfall demonstrates not only the magic of compounding high returns over long periods of time but also how active management with sound investment principles outperforms passive investments by a landslide. Charlie stated, “Berkshire will do fine after we are gone. In fact, it will do better in dollar terms.  We will never gain as much in percentage terms as we did in the beginning years. There is a worse tragedy than having Berkshire’s growth slow a little.” Buffett laughed, “Name one!”

 

2016

 

When asked how he thinks ahead of the crowd, Buffett remarked, “I owe a great deal to Ben Graham in terms of investing, and I owe a great deal to Charlie in terms of learning a lot about business. I spent a lifetime looking at businesses and why some work and why some don’t work…pattern recognition. As Yogi Berra said, ‘You can see a lot just by observing.’ That’s pretty much what Charlie and I have been doing for a long time. It is important to recognize what you can’t do.  We’ve generally tried only to swing at things in our particular strike zone. It’s really not much more complicated than that. You don’t need the IQ in the investment business that you need at certain activities in life. You do have to have emotional control. We’ve seen very smart people do very stupid things with unnecessary risks.  Charlie explained, “There are a few simple tricks that work well.  Temperament that has a combination of patience and opportunism in it is one.  I think it’s largely inherited, but it can be learned to some extent. Another factor that Berkshire has done so well is we really try to behave well. I had a great-grandfather that when he died, the preacher said, ‘None envy the man’s success won fairly and used wisely.’ It’s exactly what Berkshire is trying to do. It works!”

 

 

 

2017

 

After famously avoiding technology investments, Buffett said, “Fairly recently, we took a large position in Apple, which I do regard more as a consumer goods company in terms of certain economic characteristics. It has a huge tech component in terms of what that product can do or what other people might come along to do to leapfrog it in some way. I certainly can get a lot of information on consumer behavior and then try to draw inferences as to what consumer behavior is likely to be in the future.” Charlie Munger noted, “I think it’s a very good sign that you bought Apple. It shows either one of two things. Either you’ve gone crazy or you’re learning.  I prefer the learning explanation.”  Buffett laughed, “So do I, actually.”

 

2018

 

Buffett forecast, “Cryptocurrencies will come to bad endings. Along with the fact that nothing is being produced in the way of value from the asset, you also have the problem that it draws in a lot of charlatans and that sort of thing.  It’s something where people who are of less than stellar character see an opportunity to clip people who are trying to get rich because their neighbors are getting rich buying this stuff. It will come to a bad ending.” Charlie muttered, “Well, I like cryptocurrencies a lot less than you do. To me, it’s just dementia. I think the people who are professional traders that go into trading cryptocurrencies, it’s just disgusting. It’s like somebody else is trading turds and you decide, I can’t be left out. “

 

2019

 

One of Berkshire’s investment managers (not Buffett) recently made a nearly $1 billion investment in Amazon. Charlie Munger revealed, “I don’t mind not having caught Amazon early. I give myself a pass on that. But I feel like a horse’s ass for not identifying Google better.”  Buffett agreed, “He’s saying we blew it. And we did have some insights into that because we were using them at GEICO, and we were seeing the results produced. And we saw that we were paying $10 a click, or whatever it might’ve been, for something that had a marginal cost to them of exactly zero. And we saw it was working for us.” Charlie added, “We could see in our own operations how well that Google advertising was working. And we just sat there sucking our thumbs. So, we’re ashamed. We’re trying to atone. Maybe Apple was atonement.”

 

 

 

2020

 

At the height of the global pandemic, Berkshire’s annual meeting was held virtually and without the thousands of attendees. Buffett’s opening comments were: “This is the annual meeting of Berkshire Hathaway. It doesn’t look like an annual meeting. It doesn’t feel exactly like an annual meeting, and it particularly doesn’t feel like an annual meeting because my partner of 60 years, Charlie Munger, is not sitting up here. I think most of the people that come to our meeting really come to listen to Charlie. But I want to assure you, Charlie at 96 is in fine shape. His mind is as good as ever. His voice is as strong as ever, but it just didn’t seem like a good idea to have him make the trip to Omaha for this meeting. Charlie is really taking to this new life. He’s added Zoom to his repertoire.”

 

2021

 

Buffett discussed that Berkshire spent about $25 billion last year repurchasing shares. “We can’t buy companies as cheap as we can buy our own, and we can’t buy stocks as cheap as we can buy our own.” Buffett explained that share repurchases are a way essentially of distributing cash to the people that want the cash when other co-owners mostly want you to re-invest it. Charlie added, “Well, if you’re repurchasing stock, just to bull it higher, it’s deeply immoral, but if you’re repurchasing stock because it’s a fair thing to do in the interest of your existing shareholders, it’s a highly moral act, and the people who are criticizing it are bonkers.”

 

2022

 

Charlie Munger said, “I like having big reserves of oil. If I were running the benevolent despot of the United States, I would just leave most of the oil we have here, and I’d pay whatever the Arabs charge for their oil and I’d pay it cheerfully and conserve my own. I think it’s going to be very precious stuff over the next 200 years. And nobody else has my view, so it doesn’t bother me, I just think they’re all wrong.”

 

2023

 

Charlie Munger’s advice for a good life: “It's so simple to spend less than you earn, avoid toxic people, toxic activities, keep learning all your life, defer gratification because you prefer it that way, and if you do it all this way, you will succeed. If not, you will need a lot of unusual luck.”

 

*****

 

 

 Charlie Munger succeeded in living a good life, and we will greatly miss him.

 



Thursday, Nov. 30, 2023

Ulta Beauty-ULTA rang up a 6% increase in sales to $2.5 billion with net income declining 9% to $249 million and EPS down 5% to $5.07. Comparable sales--sales for stores open at least 14 months plus e-commerce sales--increased 4.5% compared to an increase of 14.6% in the third quarter of fiscal 2022, driven by a 5.9% increase in transactions and a 1.4% decrease in average ticket. Gross profit increased 3% to $992.1 million. As a percentage of net sales, gross profit decreased to 39.9% compared to 41.2%, primarily due to lower merchandise margin, higher inventory shrink and higher supply chain costs, partially offset by strong growth in other revenue. During the quarter, Ulta Beauty opened 12 new stores, relocated two stores and remodeled 11 stores, ending the quarter with 1,374 stores. During the first nine months, Ulta Beauty generated $46.9 million in free cash flow, down 87% from last year on working capital shifts and a 52% jump in capital expenditures to support IT and supply chain investments and the launch of luxury brands. During the first nine months of fiscal 2023, the company repurchased 1.8 million shares of its common stock at a cost of $840.5 million, including 686,689 shares repurchased during the third quarter at an average cost per share of $409.94. About $259.0 million remains available under the $2.0 billion share repurchase program announced in March 2022. Ulta ended the quarter with an attractive balance sheet with more than $121 million in cash, no long-term debt and $2 billion in shareholders’ equity. Management updated its guidance with fiscal 2023 sales now expected in the $11.10 billion to $11.15 billion range, comparable store sales growth of 5.0% to 5.5% and EPS in the $25.20 to $25.60 range, up slightly from prior guidance.

Johnson & Johnson-JNJ noted that as a result of its previously announced acquisition of Laminar, a privately-held medical device company focused on eliminating the left atrial appendage (LAA) in patients with non-valvular atrial fibrillation (AFib), it has adjusted its expected adjusted EPS for 2023, reducing it by $0.17.  Johnston & Johnson acquired Laminar for an upfront payment of $400 million with additional potential clinical and regulatory milestone payments in 2024. For the full 2023 year, JNJ lowered guidance with adjusted EPS now expected in the $9.90-9.96 range, down from previous guidence of $10.07-10.13. Additionally, the asset acquisition is expected to have an approximate negative $0.15 EPS impact in fiscal year 2024.

Wednesday, Nov. 29, 2023

Hormel-HRL reported fourth quarter sales declined 3% to $3.2 billion with net income dropping 30% to $195.9 million and EPS falling 29% to $0.36. Volume for the fourth quarter was flat year-over-year as higher turkey volumes were offset by lower retail volumes. Operating profit declined 280 basis points to 8.4%. By segment, Retail sales, which accounted for 62% of total sales, declined 4% due in part to difficult comps for Skippy spreads. Retail segment operating profits fell 40%, squeezed by the lower sales, product mix and a $28 million impairment charge related to the Justin’s acquisition. Food Service sales, which accounted for 32% of total sales, increased 2.2% to $1.03 billion, with segment operating profits up 13%.  International sales declined 12%, owing to continued softness in China and lower branded export demand.  International segment operating profits fell 67% due to the sales decline. For the full fiscal 2023 year, sales dipped 3% to $12.1 billion with net income falling 12% to $793.6 million and EPS down 11% to $1.45. During fiscal 2023, Hormel generated a 10.3% return on shareholders’ equity and strong operating cash flow of $1.05 billion, representing a meaty 132% of reported net income. Hormel generated $777.6 million in free cash flow, down 9% from last year and returned a record amount of cash to shareholders through dividend payments of $592.9 million. The company announced a 3% increase in the dividend for fiscal 2024 to $1.13 per share. Hormel boasts of paying dividends without interruption for 95 years, including 58 consecutive years of dividend increases. During the past decade, Hormel’s dividend has compounded at an 11% annual rate. Hormel ended the fiscal year with $753.2 million in cash and investments, $2.36 billion in long-term debt and $7.7 billion in shareholders’ equity on its beefy balance sheet. Looking ahead to fiscal 2024, net sales are expected to grow between 1% and 3% with EPS in the $1.43 to $1.57 range, up 3% at the mid-point. Management expects earnings to decline in the first half of the year due to the impact from lower turkey markets, lower volumes in the retail segment and softness in its China business. Hormel expects segment profit growth from all three segments in the back half of the year and a modest benefit to net earnings from its transformation and modernization initiative. "Looking ahead, our teams continue to navigate through a dynamic operating environment characterized by slowing consumer demand, inflationary pressures and headwinds in our turkey business," Jim Snee, chairman of the board, president and chief executive officer said. "We expect fiscal 2024 to be a year of investment, consistent with the plan we outlined at our recent investor day. We remain focused on our strategic priorities, executing on our transformation and modernization initiative, fueling our innovation pipeline and exiting the year with momentum in our business segments. I remain confident that we have the right brands, strategy, people and culture to deliver on our commitment to improve our business and drive long-term shareholder returns and growth."

Tuesday, Nov. 28, 2023

As announced in the third quarter earnings release, UnitedHealth Group-UNH 2023 net earnings are expected to be $23.60 to $23.75 per share and adjusted net earnings $24.85 to $25.00 per share. UnitedHealth Group’s outlook for 2024 outlook includes revenues of $400 billion to $403 billion, net earnings of $26.20 to $26.70 per share and adjusted net earnings of $27.50 to $28.00 per share. Adjusted net earnings only excludes the after-tax non-cash amortization expense pertaining to acquisition-related intangible assets. Cash flows from operations are expected to range from $30 billion to $31 billion. 

 

Tuesday, Nov. 21, 2023

Genentech, a member of the Roche Group- RHHBY announced a multi-year strategic research collaboration with NVIDIA that couples Genentech’s artificial intelligence (AI) capabilities, extensive biological and molecular datasets, and research expertise with NVIDIA’s world-leading accelerated computing capabilities and AI to speed up drug discovery and development. The collaboration is designed to significantly enhance Genentech’s advanced AI research programs by transforming its generative AI models and algorithms into a next-generation AI platform, expediting the discovery and delivery of novel therapies and medicines to people.


The Board of Directors of Hormel Foods-HRL announced a 3 percent increase to the annual dividend to shareholders, marking the 58th consecutive annual dividend increase. The Board of Directors authorized the first quarterly dividend of 28.25 cents ($0.2825) a share to be paid on Feb. 15, 2024, to stockholders of record at the close of business on Jan. 16, 2024. The Feb. 15 payment will be the 382nd consecutive quarterly dividend paid by the Company. Since becoming a public company in 1928, Hormel Foods Corporation has paid a regular quarterly dividend without interruption.

Monday, Nov. 20, 2023

Fastenal-FAST reported its board of directors declared a special one-time dividend of $0.38 per share to be paid in cash on December 20, 2023 to shareholders of record at the close of business on December 6, 2023.

Thursday, Nov. 16, 2023

Ross Stores-ROST rang up an 8% increase in fiscal third quarter sales to $4.9 billion with net income jumping 30.8% to $447.3 million and EPS charging ahead 33% to $1.33. Same store sales increased 5%, mostly due to increased traffic.  Operating margins expanded 140 basis points to 11.2% as leverage from same store sales gain and lower freight costs was partially offset by higher incentives and store wages.  Ross completed its 2023 expansion program during the quarter by adding 43 new Ross Stores and 8 new dd’s DISCOUNTS stores, which brings the total stores added year-to-date to 97 stores including 72 new Ross Stores and 25 new dd’s DISCOUNTS stores. Management expects to end the fiscal year with 1,764 Ross Stores and 345 dd’s DISCOUNTS stores for a net increase of 94 stores for the fiscal year. For the first nine months of the fiscal year, Ross generated $1.57 billion in operating cash flow, up from $472.7 million last year, boosted by higher net income and working capital efficiencies. Free cash flow of $1.03 billion increased from $54.8 million last year. Year-to-date, Ross Stores returned $1.05 billion to shareholders through dividend payments of $342.1 million and share repurchases of $703.4 million, including $239 million repurchased during the third quarter at an average cost per share of $113.80. Ross Stores ended the quarter with $4.5 billion in cash, $2.2 billion in long-term debt and $4.6 billion in shareholders’ equity on its dressy balance sheet. Given the better-than-expected year-to-date results, Ross Stores now expects fiscal year EPS of $5.30 to $5.36, up 21.7% from last year at the mid-point, including 16 cents from this year’s 53rd week. Sales are expected to increase in the 8% to 10% range with operating margins of between 11.3% to 11.5% compared to 10.7% last year. The 53rd week is expected to contribute about 65 basis points to the operating margin expansion. During the earnings conference call, Barbara Rentler, CEO, remarked, “Looking ahead, despite all the challenges in the external environment, we are encouraged by our healthy above planned results to date this year. We also remain confident in the resilience of the off-price sector and our ability to operate successfully within it, especially given consumers’ heightened focus on value and convenience. As a result, we remain optimistic about the company’s future prospects and our ability to extend market share and profitability over time.”

Brown-Forman-BFB announced today that its Board of Directors approved an increase of 6% to the quarterly cash dividend from $0.2055 per share to $0.2178 per share on its Class A and Class B Common Stock. As a result, the indicated annual cash dividend will rise from $0.8220 per share to $0.8712 per share. The dividend is payable on January 2, 2024, to stockholders of record on December 1, 2023.  Brown-Forman’s President and Chief Executive Officer Lawson Whiting said, “We are proud to continue the long tradition of delivering excellent returns to our shareholders. This marks the 40th consecutive year of dividend increases and reinforces our confidence in Brown-Forman's long-term growth outlook.” Brown-Forman, a member of the prestigious S&P 500 Dividend Aristocrats index, has paid regular quarterly cash dividends for 80 years and has increased the cash dividend for 40 consecutive years.

In separate news, Brown-Forman announced that The Duckhorn Portfolio, Inc., a premier wine group, will acquire Sonoma-Cutrer Vineyards and related brand trademarks for approximately $400 million in cash and stock. In exchange, Brown-Forman will receive an ownership percentage of approximately 21.5% in The Duckhorn Portfolio and $50 million USD. The transaction is expected to close in the fourth quarter of fiscal year 2024. Upon closing, Brown-Forman will receive two seats on The Duckhorn Portfolio’s Board of Directors.

 

PulteGroup-PHM announced today that its Board of Directors has voted to increase the Company’s quarterly dividend by 25% to $0.20 per common share.  The increase will be effective with the Company’s next scheduled dividend, which is payable January 3, 2024, to shareholders of record at the close of business on December 19, 2023. “Over the past five years, PulteGroup has generated $6.9 billion of cash flow from operations which have been used to fund our growth, while returning almost $4.0 billion to shareholders through dividends and share repurchases,” said PulteGroup President and CEO, Ryan Marshall.  “The Board’s decision to increase our dividend by 25% reflects our commitment to returning capital to our shareholders.”