Summary of Earnings Calls: Week of 8/3 – McKesson, Clorox, Monster, Marathon Petroleum, Tetra Technologies, DolbyLabs

  • McKesson
  • Clorox
  • Monster
  • Marathon Petroleum
  • Tetra Technologies
  • DolbyLabs

McKesson Earnings Call Summary

McKesson – 8/3
GoalsEnsure the safety of workers in their supply chain to deal with higer than expected demand due to accelerated pace of recovery in June compared to May and April, which means opening of physicians and other medical services
Strategies/Initiatives Retain their customers by adapting to their changing needs with regards to PPE, COVID treatments
Adapt to the growing specialty market due to openings of elective practices by investing to ensure adequate supply
important CEO Quotes“Our first quarter adjusted results while materially down against prior year due to the pandemic, finished significantly above our original expectations.”
“Our focus is on executing against what is within our control and that execution really underpinned our strong finish to the quarter, as customer demand began to improve from the troughs we experienced in April and May”
“One such area that has evolved is the demand for personal protective equipment or PPE as frontline workers and our customers work to help treat and keep patients safe. We work with supplier partners, federal, state and local governments to get higher volumes of PPE to areas of critical needs.”
important CFO Quotes“In our UK business, we identified an opportunity to accelerate our transition to digital. Our investment in Echo and our digital capabilities, but the strong growth in our online business moved quickly to increase capacity. Revenues from our Echo business grew over 300% from pre-pandemic levels and continue on a strong growth trajectory.”
“Prescription transactions, patient interactions and elective procedures began to recover sooner than we had anticipated and had favorable volume impacts that were most pronounced in our Medical-Surgical and Specialty businesses.”
COVID updateWhile they expect Q1 to be the most devestating, they believe that the recovery will not continue in a linear path and will take longer than anticipated
Not expecting a second lockdown/ pause in economy in their reports
LayoffsSolvency of customers accounted for, firm belief that prescription transaction volumes will not fluctuate in the face of increasing unemployment
Key hiresNone
Funding or new fund allocation?Allocate money in biophrarma, speciality, and ncology services
Mergers or acqusition mentionsNone
Product Release mentionsNone
Other major business updatesPrescription technology solutions expanded to include RX, as a means of segmentizing business
Relevant Analyst Questions“You guys noted a strong recovery in June. Maybe you can give us a sense on how July has looked then? And has volumes remained at the June levels? Or are you continuing to see a further acceleration?” Downward trend has come in July as many southern states go back into lockdown situations, however they see no indication of a March lockdown scenario
“Do you see opportunities in PPE that expand beyond your core customer base, other industries that might be a need of these products and whether you have an interest in addressing that as well?” Adressing of healtcare is paramount to be done first before expansion into “industrial or other lines”

Clorox Earnings Call Summary

Clorox – 8/3
GoalsCatch up to huge demand in their products through third-party suppliers and other manufacturers
Create high quality goods as recession forces people to focus on value of products rather than luxury
Strategies/Initiatives “Good growth”, emphasis on sustainable and responsible growth
Bring in new loyal customers in their lifestyle (Brita), grilling (Kinsford), and household goods as people continue to stay home
Target and collaborate with companies with a need for their products, such as Uber, AMC, United Airways, and Cleveland Clinic
important CEO Quotes“After fiscal year ’20, our sales in the e-commerce channel now represents about 12% of total company sales, compared to 8% in fiscal year 2019, and well ahead of our plan.”
“We continue to believe COVID-19 will have lasting impacts on global consumer behavior and trends including how consumers engage in our categories and with our brands, leading to meaningful long-term growth potential for our company.”
VP – “We’re excited to continue to drive our categories and maintain momentum by increasing our investments in brand building and innovation. However, our most urgent priority remains to continue aggressively expanding our production capacity to meet consumer demand, which we anticipate will remain elevated for some time.”
important CFO Quotes“In the fourth quarter, COVID-19 continued to have a significant impact on our results. In addition to double-digit sales growth in all four of our reportable segments, we delivered our seventh consecutive quarter of gross margin expansion and another quarter of strong cash flow, all of which contributed to strong fiscal year ’20 performance.”
“Next, we expect the US and many parts of the world to face an ongoing recession that will reduce consumers’ disposable spending and increase the importance of providing superior consumer value. And we plan to aggressively invest behind the momentum we’re seeing in our global portfolio, including increasing production capacity to address ongoing elevated demand for our products.”
COVID updateSupply chain issues due to COVID predicted to be resolved in the fall, again, along with heavy increased demand for all of their products except Burt’s Bees, hurt by store closures
LayoffsNo mention in earnings call
Key hiresBrenno Dorer-current CEO stepping down, with current President Linda Rendle taking over from 9/14
Funding or new fund allocation?Increasing investments to deal with short supply and advertising to keep customers loyal to the brand
Mergers or acqusition mentionsAnnounced acquisition of majoirty stake in joint venture with Saudi Arabia to have a foothold in the Gulf States
Product Release mentionsGlad Forceflex Trash bags released Q4 2019 recieving positive receptions
Other major business updatesLooking for a rebrand in FY 2021 to appeal to envoirnmentaly conscious customers
Relevant Analyst Questions“And if you think about our B2C and B2B in total, I think the thing for us to consider is those lines will continue to blur as we move forward, and that’s what we are really well suited to do with all of our technologies and capabilities.” With B2B against the B2C the question, they think blurring that line is the future as all will buy regardless of logic or emotion

Monster Earnings Call Summary

Monster 8/4
SummaryDespite the initial decrease in in-person sales, their ecommerce stores have made gains during this pandemic and have sold merchandise, along with almost all shippers operating as normal. Additionally, Monster is being aggressive in introducing new products to foreign nations to establish a foothold in a time where many nations are coming out of lockdown, along with having future plans to launch more affordable options.
GoalsKeep distributors running, and increase capacity to ensure supply can keep up with potentially increasing demand
Penetrate foreign markets, while analyzing drinks (potentially alcoholic) to introduce
Strategies/InitiativesAppeal to the people in philanthropic efforts through Monster Energy Cares
Take advantage of people coming out of lockdown by aggressively promoting their new and affordable drinks.
Important CEO quotes“Our e-commerce, club store, mass merchandiser and grocery and related business continued to increase in the quarter while our foodservice on-premise business, which is a small channel for us, remains challenged.”
Important CFO quotesNone
COVID UpdateBottlers and distributors decreasing their inventory meant sales were adversely affected in those regions
Key HiresNone
Funding/New fund allocationRevenues increased from this time last year due to lower sponsorship, travel, endorsement, and entertainment costs
Mergers/acquisition mentionsNone
Product release mentionsPredator, launched in March, achieved 1.4% market share
Eight new drinks were made in the past two months in over 8 nations, including Puerto Rico, Honduras, New Zealand, and Spain
More drinks are being released in China, Japan, and South Korea, where the end of lockdown gives Monster a chance to aggressively pursue market share in those nations
Other major business updatesNone
Relevant analyst questionsCBD and hard alcoholic drinks are something that the company is analyzing for the future to launch at the appropriate time after the effects of COVID wear off
Since bottlers are remaining cautious about inventories, the company will not be able to handle a boost in demand if it comes
Still a work in progress to have the new products mentioned earlier to be on the shelves due to supply chain and contractual agreements over shelf space.

Marathon Petroleum Earnings Call Summary

Marathon Petroleum, 8/3
SummaryWith the company suffering greatly from decreased demand in their products due to COVID-19, Marathon is attempting to cut costs anywhere they can and close/repurpose their assets to keep themselves alive during the pandemic.
GoalsAttempt to navigate the COVID environment that has been disastrous for business by mitigating losses
Strategies/InitiativesClose refineries and other positions that incur a loss to the company
Repurpose facilities to create product that provides more profitability
Important CEO quotes“These advantages should drive significantly lower capital requirements compared to greenfield investments, and if pursued, enable initial production as early as 2022 with the option to ramp up from there.”
“We recognize that we’re in a return of capital business, and we need to have an asset base and cost structure that works across all cycles. We’re focused on becoming a lower cost, disciplined company”
Important CFO quotes“We saw merchandise sales improve from first quarter supported by seasonality. Same-store merchandise sales only decreased 4% year over year despite stay-at-home mandates and the significant fuel demand pressures of the quarter.”
COVID UpdatePlans are made to restructure costs looking into the future, as there seems to not be a hope that business can return soon
Key HiresNone
Funding/New fund allocationPlan to maximize expense reductions and lower capital expenditures
Mergers/acquisition mentionsNone
Product release mentionsFacility being repurposed to produce renewable diesel fuel
Other major business updatesSold Speedway to 7-11 for $21 billion cash, and have established a partnership with the company
Relevant analyst questionsResuming crude oil and gasoline operations seems to be a long way off considering the current lack of demand for their products and costs determined to be too high
With the partnership with 7-11, Marathon would gain value with regards to logistics and transportation, while 7-11 expands their retail sphere

Tetra Technologies Earnings Call Summary

Tetra Technologies, 8/3
SummaryBy being aggressive in cutting costs, such as idling plants, furloughing and laying off employees, corporate, etc, while keeping a diverse portfolio and investing in automation to not lose productivity, Tetra was able to turn a profit for this quarter.
GoalsContinue to be aggressive in cost optimization while promoting automation to make up for lost labor
Continue investment in offshore businesses as they are the strong point in the portfolio
Strategies/InitiativesRetain their strong customer base which is present in all of their business segments
Important CEO quotes“In parallel to field staff and the cost reductions, we also made deep cuts in our corporate and overhead cost structure. This has streamlined our decision-making and much of this cost will not return when the market does recover”
“For the quarter, we’ve benefited from our industrial chemicals business, which outperformed the second quarter of last year in both revenue and EBITDA margins and saw a little impact from the COVID-19 pandemic.”
Important CFO quotes“TETRA on a stand-alone basis was able to generate enough EBITDA to cover capital expenditures, interest expense, cash taxes and remain cash flow positive in this period.”
COVID UpdateProjects in their oil and gas fields may have to be delayed until 2021 due to the current market situation
LayoffsAfter realizing the massive hit that the company would take as a result of COVID-19, they immediately took on staff reductions and furloughs
Key HiresNone
Funding/New fund allocationGreatly invested in technology and automation in their work, which allowed them to save even more money and increase production, especially with the layoffs of workers
Mergers/acquisition mentionsNone
Product release mentionsNone
Other major business updatesNone
Relevant analyst questionsOil and gas revenues mainly come from Europe and the Gulf States, which has seen strong numbers due to a seasonal spike in demand

DolbyLabs Earnings Call Summary

Dolby, 8/3
SummaryWith the decreased spending on consumer electronics that Dolby profits on licensing and the closing of cinemas, Dolby has been suffering from a severe drop in demand. However, with their new services like, foreign investments, and adoption of their technologies by new companies, Dolby plans to set itself up for the long term
GoalsWait consumer spending to increase to pre-covid levels to resume normal business volumes
Make long term investments with broader range of products
Strategies/InitiativesExpand dolby among a wider range of products and services in gaming and music through developer programs like Dolby Atmos, vision, and
Important CEO quotes“The highly anticipated releases of Hamilton on Disney Plus and Greyhound on Apple TV Plus are both available in Dolby. This quarter, we began to see the first titles in Dolby Vision on Google Play. And Hotstar, the largest streaming service in India, began to support Dolby Vision for Disney Plus content.”
“The closure of cinemas around the world has significantly reduced demand for our cinema products. We believe that when Cinemas do begin to reopen, exhibitors will look to highlight their premium offerings and consumers will seek out the best experience.”
Important CFO quotes“Let’s start with products and services revenue, most of which goes into the cinema industry. The screens are opening more slowly than we thought last quarter, so we are assuming that there will not be any significant uptick in equipment, purchasing activity from exhibitors in Q4”
Broadcast revenues were down about 34% year-over-year, and that was driven by lower recoveries and lower unit volume due to the pandemic, despite the fact that adoption of Dolby Vision and Dolby Atmos into TVs and set-top boxes is higher than last year.
COVID UpdateWaiting until consumer spending returns and for the revival of the Dolby cinemas experience
Key HiresNone
Funding/New fund allocationInvestment in South Korea and Saudi Arabia
Mergers/acquisition mentionsNone
Product release mentionsReleased, which enables developers to utilize dolby technology in their own apps and services
Other major business updatesDolby Atmos + Vision being adopted in TCL, Sony, OnePlus, Xiaomi, Nokia
Relevant analyst questions“You talked about some shift of new customer wins and revenue in the prepared remarks, assuming, that’s just due to COVID perhaps for better release windows, but just want to see if extra color you could add to those remarks?”
The company has had to push back deals that they were to get done this year despite the increased amount of partnerships, but also expect to see more consumer as an Olympic year comes up as well

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