HI-Quality Company Updates

Monday, July 26, 2021

F5 Networks-FFIV reported fiscal third quarter sales increased 12% to $651.5 million with net earnings and EPS increasing 28% to $89.6 million and $1.46, respectively. Product sales increased 21% to $310 million, powered by a 34% jump in software sales to $129 million, now representing 42% of total product sales, up from 38% last year.  Subscription sales accounted for 78% of software sales, up from 73% last year. Services sales increased 4% to $341.6 million. Deferred revenues increased 13% to $1.44 billion due to a jump in multi-year NGINX and SHAPE contracts. Enterprise customers accounted for 69% of sales, Service Providers accounted for 15% of sales and government sales accounted for 17%, including 4% Federal. During the latest quarter, F5 generated $182 million in operating cash flow and $173 million in free cash flow with the company repurchasing $100 million shares, thereby completing its $500 million share repurchase program at an average cost per share of $199.90.  F5 Networks ended the quarter with $863 million in cash and investments, $662.7 million in long-term obligations and $2.2 billion in shareholders’ equity. Looking ahead, management expects sales in the $660 million to $680 million range, up 9% at the mid-point, with non-GAAP EPS in the $2.68 to $2.80 range, up 13% at the mid-point. Software sales are expected to continue to increase at a 35% pace.

Bank of Hawaii-BOH reported revenue declined 6% to $167.9 million with net income jumping 74% to $67.5 million and EPS up 71% to $1.68. The net interest margin was 2.37% during the quarter compared to 2.83% in the prior year period reflecting higher levels of liquidity from continued strong deposit growth and lower interest rates. The return on average assets and average equity improved to 1.23% and 19.6%, respectively, during the quarter compared to the prior year period. Total assets increased to a new record of $22.7 billion as total deposits increased 16% from a year ago to $20.2 billion. Total loans and leases increased 2% from a year ago to $12 billion as of June 30, 2021. The company’s overall asset quality remained stable during the quarter. The bank successfully issued preferred stock during the quarter which enhances the strength of the balance sheet and positions the bank well for future growth. Thanks to its capital strength, the Board of Directors increased the quarterly dividend 4% to $.70 per share. The bank’s long-term goal is to pay out 50% of net income in dividends. Bank of Hawaii announced the resumption of the share buyback program beginning in July with $113 million remaining authorized for future share repurchases. Unemployment is improving and Hawaii’s real estate market is very strong like in much of the country. Tourism is also improving with the visitor count nearly back to pre-pandemic levels despite international travelers, which typically make up one-third of visitors, still not back due to the pandemic. Hotels in Hawaii are doing nicely with 97% of them once again open and occupancy at about 77%. Revenue per available room is now higher than in 2019, prior to the pandemic.

Check Point Software-CHKP reported second quarter revenue rose 4% to $526.1 million with net income declining 5% to $186 million and EPS flat at $1.38. Strong execution drove double-digit growth across cloud-based cybersecurity products during the quarter in response to a 93% surge in ransomware attacks.  Deferred revenue increased 10% over the prior year period to $1.5 billion.  Free cash flow increased 5% during the first half to $631 million with the company repurchasing $650 million of its common stock including 2.7 million shares in the second quarter for $325 million at an average cost of $120.37 per share. For the third quarter, Check Point expects revenue in the range of $515 million to $540 million with EPS in the range of $1.30-$1.40.

Friday, July 23, 2021

Gentex-GNTX reported second quarter sales increased 86% to $428 million with the company swinging to an $86.5 million profit or $.36 per share compared to a loss in the prior year period resulting from the pandemic. Gentex is experiencing tremendous volatility in its business due to industry-wide part shortages and global supply chain constraints in the auto industry. This led to an estimated 2 million unit push out of mirror shipments during the quarter due to a shortfall in industry vehicle production. Over the past 18 months, the auto industry has faced significant challenges due to the COVID-19 pandemic. During the first half of last year, the impact was felt in terms of very low sales levels due to shutdowns, but this year, the impact has been felt in the form of massive order changes and reductions to planned volumes due to supply related issues that are affecting the auto manufacturer’s ability to achieve the production levels needed to satisfy strong demand. For the second half of 2021, Gentex expects orders to improve but supply constraints are expected to continue to cause disruptions that are leading to higher commodity pricing, higher freight expenses and inefficiencies in operations. Despite all the challenges, Gentex remains optimistic that the next 18 months has the potential to produce record levels of revenue and profitability for the company. For the second half of 2021, Gentex expects revenues in the range of $970 million to $1.07 billion with a gross margin in the range of 37.5% to 38.5%. For fiscal 2022, Gentex expects revenue to be about 10%-15% higher than the updated 2021 revenue estimates of $1.88-$1.98 billion. While industry supply shortages are expected to continue into the first half of 2022, Gentex is encouraged that the overall demand for vehicles should still provide opportunities for the company to continue to outperform the underlying market. Gentex remains cash rich and debt-free as of quarter end and repurchased 3.4 million shares of its common stock during the quarter for $115.9 million or at an average price of $34.09 per share as management views the stock as undervalued. Gentex plans to continue to return 100% of its strong free cash flows to shareholders through dividends and share repurchases unless a strategic and attractive acquisition opportunity appears.

Thursday, July 22, 2021

Roche Group-RHHBY reported first half sales increased 8% in constant exchange rates (CER) to CHF 30.7 billion with net income and EPS both increasing 2% in CER to CHF 7,803 and CHF 9.05, respectively. The 8% sales growth was driven by a 51% jump in  Diagnostics Division sales to CHF 9.0 billion as continued growth in sales of COVID-19-related products coupled with a rebound in routine testing across all regions as pandemic measures eased.  While Roche’s industry-leading portfolio of COVID-19 tests contributed total sales of CHF 2.5 billion, the demand for COVID-19 tests is likely to decrease in the second half of the year. Pharmaceuticals Division sales declined 3% to CHF 21.7 billion due to biosimilar competition, notably in the US, although the continuing uptake of new medicines partially offset the decline. New medicines launched since 2012 continued their strong growth, up 30% during the first half, to CHF 11 billion, now contributing more than 50% of pharma division sales. During the first half of the year, Roche generated operating cash flow of CHF 8.2 billion and free cash flow of CHF 6.45 billion, up 18% from last year. During the first half of the year, Roche paid shareholders nearly CHF 8 billion in dividends, up 2% year-over-year.  Roche ended the quarter with cash and investments of CHF 8.0 billion, long-term debt of CHF 11.3 billion and shareholders’ equity of CHF 37.8 billion on its sturdy balance sheet. Given the first half results and its robust pipeline, including a pill for COVID and a new Alzheimer’s treatment, management remains very confident about meeting its full year forecast with sales and core EPS targeted to growth in the low- to mid-single digit range. Roche expects to further increase its dividend in Swiss francs.

Intel-INTC reported second quarter revenues increased 2% to $19.6 billion with net income declining 1% to $5.1 billion and EPS up 4% to $1.19. By business segment, Client Computing Group revenue increased 6% to $10.1 billion on strong PC demand. Data Center Group revenues declined 9% to $6.5 billion. Internet of Things revenue increased 47% to $984 million on higher demand while Mobileye revenue jumped 124% to $327 million, driven by the automotive recovery. During the first half of the year, Intel generated $6.7 billion in free cash flow with the company returning $5.2 billion to shareholders through dividend payments of $2.8 billion and share repurchases of $2.4 billion at an average cost of $59.53 per share. Intel has $7.2 billion authorized for future share repurchases. Intel ended the quarter with $7.8 billion in cash and investments, $31.7 billion in long-term debt and $85.2 billion in shareholders’ equity. Management raised guidance with 2021 revenue now expected to be relatively flat at $77.6 billion with EPS of $4.09. Capital expenditures are expected in the $19 billion-$20 billion range. “There’s never been a more exciting time to be in the semiconductor industry. The digitization of everything continues to accelerate, creating a vast growth opportunity for us and our customers across core and emerging business areas. With our scale and renewed focus on both innovation and execution, we are uniquely positioned to capitalize on this opportunity, which I believe is merely the beginning of what will be a decade of sustained growth across the industry,” said Pat Gelsinger, Intel CEO.

Biogen-BIIB reported second quarter sales declined 25% to $2.8 billion with net income dropping 71% to $448.5 million and EPS declining 69% to $2.99 which included impairment charges of $542 million. Generic competition resulted in a 24% decline in Multiple sclerosis (MS) revenue to $1.8 billion. SPINRAZA revenue increased 1% to $500 million while biosimilar revenues increased 18% to $202 million. During the quarter, Biogen received accelerated FDA approval for ADUHELM for initiation of treatment in patients with mild cognitive impairment or mild dementia due to Alzheimer’s disease. The FDA approval has been swirled in controversy due to much confusion on the science and data on the drug. Several large medical sites that specialize in Alzheimer’s have announced they will not administer the drug. ADUHELM revenue during the quarter was minimal at $2 million as it will take time, resources and planning to get medical sites to administer the drug and for Medicare to approve the $56,000 treatment. Biogen is working to provide additional clarity on ADUHELM and is continuing engagement with worldwide regulators on the drug. Free cash flow declined 42% to $1.8 billion during the first half due primarily to the lower earnings. During the second quarter, Biogen repurchased 1.6 million shares of its common stock for $450 million at an average price of $281.25 per share with $3.55 billion remaining authorized for future share repurchases throughout 2021. Biogen updated its full year 2021 guidance with revenue now expected in the range of $10.65 billion to $10.85 billion and non-GAAP EPS estimated in the range of $17.50 to $19.00. This guidance assumes modest ADUHELM revenue in 2021, ramping higher thereafter. This guidance also assumes erosion of Biogen’s MS drugs in the U.S. with the decreased revenue from these high margin products expected to reduce gross margins.

Genuine Parts-GPC reported strong second quarter results with sales up 25% to $4.8 billion with net income and EPS from continuing operations increasing from prior year losses to $196 million and $1.36, respectively. By business segment, Automotive parts group sales increased 28% to $3.2 billion, representing 67% of total company revenues. The Industrial business sales increased 20% to $1.6 billion, representing 33% of total revenues. Genuine Parts produced its 15th consecutive quarter of gross margin expansion while further improving productivity via ongoing expense initiatives. The company generated cash flow from operations of $614 million during the first half of 2021. During the first half, the company repurchased $184 million of its common shares and paid dividends of $232 million, marking 65 consecutive years of increasing dividends. Genuine Parts has a strong balance sheet with $987 million in cash, $2.5 billion in long-term debt and $3.2 billion in shareholders’ equity. The company is well positioned to benefit from the strong economic recovery and raised its financial outlook for the full year. Total sales growth is expected to increase 10% to 12% in 2021 with EPS expected in the range of $5.81 to $5.96 with cash flow from operations in the range of $1.2 billion to $1.4 billion.


Wednesday, July 21, 2021

NVR, Inc.-NVR reported second quarter revenues increased 41% to $2.3 billion with net income jumping 96% to $321 million and EPS increasing 94% to $82.45, respectively. New orders decreased by 6% during the quarter to 5,521 units. However, the average sales price of new orders increased by 20% to $440,200. The cancellation rate in the second quarter was 8% compared to 16% in the prior year period. Settlements increased 32% during the quarter to 5,685 units. The backlog of homes sold but not settled as of June 30, 2021 increased on a unit basis by 19% to 12,527 units and increased on a dollar basis by 35% to $5.41 billion. Mortgage loan closings increased 37% to $1.57 billion during the quarter. During the first half of the year, the company repurchased 165 million shares for an average price of $4,572 per share and ended the quarter with $2.6 billion in cash, $1.5 billion in long-term debt and $3 billion in shareholders’ equity on its sturdy balance sheet.

SEI Investments-SEIC reported a 19% increase in revenues to $475.7 million with net income increasing 32% to $133.8 million and EPS up 37% to $0.93. Over 90% of the company’s revenues are recurring and customer retention rates are in the high 90s. By segment, Private Banks revenues increased 15% to $123.7 million with operating margins of 5%; Investment Advisors revenues increased 27% to $119.4 million with operating margins of 50%; Institutional Investors revenues increased 12% to $85.7 million with operating margins of 51%; Investment Managers revenues increased 20% to $142.8 million with operating margins of 40%. Average assets under management, excluding LSV, increased 28% to $858.2 billion, primarily due to market appreciation. During the second quarter, SEI Investments generated $188.4 million in cash flow from operations and $171.3 million in free cash flow, representing a robust 128% of reported earnings. During the quarter, the company repurchased $129 million shares at an average cost per share of $61.93. Given the current market value of SEI shares, the company expects to remain active in the repurchase space. SEI Investments ended the quarter with $911 million in cash and $32 million in long-term obligations on its clean balance sheet.

Johnson & Johnson-JNJ reported second quarter sales increased 27% to $23.3 billion with net income and EPS both rebounding a healthy 73% to $6.3 billion and $2.35, respectively. Growth was driven by the Medical Devices unit which reported sales increased 63% to $7 billion during the quarter due to the COVID-19 related market recovery and innovation. Pharmaceutical sales increased 17% to $12.6 billion during the quarter driven by double-digit growth in key products led by 22% growth in oncology products. Consumer Health sales increased 13% during the quarter to $3.7 billion with strong growth across multiple franchises primarily due to the market recovery. JNJ continued to generate strong free cash flow of $8 billion during the quarter and ended the quarter with $25 billion in cash and investments and $33 billion in long-term debt on its strong balance sheet. A key priority for deploying cash is the dividend with $2.8 billion paid in dividends during the quarter. JNJ also invested $3.4 billion in R&D during the quarter to advance its promising pipeline of new products. Based on strong first half performance, JNJ increased its outlook for full year 2021 results with revenues expected to increase 13.5%-14.5% to a range of $93.8 billion to $94.6 billion with adjusted EPS expected to increase 19.6% to 20.8% to a range of $9.60 to $9.70.

Tuesday, July 20, 2021

Canadian National Railway-CNI reported second quarter revenues chugged ahead 12% to $3.6 billion with net income and EPS rebounding 90% to $1.034 billion and $1.46, respectively. Adjusted net earnings and EPS increased 16% to $1.058 billion and $1.49, respectively.  Revenue ton miles increased 13% year-over-year to 59.2 billion and volume grew in virtually every business unit, with notable strength in industrial products, international and domestic intermodal and propane. During the first half of the year, the company generated $1.3 billion in free cash flow, down $300 million from last year, mainly due to the sale of assets last year and timing of tax payments. Canadian National paid $872 million in dividends during the first half of the year and ended the quarter with $569 million in cash, $12 billion in long-term debt and $20.3 billion in shareholders’ equity. During the conference call, management reiterated its confidence in its ability to obtain the necessary approvals for the proposed $33.6 billion merger with Kansas City Southern and has filed shelf registration to issue up to $6.0 billion of debt financing. Management also reaffirmed 2021 guidance with high-single digit RTM volume growth, overall pricing above rail inflation, double-digit adjusted EPS growth, capital expenditures of $3.0 billion and free cash flow in the range of $3.0 billion to $3.3 billion.

Maximus-MMS has been awarded two contracts from the Internal Revenue Service (IRS) worth a combined $151 million. Under the contracts, Maximus will conduct a variety of work for IRS, including implementing legislation such as the American Recovery Plan, training IRS employees and moving specific content to the cloud for the first time. With the implementation of new technology and the work completed through these two contracts, Maximus will help the IRS turn its modern vision for the agency into reality. Throughout the COVID-19 pandemic, Maximus helped the IRS meet the increased needs of citizens, through the distribution of relief payments in 2020 and 2021, as well as extensions and special exemptions during filing season including support for the IRS Call Center for information on Economic Impact Payments (EIP).


Monday, July 19, 2021

Tractor Supply-TSCO rang up a 13.4% increase in second quarter sales to $3.6 billion with net income plowing ahead 9.2% to $370 million and EPS up 10% to $3.19. Comparable store sales increased 10.5% during the second quarter, driven by transaction count and average ticket growth of 4.5% and 6.0%, respectively. The increase in comparable store sales was driven by robust growth in everyday merchandise, including consumable, usable and edible products and solid demand for spring and summer seasonal categories. All geographic regions and major merchandising categories reported comparable store sales growth. In addition, Tractor Supply experienced record e-commerce sales. Operating margins declined 61 basis points to 13.5% as commodity inflation and increased freight and wage costs were mostly offset by price increases. Management expects inflation to persist in the back half of the year and will continue to ably manage through it. During the first half of the year, Tractor Supply generated $592.9 million in free cash flow, representing more than 100% of net income, a sign of high-quality reported earnings. During the second quarter, the company returned $263.2 million to shareholders through share repurchases of $203.3 million at an average cost per share of $184.82 and cash dividends totaling $59.9 million. During the second quarter of 2021, the company opened 11 new Tractor Supply stores and one new Petsense store and closed four Petsense stores. Tractor Supply ended the quarter with $1.4 billion in cash and investments and $3.5 billion in long-term obligations on its sturdy balance sheet. Given the robust first half results, Tractor Supply upped its guidance with sales now expected in the $12.1 billion to $12.3 billion range. Comparable store sales are now expected to increase between 11% and 13%, up from prior guidance of 5% to 8%. EPS are now expected in the range of $7.70 to $8.00, up from previous guidance of $7.05 to $7.40.


Friday, July 16, 2021

UnitedHealth Group-UNH reported second quarter revenues rose a healthy 14.8% to $71.3 billion with net income and EPS each down 36% to $4.3 billion and $4.46, respectively. Well-diversified revenue growth during the quarter included double-digit growth at both Optum and UnitedHealthcare. The earnings comparison reflected the broad-based deferral of healthcare during the second quarter of 2020 due to the pandemic. Cash flows from operations during the second quarter were $5.5 billion, or 1.3 times net income. Free cash flow declined 13% during the first half of the year to $10.4 billion with the company paying $2.5 billion in dividends and repurchasing 7.9 million shares of its common stock for $2.9 billion at an average price of $367.08 per share during the past six months. Return on equity during the second quarter of 25.2% reflected the company’s strong and diverse earnings profile and efficient capital bases. Debt to total capital was 40.1% at quarter end with the company holding over $66.6 billion of cash and investments. Based upon first half 2021 performance, management raised its full year earnings outlook to $17.35 to $17.85, which includes $1.80 in net unfavorable COVID-19 effects.

Wednesday, July 14, 2021

Walgreens Boots Alliance-WBA announced that its board of directors has declared a quarterly dividend of 47.75 cents per share, an increase of 2.1 percent. The increased dividend is payable September 10, 2021 to stockholders of record as of August 20, 2021, and raises the annual rate from $1.87 per share to $1.91 per share. Walgreens Boots Alliance and its predecessor company, Walgreen Co., have paid a dividend in 355 straight quarters (more than 88 years) and have raised the dividend for 46 consecutive years.

Tuesday, July 13, 2021

Fastenal-FAST reported a slight dip in second quarter sales to $1.5 billion with net income inching up to $239.7 million and EPS coming in flat at $0.42. Sales to manufacturing and construction customers grew 21.5% during the quarter, but the fall-off of the pandemic-related surge in PPE and sanitation product sales from last year resulted in flat overall sales. Pricing taken to mitigate product and transportation cost inflation contributed 80 to 110 basis points to net sales during the second quarter. During the quarter, Fastenal reported daily sales of $23.6 million, reflecting a slight decline from last year. Daily sales of Fastener products, accounting for about 33.6% of second-quarter sales, rose 28.4% year-over-year on higher manufacturing and construction demand. Sales of safety products, about 21% of second-quarter sales, declined 38.6% on a daily basis. Sales of the remaining products, about 45.4% of second-quarter sales, grew 12.9% year-over-year. Fastenal signed 87 new Onsite locations during the quarter, bringing the total to 1,323 active sites, up 9.2% from last year. Daily sales through Onsites increased more than 25% on weak 2020 comps. Daily sales through Fastenal Managed Inventory (FMI) devices grew 61.4% for second-quarter 2021 and represented 31.1% of net sales. E-commerce sales rose 53% and now represent nearly 42% of sales. During the second quarter, Fastenal generated operating cash flow of $171.5 million and free cash flow of $140 million with the company returning $161 million to shareholders through dividend payments. Fastenal ended the quarter with $322 million in cash, $365 million in long-term debt and $2.9 billion in shareholders’ equity on its sturdy balance sheet. Looking ahead to the remainder of the year, Fastenal expects tight supply chains and labor shortages to persist with pressure from product and transportation inflation expected to increase during the second half of the year. Management anticipates taking further steps to address these cost pressures during the third quarter.


PepsiCo-PEP reported second quarter sales bubbled up 21% to $19.2 billion with net income and EPS popping more than 40% to $2.36 billion and $1.70, respectively. Excluding the impacts of currency translation impacts and special items, organic revenues increased 12.5% on 7 points of volume growth and 5 points of price and mix. Core EPS increased 27%. PepisCo’s North American beverage business delivered a 21% gain lapping pandemic related impacts as the foodservice industry began re-opening doors and lifting capacity restrictions.  PepsiCo gained beverage market share in the carbonated soft drink, ready-to-drink tea and juice categories. Revenues from key brands including Pepsi, Mountain Dew, Gatorade, bubly and Starbucks grew at double-digit rates. Global snacks business remained resilient as organic revenue grew 6%, powered by market share gains across key brands such as Lays, Doritos, Cheetos, Ruffles, PopCorners, Sun Chips and Miss Vickie’s. Despite gaining market share in the home breakfast, snacks and meals categories, Quaker Foods revenue declined 13% as the business lapped a surge in consumer demand during the pandemic. Despite uneven recoveries across many international markets, the International Beverage business accelerated 22% organically and the International snack business delivered 11% growth, driven by double-digit growth in Mexico, Russia, Brazil, Turkey, Egypt, India, Germany, France, Spain and South Africa. During the first half of 2021, PepsiCo generated over $1 billion in free cash flow with the company returning nearly $3 billion to shareholders through dividends of $2.8 billion and share buybacks of $106 million, which marked the completion of share buybacks for 2021. PepsiCo ended the quarter with $2.8 billion in cash and investments, $38 billion in long-term debt and $15.3 billion in shareholders’ equity. Looking ahead to the full year, PepsiCo expects revenue growth of 6%, versus prior guidance of mid-single-digit growth, and constant currency EPS growth of 11%, up from previous guidance of high-single-digit growth. Core EPS is expected to be $6.20 compared to $5.52 in 2020. PepsiCo expects to return $5.9 billion to shareholders during 2021, mainly through dividend payments. Management also expects to mitigate higher input, freight and supply chain costs with price increases, mix and assortment.

Thursday, July 8, 2021

In addition to announcing its regular quarterly dividend of $.66 per share, Paychex-PAYX also announced a new $400 million share repurchase authorization.  "At Paychex, we take great pride in the company’s history of providing exceptional shareholder value. Today’s dividend and stock repurchase announcement are an illustration of that commitment and positions us to continue to make strategic investments in the long-term growth of Paychex," said Martin Mucci, Paychex president and CEO. In fiscal 2021, ended May 31, 2021, Paychex returned $909 million in dividends, or 83% of net income, to shareholders.


Thursday, July 1, 2021


Regeneron Pharmaceuticals-REGN announced that scientists from the Regeneron Genetics Center® (RGC) have discovered rare genetic mutations in the GPR75 gene associated with protection against obesity. As reported in Science almost 650,000 people were sequenced to find rare individuals with this genetic 'superpower,' providing new insights into the genetic basis of obesity. Potential therapeutics mimicking these genetic superpowers are being developed at Regeneron, utilizing its VelocImmune technologies and novel technologies from collaborators such as Alnylam Pharmaceuticals, Inc. It is estimated that more than one billion people could be suffering from obesity (body mass index [BMI] of 30 or higher) by 2030. Working with research collaborators, RGC scientists found that individuals who have at least one inactive copy of the GPR75 gene have lower BMI and, on average, tend to weigh about 12 pounds less and face a 54% lower risk of obesity than those without the mutation. Protective 'loss of function' mutations were found in about one of every 3,000 people sequenced. "Discovering protective genetic superpowers, such as in GPR75, provides hope in combating global health challenges as complex and prevalent as obesity," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer at Regeneron. "Discovery of protective mutations – many of which have been made by the Regeneron Genetics Center in its eight-year history – will allow us to unlock the full potential of genetic medicine by instructing on where to deploy cutting-edge approaches like gene-editing, gene-silencing and viral vector technologies."


Walgreens Boots Alliance-WBA reported third quarter sales rose 12.1% to $34 billion with the company swinging to a $1.2 billion profit and EPS of $1.27 compared to a loss in the prior year period, which included a $2 billion non-cash impairment charge related to goodwill and intangible assets in Boots UK. Sales growth during the quarter reflected strong growth in the International segment, aided by the formation of the company’s joint venture in Germany, and solid growth in the United States segment. Profitability improved across both the pharmacy and retail segments in the United States and a rebound in the International segment due to less severe Covid-19 restrictions in the UK. Free cash flow increased 36% during the first nine months to $3.3 billion with the company paying $1.2 billion in dividends. During the quarter, WBA completed the divestiture of the Alliance Healthcare businesses and used a portion of the $6.275 billion in cash to pay off $3.3 billion of debt and will deploy the remainder to accelerate growth. The company raised fiscal 2021 guidance from mid-to-single growth to around 10% growth in constant currency EPS reflecting the strong results in the third quarter and greater clarity on the impact of COVID-19 vaccinations. Walgreens has administered more than 25 million COVID-19 vaccinations to date.

Tuesday, June 29, 2021

FactSet-FDS reported third quarter revenue rose 7% to $399.6 million with net income and EPS each dipping less than 1% to $100.7 million and $2.62, respectively. The increase in revenue was due to higher sales of analytics and content and technology solutions. Annual Subscription Value (ASV) plus professional services was $1.6 billion as of 5/31/21. Annual ASV retention was greater than 95%. Client count during the quarter increased 69 to 6,172 with user count up 1,649 to 155,004. Operating margin declined to 29.5% compared with 32.5% in the prior year period because of higher spending for the company’s multi-year investment plan as well as increased performance-based compensation reflecting the acceleration in ASV. Free cash flow year-to-date increased 14% to $322.8 million with share repurchases of $172 million and dividend payments of $87.1 million during the same time. During the third quarter, the company repurchased 178,100 shares of its common stock at an average price of $323.25 for $57.6 million with $292.4 million remaining authorized for future share repurchases. During the past quarter, the company increased its dividend 6.5%, marking the 22nd consecutive year of dividend increases. For the full fiscal 2021 year, FactSet expects revenue in the range of $1.57 billion to $1.59 billion and EPS in the range of $10.05 to %10.45.

Saturday, June 28, 2021

Regeneron-REGN and Intellia Therapeutics announced positive interim data from an ongoing Phase 1 clinical study of their lead in vivo genome editing candidate, NTLA-2001, which is being developed as a single-dose treatment for transthyretin (ATTR) amyloidosis. NTLA-2001 is the first CRISPR/Cas9-based therapy candidate to be administered systemically, via intravenous infusion, for precision editing of a gene in a target tissue in humans. NTLA-2001 is designed to inactivate the TTR gene in liver cells to prevent the production of misfolded transthyretin (TTR) protein, which accumulates in tissues throughout the body and causes the debilitating and often fatal complications of ATTR amyloidosis. "This is exciting early data both for people living with this devastating disease and for the entire scientific community working to maximize the potential of genetics-based medicines through cutting-edge research and technologies," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer of Regeneron, which first partnered with Intellia in 2016 to advance CRISPR/Cas9 gene-editing technology for in vivo therapeutic development. "Thanks to large-scale human genetics research, there have been many new genetic targets identified and confirmed to have an impact on human health. Combining this knowledge with the precision and enhanced convenience of a single CRISPR infusion unlocks new possibilities in treating – and potentially even curing – life-threatening and historically difficult-to-address diseases."

Friday, June 25, 2021

Paychex-PAYX reported strong fourth quarter results with revenues up 12% to $1.0 billion, net income up 19% to $263 million and EPS jumping 20% to $.73. Double-digit growth during the fourth quarter was driven by a record 85% client retention level, record sales results and stronger checks per client, which were due to improving macroeconomic conditions and gains in employment. The client base growth was strong, and Paychex ended the year with over 710,000 clients thanks to the value the company added for clients during the pandemic. For the full fiscal 2021 year amid unprecedented challenges, Paychex reported flat revenues, net income and EPS of $4.1 billion, $1.1 billion and $3.03, respectively. Return on shareholders’ equity was a superb 37.2% for the year. Free cash flow declined 13% during the year to $1.1 billion with the company paying $909 million in dividends and repurchasing 1.7 million shares of its common stock for $156 million at an average price of $91.59 per share. Paychex is well positioned for growth in fiscal 2022 with total revenue anticipated to grow approximately 7% and adjusted EPS growth of 10%-12% expected.


Thursday, June 24, 2021

 

Nike-NKE rang up a 96% jump in fourth quarter sales to $12.3 billion with earnings of $1.5 billion and EPS of $0.93 compared to last year’s fourth quarter loss of $790 million, or $0.51 per share. North America sales, which accounted for more than 40% of Nike’s total quarterly revenue, spiked 141% higher amid reopening of the economy, increased wholesale as supply chain issues abated and continued growth in NIKE Brand Digital sales which jumped 41%. Despite temporary COVID-related retail store closures, Europe, the Middle East and Africa sales increased 124% to nearly $3 billion, boosted by a 40% increase in digital sales and the gradual reopening of markets across the region. Sales in Greater China increased 17% to $1.9 billion as boycotts by consumers in response to Nike’s decision to check its supply chain for the use of forced labor by Uighurs and other ethnic minorities likely muted demand for Nike products though sales trends improved during the quarter. For the year, Nike reported sales of $44.5 billion, up 19% from last year, with earnings up 126% to $5.7 billion and EPS up 123% to $3.56. During fiscal 2021, Nike generated a winning 44.9% return on shareholders’ equity. Nike has a strong track record of investing to fuel growth and running up shareholder returns through share repurchases and dividends, including 19 consecutive years of dividend increases. During 2021 Nike returned $2.25 billion to shareholders through dividend payments of $1.6 billion and share repurchases of $650 million at an average cost per share of $132.65. Looking ahead to fiscal 2022, Nike expects revenue to grow in the low double-digits, surpassing $50 billion, with gross margins expanding 125 basis points to 150 basis points, reflecting the continued shift to a more profitable NIKE Direct business and sustained strong full price realization, partially offset by higher product costs and supply chain investments.

Accenture-ACN reported excellent third quarter results with revenues up 21% to $13.2 billion and net income and EPS each jumping 26% to $1.6 billion and $2.40, respectively. Operating margin expanded 40 basis points to 16% during the quarter. New booking increased 39% during the quarter to $15.4 billion with consulting bookings of $8 billion and outsourcing bookings of $7.4 billion.  These strong financial results reflect significant market share gains and the continued momentum driven by the demand for digital transformation for clients. Accenture is seeing not only the strong recovery from the pandemic but sustained growth in demand as the cloud becomes critical for clients. Growth was broad-based across geographic markets with double-digit growth in all regions, led by 18% growth in North America, and double-digit growth in 11 of 13 industry groups led by 21% growth in Health and Public Service. Year-to-date, free cash flow increased 33% to $6.2 billion. During the first nine months, Accenture paid $1.7 billion in dividends and repurchased $2.8 billion of its common stock at an average price of $253.64 per share. Accenture’s remaining share repurchase authorization is $4.2 billion. Year-to-date, Accenture has acquired 39 innovative companies for $1.5 billion bringing the company scale and new or expanded capabilities. Accenture raised financial projections for the full fiscal 2021 year with revenue now expected to increase 10% to 11%, operating margin expected to expand 40 basis points to 15.1% and EPS in the range of $9.07 to $9.16, representing 15% to 16% growth. Free cash flow for the full year is expected in the range of $8.0billion-$8.5 billion with the company planning to return at least $5.8 billion to shareholders via dividends and share repurchases.

Wednesday, June 16, 2021


Regeneron Pharmaceuticals-REGN welcomed positive results from the largest trial assessing any monoclonal antibody treatment in patients hospitalized with severe COVID-19. The UK RECOVERY trial found that adding investigational REGEN-COV™ to usual care reduced the risk of death by 20% in patients who had not mounted a natural antibody response on their own against SARS-CoV-2, compared to usual care on its own. "Definitive Phase 3 trials have now demonstrated that REGEN-COV can alter the course of COVID-19 infection from prevention, to very early infection, all the way through to when patients are on a ventilator in the hospital," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer at Regeneron. "We are incredibly grateful to the RECOVERY team, participating investigators and patients for conducting this in-depth analysis, and hope that the results mean that even more patients may soon be able to benefit from this life-saving medicine. We intend to rapidly discuss these results with regulatory authorities, including in the U.S. where we will ask for our EUA to be expanded to include appropriate hospitalized patients." Regeneron is collaborating with Roche-RHHBY to increase global supply of REGEN-COV. Regeneron is responsible for development and distribution of the treatment in the U.S., and Roche is primarily responsible for development and distribution outside the U.S. The companies share a commitment to making the antibody cocktail available to COVID-19 patients around the globe and will support access in low- and lower-middle-income countries through drug donations to be made in partnership with public health organizations.

Tuesday, June 15, 2021

Oracle-ORCL reported fourth revenues increased 8% to $11.2 billion with net income increasing 29% to $4.0 billion and EPS up 38% to $1.37. Adjusted net income and EPS increased 20% and 29%, respectively. Accelerating growth in cloud application revenue powered fourth quarter results with Fusion ERP up 46%, Fusion HCM up 35% and NetSuite up 26%. Revenue from Oracle’s Gen2 Cloud Infrastructure business, including Autonomous Database, grew over 100% during the quarter. For the fiscal year ended May 31, revenues increased 4% to $40.5 billion with net income up 36% to $13.7 billion and EPS up 48% to $4.55. Adjusted net income and EPS increased 11% and 21%, respectively, representing the 4th consecutive year of double-digit growth and the best results in seven years. Cloud service subscriptions now account for 71% of total revenues. During fiscal 2021, Oracle generated a record $13.8 billion in free cash flow with the company returning nearly $24 billion to shareholders through dividend payments of $3.0 billion and share repurchases of $21 billion at an average cost per share of $63.83. During the past 10 years, Oracle has reduced its shares outstanding by more than 44%. Oracle ended the fiscal year with $46.6 billion in cash and investments, $76.0 billion in long-term debt and $6.0 billion in shareholders’ equity. Oracle generated a remarkable 230.9% return on shareholders’ equity during fiscal 2021, thanks to its profitable operations and balance sheet leverage. Management expects growth to accelerate during 2022 and beyond as the fast-growing cloud business becomes a larger portion of the business. Given the high returns on investment in the cloud, Oracle plans to nearly double its capital investments to $4 billion in 2022. First quarter revenues for fiscal 2022 are expected to increase 3% to 5% generating non-GAAP operating margins of 47%, higher than any of Oracle’s competitors.   

Biogen-BIIB and Sage Therapeutics, Inc.  announced that the WATERFALL Study in patients with Major Depressive Disorder (MDD)  met its primary endpoint with zuranolone (SAGE-217/BIIB125) 50 mg showing statistically significant improvement in depressive symptoms compared with placebo at Day 15 as assessed by the 17-item Hamilton Rating Scale for Depression (HAMD-17) total score. Monoamine-based antidepressants have been the standard of care for chronic treatment of MDD for the past 60 years. They are treatments administered daily, which require sufficient exposure and continuous use to maintain effect. Zuranolone is a two-week, once-daily oral drug under investigation for the treatment of MDD. It is a molecule that is designed to potentially provide a rapid-acting, sustainable treatment option, and could represent a breakthrough in the current management of depression. “Together with our collaboration partners at Sage, we are proud to announce highly encouraging results from the Phase 3 WATERFALL Study of zuranolone in major depressive disorder. These results represent hope and positive progress for the more than 250 million patients worldwide who are estimated to live with depression,” said Alfred Sandrock, Jr., M.D., Ph.D., Head of Research and Development at Biogen. “Major depressive disorder is a common co-morbidity of many diseases represented in Biogen’s neuroscience portfolio. We believe zuranolone has the potential to offer a unique, first-in-class therapeutic for depression with a distinct benefit-risk profile to people living with this common but serious mental health condition.” “MDD is a pressing mental health concern and, unlike physical health concerns where innovation is commonplace, many of the treatments for MDD were first approved more than two decades ago,” said Paul Gionfriddo, President and CEO of Mental Health America (MHA). “We welcome today’s news, and the potential for a new and innovative treatment that could change the way we treat depression.” Zuranolone has been granted Breakthrough Therapy Designation by the U.S. Food & Drug Administration, and the companies intend to discuss next steps with the Agency.

Monday, June 14, 2021

Cisco Systems-CSCO was  awarded a single-award indefinite-delivery/indefinite-quantity contract with a ceiling of $1.2 billion for brand name Cisco Smart Net Total Care and Software Support Services for users across the Department of Defense. The period of performance is a one-year base period and two one-year option periods, for a total contract life cycle of three years.

T. Rowe Price Group-TROW announced that its Board of Directors has declared a special cash dividend of $3.00 per share payable on July 7, 2021 to stockholders of record as of the close of business on June 25, 2021. William J. Stromberg, the company's chair and chief executive officer, commented: "This special cash dividend is an efficient return of capital to our stockholders and reflects the healthy cash position on our balance sheet. After the special dividend payment, the company's balance sheet will remain very strong, with ample liquidity to continue to execute on our business strategy. In addition, we believe that the payment of the special cash dividend will not have a material impact on the company's ability to meet its ongoing financial needs, continue our outstanding dividend record for the foreseeable future, or maintain a buffer against market volatility."

Thursday, June 10, 2021

Raytheon Technologies-RTX has been awarded a $3,120,000,000 indefinite-delivery/indefinite-quantity contract for F-15 Radar Eagle Vision. This contract provides for the production, modernization and support of the F-15 APG-82 radar system to rapidly deliver and stay aligned with the F-15 weapon system program. Work will be performed in El Segundo, California, and is expected to be completed June 8, 2036.

T. Rowe Price Group-TROW reported preliminary month-end assets under management of $1.59 trillion as of May 31, 2021, representing an 8.4% increase since year end.

Wednesday, June 9, 2021

Brown-Forman-BFb reported fourth quarter revenue rose 14% to $812 million with net income and EPS each down 6% to $120 million and $.25, respectively. For the full fiscal 2021 year, revenues rose 3% to $3.5 billion with net income and EPS each bubbling up 9% gains to $903 million and $1.88, respectively. Sales growth during the year was generated in all major geographic regions demonstrating the resilience of the company’s brands in a difficult environment. Growth was driven by 4% underlying growth in the Jack Daniel’s family of brands while premium bourbons maintained double-digit underlying sales growth with the tequila portfolio growing underlying net sales by 14%. Return on shareholders’ equity for the year was a strong 34% driven by an industry-leading return on invested capital of nearly 20%. Free cash flow during the year increased 24% to $755 million with the company paying $338 million in dividends. Brown-Forman has paid dividends for 77 consecutive years and has increased the dividend for 37 straight years. Management is optimistic for fiscal 2022 as the operating environment continues to improve with the re-opening of on-premise locations and the increase in tourism. For fiscal 2022, the company anticipates mid-single digit growth in underlying sales and operating income.

UPS-UPS discussed its 2023 financial targets as follows: Consolidated revenue is expected to range from approximately $98 billion to $102 billion with consolidated adjusted operating margin ranging from approximately 12.7 percent to 13.7 percent. Cumulative capital spending from 2021–2023 is expected to approximate $13.5 billion to $14.5 billion. Adjusted return on invested capital is expected to range from approximately 26 percent to 29 percent.


Monday, June 7, 2021

The FDA approved Biogen’s-BIIB Aduhelm (aducanumab) to treat patients with Alzheimer’s disease using the Accelerated Approval pathway, under which the FDA approves a drug for a serious or life-threatening illness that may provide meaningful therapeutic benefit over existing treatments when the drug is shown to have an effect on a surrogate endpoint that is reasonably likely to predict a clinical benefit to patients and there remains some uncertainty about the drug’s clinical benefit. This approval is significant in many ways. Aduhelm is the first novel therapy approved for Alzheimer’s disease since 2003. Perhaps more significantly, Aduhelm is the first treatment directed at the underlying pathophysiology of Alzheimer’s disease, the presence of amyloid beta plaques in the brain. The clinical trials for Aduhelm were the first to show that a reduction in these plaques—a hallmark finding in the brain of patients with Alzheimer’s—is expected to lead to a reduction in the clinical decline of this devastating form of dementia.

Friday, June 4, 2021

Regeneron Pharmaceuticals-REGN announced the U.S. Food and Drug Administration (FDA) updated the Emergency Use Authorization (EUA) for REGEN-COV™, lowering the dose to 1,200 mg (600 mg casirivimab and 600 mg imdevimab), which is half the dose originally authorized. Pivotal Phase 3 data showed the 1,200 mg dose reduced risk of hospitalization or death by 70%. As part of the updated EUA, REGEN-COV should be administered by intravenous (IV) infusion; subcutaneous (SC) injections are an alternative when IV infusion is not feasible and would lead to a delay in treatment. "Despite increased use of vaccines, thousands of patients are still becoming infected in the U.S. every day, with many at high risk of serious complications from COVID-19. Unfortunately, to date only a fraction of patients eligible for antibody treatments have received them, which we hope will change based on this updated FDA authorization. REGEN-COV is readily available and supplied free of charge by the U.S. government," said George D. Yancopoulos, M.D., Ph.D., President and Chief Scientific Officer at Regeneron. "REGEN-COV has also demonstrated potency against the main variants of concern to date in vitro and is the only antibody therapy currently available across the U.S., including in states where variants first identified in Brazil and South Africa are circulating at a higher rate."


Fastenal-FAST reported May net and daily sales each declined 3.2% to $477.2 million and $23.9 million, respectively. Strong growth in Canada/Mexico was offset by declines in the U.S. and the rest of the world. By end market, manufacturing sales jumped 18.9% with non-residential construction sales up 4.4%. Daily sales by product line reflected strong 28.2% growth in fasteners, 12.5% growth in other products offset by the 44.1% decline in Safety products as Fastenal is lapping the strong demand for Safety products last year due to the pandemic.


Thursday, June 3, 2021

The Board of Directors of SEI Investments Company-SEIC approved an increase in its stock repurchase program by an additional $250 million, increasing the available authorization under the program to approximately $316 million.

Thursday, May 27, 2021

The TJX Companies-TJX announced that its Board of Directors has reinstated its share repurchase program. The Company plans to repurchase approximately $1.0 billion to $1.25 billion of TJX stock during the fiscal year ending January 29, 2022, and currently has approximately $3.0 billion remaining under its existing stock repurchase programs. TJX also announced the declaration of a quarterly dividend on its common stock of $.26 per share payable September 2, 2021, to shareholders of record on August 12, 2021. Further, as of today, the Company continues to see second quarter overall open-only comp store sales trends similar to the first quarter.

Ulta Beauty-ULTA reported first quarter revenues increased 65% to $1.9 billion with net income and EPS increasing from prior year losses to $230 million and $4.10, respectively. Comparable sales increased 66% compared to a decrease of35% in the first quarter of fiscal 2020, driven by a 52.5% increase in transactions and a 9% increase in average ticket. During the first quarter, the company opened 28 new stores and ended the quarter with 1,290 stores. Ulta Beauty generated $296 million of free cash flow during the quarter and repurchased 1.2 million shares of common stock for $392 million at an average cost of $315.55 per share. As of 5/1/21, the company had $1.1 billion remaining authorized for future share repurchases. The company ended the quarter with $947.5 million in cash, $1.6 billion in operating lease liabilities and $1.8 billion in shareholders’ equity. For fiscal 2021, the company plans to open 40 net new stores with revenues expected in the range of $7.7 billion to $7.8 billion on comparable store sales growth of 23% to 25%. The company expects operating margin to expand to 11%, driven by gross margin expansion with EPS in the range of $11.50-$11.95. The company expects to repurchase $850 million of its stock in fiscal 2021 with capital expenditures expected in the range of $225 million to $250 million.  

Thursday, May 20, 2021

Ross Stores-ROST rang up sales $4.5 billion with net income of $467 million and EPS of $1.34. This compares to sales of $1.8 billion and a net loss of $306 million, or $0.87 per share, last year. Same store sales increased 13% from 2019 levels on an increase in basket, partially offset by a slight decline in traffic. First quarter sales significantly exceeded management’s expectations as the company benefited considerably from a combination of government stimulus payments, ongoing vaccine rollouts, easing of COVID restrictions and pent-up consumer demand. Operating margin of 14.2% was well above plan and slightly above 2019 as leverage from the strong comparable sales gains offset the expected expense pressures from higher freight and wages, as well as ongoing COVID-related operating costs. During the quarter, Ross Stores generated $615.9 million in free cash flow, representing a stellar 129% of reported earnings, with the company paying $101.5 million in dividends. Ross Stores ended the quarter with $5.4 billion in cash and investments, $2.4 billion in long-term debt and $3.7 billion in shareholders’ equity on its dressy balance sheet. Given the strong results and cash flow, the company’s Board authorized a new program to repurchase up to $1.5 billion of its common stock through fiscal 2022, with plans to buy back $650 million this year and $850 million in 2022. Ms. Rentler, CEO, noted, “The reinstatement of our share repurchase program reflects the current strength of our balance sheet, confidence in the company’s ability to generate excess cash after funding our growth and other capital needs of the business, and our long-standing commitment to enhancing stockholder value and returns.” For the full 2022 fiscal year, Ross expects same store sales to increase 7% to 9% from 2019 levels with EPS in the $3.93 to $4.20 range.

Cisco Systems-CSCO reported third quarter revenues increased 7% to $12.8 billion with net income increasing 3% to $2.9 billion and EPS increasing 5% to $0.68. There was broad-based strength across the business with 10% year-over-year product order growth, representing the strongest demand in nearly a decade. Product revenue increased 6% to $9.1 billion and Service revenue increased 8% to $3.7 billion. Cisco continues to make progress on transforming to more software and subscription with 81% of software revenue sold as a subscription in the quarter, up from 76% in the last quarter. Revenue by geographic region was led by 19% growth in Asia Pacific, Japan, and China. Free cash flow declined 6% during the first nine months of the year to $10.4 billion with the company paying $4.6 billion in dividends and repurchasing $2.1 billion of its common stock, including 10 million shares repurchased in the third quarter at an average price of $48.71 per share. This reflects management’s confidence in future growth and the company’s financial strength with more than $23 billion in cash and investments on its quarter end balance sheet with $9.5 billion in long-term debt and $40.2 billion in shareholders’ equity. During the quarter, Cisco closed its acquisition of Acacia Communications for $4.5 billion. Cisco is seeing encouraging signs of strength across its business segments with its technology expected to be a powerful engine for economic recovery and growth. For the fourth quarter of fiscal 2021, management expects revenue growth of 6% to 8% with EPS expected in the range of $.64 to $3.69.

Hormel Foods-HRL reported second quarter sales rose 8% to a record $2.6 billion, net earnings and EPS each remained flat compared to last year, at approximately $228 million and $0.42. Free cash flow decreased 61% during the quarter to $110 million with the company repurchasing nearly $1 million of its common stock and paying $132.3 million in dividends, reflecting the company’s 371st consecutive quarter of dividend payments. Management is increasingly optimistic about generating sales and earnings growth in fiscal 2021 with the International segment expected to have a record year led by the continued strength in China, strides made in the global e-commerce business, a recovering foodservices business as restaurants open again and momentum in the deli and retail businesses. In February 2021, the company entered into a definitive agreement to acquire the Planters snack nuts business. The company expects to close the transaction in June 2021. For fiscal 2021, Hormel raised its sales guidance, expecting sales in the range of $10.2 billion-$10.8 billion with EPS expected in the range of $1.70-$1.82. These results do not include the pending Planters acquisition. “We have a very positive outlook on the foodservice industry and continue to see elevated demand in the retail, deli and international channels. As we enter this inflationary period, we will continue to offset margin pressure with price actions and supply chain improvements. Our experienced management team has a proven ability to navigate and grow our business in volatile market conditions,” said Jim Snee, chairman of the board, president and CEO.