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Coronavirus Cheatsheet: Week of March 2nd
March 2, 2020
15+ min read
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- Management teams reporting Q1 Earnings are split between guiding to a wider-than-normal range or providing guidance excluding the impact of Coronavirus.
- Some companies are already updating Q1 guidance via Press Release to account for the pandemic’s impact.
- Most companies are adding Coronavirus as a Risk Factor in their 10-Ks
- All management teams are being asked to comment on the impact of Coronavirus
Week of 3/2: Updates
Walmart (3/4 – Raymond James Conference)
Certainly, I’m looking at reading the same things as you are and with Coronavirus and certainly, we’re concerned about associates and and customers and making sure we’re doing the right thing there. When you look at kind of the underlying economy, it still feels good to us. And we said that a couple of weeks ago at our analyst meeting, inflation is low, interest rates are very low, wages are good. Fuel prices are low. So all of that portends to being — having a pretty good economy, particularly here in the U.S. And so I think, overall, the consumer feels pretty good.
American Express (3/4 – KBW Conference)
And we have gone through January and February, maintaining that same momentum. Now when you look around the globe, we are a global company, you will see that in the markets in Asia, most impacted by the coronavirus, so we’re talking Mainland China, Hong Kong, Taiwan, Singapore and Japan. You do see for those countries, material reductions in travel, both inside the countries and in and out of the country. And that has caused a moderation in spending trends in those countries that for those countries is material. But for our overall company, that is not a material part of our business. And so if you were to look at our filings, you would see that what we broadly call our Asia Pacific region is 9%, 10% of our revenue in PTI. But that actually encompasses a lot more than just the companies I just talked about. Australia, for example, as part of our Asia Pacific reason. And actually, Australia has been particularly strong. And for reasons, I’m not sure I can fully explain, even stronger in the most recent weeks than it was in February.
So sitting here today, in terms of the impact on us, we really see nothing that would cause us to have a materially different view of our plans for the year than we started. However, the obvious question that we’re watching every hour, every day, and that all of you and all of our competitors, like when you just had on the stage are watching is, are the impacts, the kinds of impacts that we have seen in those 5 Asian countries I just articulated. Are you going to see that impact spread into Europe and into the U.S.? And if it does spread, how long does it last? And as we sit here today, we don’t have material factual evidence of that spread. We have lots of anecdotes, right? And certainly, we have, if you look at just the last couple of days, a little bit of softness in some of the T&E bookings. But again, let’s put that in perspective, for our company, about 8% of our overall billings volume globally come from airlines. And I am an old airline CFO. I would remind you an airline stopped flying to China. They actually generally redeploy the plane somewhere else and consumers often do the same thing. And if they’re not going to go to Europe. Often, they go somewhere else in the U.S. So airlines are only 8% of our billings. T&E in total is down to 25% of our business. And I think, Sanjay, that’s some — at least in the U.S., I think that’s something people sometimes forget. I suspect you’ll get to a question about, gee, do we have any learnings from SARS? Well, SARS was 17 years ago. Even the general lesson that SARS, I think, teaches us is these things end and there’s a strong rebound afterwards. We were also a different company back in the SARS however T&E was a bigger portion of our company. And in the interim, we’ve had 17 years of much higher growth rates outside of T&E, particularly in our commercial business.
Visa (3/4 – KBW Conference)
So obviously, this is a very fluid situation. And we put out numbers on, I guess, Monday night saying we would — we expect our revenue to be 2.5 to 3.5 basis points — percentage points below the outlook that we provided for our fiscal second quarter, which ends at the end of this month.
The reality is that most of that impact is travel in and out of Asia and intra-Asia, which is not altogether surprising given that, that was the initial epicenter of the buyers. We are seeing it in the impact in both card-present as well as card-not-present, although the reality is that much of the card-not-present impact is actually travel, people using online travel agencies and the like. Although intra-Asia, we are seeing some, although smaller impact on just e-commerce in general beyond travel.
In the places where we process the majority of the transactions and therefore, have insight daily into volumes, we’re largely seeing domestic volumes hold up with the exception of Hong Kong and Singapore, where there definitely is an impact on domestic volumes. And just as a reminder, we don’t have a domestic business in China, so that’s why I’m not commenting on China. There’s no transactions domestically for us to see or analyze.
It has only been a couple of weeks that the virus has moved in a fairly pronounced way outside of Asia and it’s plain and simple. There’s just too few data points to draw any conclusions about its impact. That said, we factored some deterioration outside of Asia into the estimate that we put together on the 2.5 to 3.5 percentage point decline in revenue.
Dollar Tree (3/4 – Earnings Call)
Let me give you a bit of an update on the coronavirus as it affects our supply chain as we see it today. Our global sourcing group and merchants along with our logistics team are meeting daily and updating our progress on visibility to individual purchase orders. Generally, we are seeing production pickup, and factory attendance is increasing each week. Our global sourcing team in China and third parties that provide quality assurance inspections are nearly at normal levels. All ports and third-party freight consolidators are open and operating at near-normal levels, and we are getting all needed space on vessels for our freight. At this point, all of our Easter merchandise and lawn and garden seasonal product is in our domestic supply chain, either in distribution centers or flowing to stores. At this point, we see a very small percentage of product canceled and some products moving on to later delivery, usually by a few weeks. And our teams are working to mitigate with sources elsewhere, including domestic sources, to mitigate any effect there. More to come.
Our initial outlook for fiscal 2020 includes the following assumptions: our outlook does not include any potential impact related to the supply chain or other aspects of the company’s business for the COVID-19 coronavirus.
We certainly are seeing a spike on anything that’s related to hand sanitizers and cleaning surfaces. But I would say we’re also in first [of] month right now in tax refund time. So right now there is money in the market for all those reasons, plus a heightened efforts for everyone to wash their hands and use hand sanitizer. So we’re seeing that in the stores as well.
Centene (3/4 – Conference Call)
Needless to say, we are monitoring the situation closely. The situation is fluid. However, we have not seen any impact on our business thus far. It is too early to make a determination given how quickly this could evolve. We do fully expect it to be manageable.
Moody’s (3/4 – Raymond James Conference)
So — well, so there’s lots of people who are thinking about this. And I would say maybe the one that’s most traditional that everyone would expect is the rating analysts need to incorporate expectations related to coronavirus or COVID-19, whatever you want to call it, in each of their sectors and with respect to each of their companies. So the ratings process incorporates this just in terms of the way we actually assign ratings to institutions and to entities. And then you’ve got, I’ll call it, big picture experts who might be health care experts or they might be more familiar with the way the World Health Organization or the CDC organization might work. We might incorporate them into the ratings process as well. We’ve got scenario analysis that we do in our group that does economic forecasting. So in Westchester and in London and a couple of other places, we have maybe 100-some-odd econometricians. And they produce forecasts at the MSA level and at the bigger picture macro level in order to address questions like this. So we’re updating those forecasts right now and incorporating scenarios that are COVID related — COVID-19 related.
Xilinx (3/4 – Morgan Stanley Tech Conference)
With respect to impacts to the company on the supply side, we don’t have — most of our supply chain is not in China. So we don’t see any impact of availability of products. With respect to the demand side, we haven’t seen capacity normalizing post-Lunar New Year, to the extent we would have expected by now. And so while the impact currently has been modest, I think the expectations are if this obviously is protracted, global consequences, there could be more meaningful impacts to the business in subsequent quarters.
Home Depot (3/4 – Raymond James Conference)
So on our global supply chain, I would say, for Q1, we’re in pretty good shape. So product for Q1 is largely in our stores. So Q1 and 2, for us, is a big strength. Spring and outdoor project business, we’re largely set. So all our merchandising space has largely transitioned to spring product. We’ll be finished with that in our northernmost markets in the next week or 2. But — so all that product that comes in, think grills and patio sets and the outdoor power equipment I was talking about previously, for Q1, that product is largely in-store, in our supply chains or on the water.
Q2, I would say, it’s a very fluid situation. So as you say, we have very strong relationships with our supplier partners. For our direct imports, where we’re working directly with factories in Asia, we are in constant contact with them and monitoring their capacity and how they’re getting back up to speed and what their shipping horizons, timing is going into Q2. It’s fluid. We’re literally looking at this PO to PO. The good news is the ports are open and functioning. We haven’t had delays in ports. It’s really a matter of workers getting back to factories from the Chinese New Year. Most of those workers or many of those workers are in residence at the factories. And for those 2 weeks of Chinese New Year’s, they travel home to wherever their provinces may be out of the major cities. So it’s been a transportation issue in restrictions of travel intra-country to get those workers back to the factories.
So again, we’re in contact, varying degrees, as you can imagine, of building back to capacity. The next set of suppliers are suppliers that, while we don’t procure directly from China, we know the country of origin is China and Asia. And we’re in constant contact with them, starting to build orders into Q2. Again, it’s PO to PO. You’re obviously not going to order too deep into Q2. You just — the supply chain won’t handle that sort of cube. So we just have to keep working it. Nothing alarming at this point. We said there was nothing in our guidance for 2020 that included coronavirus. We were 3.5% to 4% at our analyst meeting in December and after our first quarter — after our Q4 earnings call. And there’s no change to that at this point. But certainly, it’s a fluid situation.
Brown-Forman (3/4 – Earnings Call)
Specifically, our base in China has been growing underlying net sales at a double-digit rate since fiscal 2018, led in large part by our growing e-premise business where we have been focusing our investment in this market. Our performance through January had essentially not been affected by the coronavirus. So understandably, we do expect a marked slowdown in our fourth quarter in this market in other parts of Asia and have already experienced this in February. Despite this near-term headwind, we remain optimistic about the long-term growth potential for our portfolio throughout Asia.
So again, if you looked at what we did, we took our overall forecast down, as you saw, we reduced our underlying forecast with 2 factors. First, it was the tempering of the growth and contribution from some of our international markets, again reflecting some short-term disruptions as well these macro and economic and geopolitical challenges. So when we look at our base business, but we would estimate now that our base business is doing is probably growing in the 3.5% to 4.5% range. It is, therefore, a couple of points less than what our expectations were just 3 months ago. But the second factor that we built into our forecast, and this is what you’re asking specifically about Vivian, that led to a reduction in our top line outlook, and again not surprising, is this unpredictability and uncertainty surrounding the coronavirus and what it may have on our business globally. So we’ve estimated at this point, there’s about a point drag including those markets that are currently affected. So to your point, directly from the Asian markets, including China and other parts of Asia, Travel Retail and we haven’t Italy in there. So collectively, that’s about 8% of our business. And as I said earlier, yes, we’ve already seen areas — many of these areas already affected in results. But that being said, we also have, in that 1%, some additional downside impact. And we don’t know, none of us knows that’s going to be enough, too much we’re learning daily as this situation and So we’re really only looking at our fourth quarter. We haven’t had to estimating downstream, secondary effects on anything beyond the demand we see in an expectation for perhaps it some other markets. We don’t know about the economy and the consumer confidence and sentiment and how they may linger into our first quarter and summer months.
Lyft (3/4 – Keybanc Conference)
I think users and people around the United States are reevaluating their daily routines in light of all the media attention. And I will say anecdotally, talking to a number of friends and colleagues. People are using more Lyft. I think when you turn on the TV or watch any sort of media channel right now, and all you hear about is coronavirus. If you have to get from point A to point B, you begin to second think any sort of situation where you’re going to be crammed into a bus or crammed into a train or subway. And when you’re pack against people and you hear distant coughing, I think there’s nothing worse in terms of the human psyche right now because there’s just so much fear. And so what I can tell you to date, we have not seen a demand impact. Quarter-to-date, we feel great about the quarter. We are reaffirming Q1, both in terms of revenue and adjusted EBITDA.
And I think one important data point, which will probably be a big surprise for a lot of investors. Last week, it was markets in free fall, fear, paranoia about coronavirus in the United States. Last week was our single biggest week in our history in terms of both revenue and rides. And so again, I don’t want that to get lost. It was literally our all-time best, with — even weeks with New Years. It was last week. So it’s impossible to predict. There are so many different scenarios where we can go from here, but I do think there’s some mitigating factors from Lyft, especially what’s priced into our stock at this point. Again, we feel good about the quarter, and we’re just going to keep putting up numbers.
Sirius XM (3/4 – Morgan Stanley Conference)
And all the news has been about the coronavirus. So what does it mean for us? Well, we’ve done a bunch of things operationally because you really don’t know where it’s going. So we’ve got sort of tiger teams in place to make sure there’s adequate at home work capabilities across all the different product lines that we’ve got — guys who figure out staffing in the event people can’t get to offices? How do you cover all the bases to keep all the wheels running and turning we did — we asked our employees not to travel internationally. That’s not a huge thing for us. We do have a bunch of call center operations in the Philippines. So it’s not a major thing. We’ve checked supply chains with the OEMs. And honestly, things look — looks pretty good. The supply chain for automotive is fairly long as I think most people know. And so if it goes on for a couple of months, I think there’s probably not a whole heck of a lot of impact on us. If it goes on for much longer than that where people can’t get in. We can’t get printed circuit board supply, right? That could be an issue. But it’s got to run for a few months before we think we start to see anything. So other than that, it’s just keep cracking away the business everyday.
Hewlett Packard Enterprise (3/3 – Earnings Call)
Additionally, the outbreak of the coronavirus at the end of January impacted component manufacturing, resulting in higher quarter end backlog.
Also, we do feel it is prudent to revise our fiscal year ’20 free cash flow outlook from $1.9 billion to $2.1 billion to $1.6 billion to $1.8 billion, given that we expect some impact on cash conversion cycles driven by the ongoing recovery from supply constraints and impact of the coronavirus.
Unfortunately, this is also causing supply and demand disruptions and affecting our revenue profile. The outbreak at the end of January started to impact component manufacturing and resulted in constrained supply and higher quarter-end backlog worldwide, and we have been in constant contact with our suppliers and are establishing specific mitigation and recovery plans. So this is affecting our revenue profile for the full year. This is why we’re not guiding in the short term. And relative to what we said at SAM, where we were experiencing — we’re thinking we would be returning to growth in fiscal year ’20, I don’t think that it is likely at this stage that we’ll grow in fiscal year ’20, as a whole for the fiscal year. But we do anticipate recovery of those supply chain constraints over time and face easier comps during the course of the year.
Answer – Antonio Fabio Neri: I would like to add a couple of comments. One is on the coronavirus. Obviously, this is very fluid at this point in time. There is uncertainty. We have a daily process with each of our suppliers that we managed very, very tightly. And some of those suppliers are dependent on other suppliers because, as you can imagine, the supply chain is a little bit longer with Tier 2, Tier 3 suppliers that provide what I call low-level components to build what I call the printed circuit boards or the PCIs or the PCBAs, and that’s a challenge we see today. And we see recovery, but obviously, it’s going to take time. And that’s why Tarek said we cannot provide right now a definite guidance. I think it will be not appropriate. And that’s why we felt prudent not to provide Q2, but because the recovery is going to happen through the year that we felt comfortable reaffirming the 2020 guidance.
Ross Stores (3/3 – Earnings Call)
As noted in our press release, our guidance does not reflect the potential unknown impact from the evolving coronavirus outbreak. While we’re closely monitoring the situation, there remains a high level of uncertainty over supply chain disruptions in China. In addition, it is unclear how a further possible spread of the coronavirus could negatively impact U.S. consumer demand.
Digital Realty Trust (3/3 – Citi Conference)
On the customer side, I would say, to date, we’ve seen limited impact. We’ve been doing business very recently with customers into APAC and out of APAC. We are obviously big believers in a virtual world. It’s driving through our data centers every day, and business is getting done in a virtual format in many fronts. That being said, we have no idea where this current scenario goes, and there’s always a potential impact to business. My glass half-full on that is the breadth of our customer base, 2,000 today, going to close to 4,000 with our combination or depth of relationship, both personally and contractually. With some of these top buyers, allows for easy repeat buying and allows us to keep continuing to support their business in the event that they don’t have the physical ability to go to a new location as they’ve seen most of our sites. They know our capability. We’re on board as a vendor with them. From a supply chain standpoint, we are — obviously have the potential risk of impact given numerous components within our 4 walls. Could be manufactured or imported for some of the countries impacted. From our advanced discussions that well predate today where we are on this coronavirus. We feel that we look — appear to be insulated, whether it pertains to batteries, UPS, switchgear, for at least 12 months’ worth of time. So, so far so good. But again, as I mentioned in the opening statements, we don’t know where this is going. We take it very seriously. And lastly, and I probably should put this front. From a people front at Digital, we are relatively small in the people front. Today, only 1,500 employees, but we are very international. So we’ve taken steps to shut down all travel into and out of APAC. That happened several days ago, and we’ll obviously evaluate this step-by-step as things need to be evaluated for other international parts of the world.
Teleflex (3/3 – Raymond James Conference)
So as we see our $5 million to $10 million, it will be at the lower end if things get back to pretty much business as normal in China right about now, in early March. The impact will be $10 million — $5 million and $0.05, $10 million and $0.10 on the EPS if the uncertainty continues in China and procedures don’t get back to normal in — until the end of March, early April. I guess where we’re a little bit insulated is the portfolio that we sell in China and also there is, ironically, a little bit of upside also baked into that $5 million to $10 million, where we would envision that some of our CVC coated catheters would get used as some of these patients would get admitted into the intensive care unit because of the condition. And I think that once people return to work, which from our intel, at least, is happening right about now, one would imagine that the procedures would then start flowing through the hospitals. Again, I’m — at least by the end of the month, we’d get back to business as usual. Now the virus has gone beyond the shores of China, as we all know, and is now having some impact in South Korea and Italy. And I think that it is tragic, and I’m not trying to take away from the tragic nature of it, and it is quite infectious, but I would also remind the audience that the general flu in America, just in America, has had 16,800 fatalities already this year in the general flu, and the coronavirus has also tragically had 3,000 fatalities. I think also coming outside of the Chinese health care system moving into a more developed health care systems, like you have in Western Europe and in the Americas, we should be better prepared to contain the virus as long as we’re diligent.
Fortinet (3/3 – Morgan Stanley Conference)
First, from the sell side. We just finished the 2 months. The quarter — the previous quarter and 10 quarters the same. So we’re on track for first 2 months. So we don’t see any initial problem there. And — but do the [spare amount unit] come almost 50% of the business. So that’s where there it is still risk. We’re not changing our guidance. So far. And also from the supply chain from other manufacturer side, that we have over 90% manufacturers outside China and it come down like a single-digit of our manufacturing. And also a lot of low-end because we more manufacture with it directly. A lot of low-end already manufactured because we also care the overall cost, including shipping cost is a lot of low-end a shipping capacity, already manufactured a few months ago. And so we — so far, we don’t change any of the guidelines. And so everything on track, but I do believe there’s a blurred dynamic, and there’s still the risk, so.
We don’t see much impact. At least it’s not quite mature. We do see certain industry like whether it’s the cruise line or is it certain airline, maybe a little bit slow down. But we are still broad and cover different vertical, and also still broad and cover a few [profits] diversified, so we don’t see that as much as — effect the results or impact it.
Cummins (3/3 – Evercore ISI Conference)
So I think as you’re aware, when we gave our guidance back at the beginning of February, we didn’t include any impact of the coronavirus at the time. Things were still moving pretty rapidly, a pretty fluid situation.
What we’ve seen right now, we have about 10 facilities in the Hubei province in China, many more dotted throughout the rest of the country. In general, our facilities open 1 to 4 weeks after the Lunar New Year. So a delay on opening there. And our total China exposure on consolidated sales is about $40 million to $50 million a week. In addition to that, our JV income is about $200 million a year in China. So definitely had some negative impacts on domestic China consumption given the delays in start-up of our facilities. Almost all of the facilities now are up and running to some degree. Some of them 100%, some less than that. And I’d say the ones that are running a little less than that, it’s really driven at this point by OEM partners whose facilities aren’t up and running 100%.
So we’ll know a little bit more about what the full year impact is, the demand, I think, by the time we get to Q1 earnings. Just need to see to what extent potentially the government does some stimulus and whether the demand that we did lose in the first quarter comes back in the second half of the year.
So from a finished Cummins product perspective, we do not export a significant amount of material outside of China. We generally produce and sell in country. The area that we’re paying very close attention to is more some of our Tier 2 and Tier 3 suppliers that have some of their facilities out in China that export some of those to our global facilities.
So at this point, we’ve had no disruption, 20 of our facilities related to that. But certainly a very concerted effort by our supply chain organization tracking individual part numbers and understanding where the risks could be in the supply chain related to some of the delays of those Tier 2 or 3 suppliers that have been ramping up production.
Charter Communications (3/3 – Morgan Stanley Conference)
I mean it’s a little early on the advertising side on coronavirus. So I’m going to refrain from commenting there. The advertising business is healthy for us. It’s really attractive.
Intuitive Surgical (3/3 – Raymond James Conference)
But you look at China specifically, on the procedure side of our business, roughly 3% of our worldwide procedures are performed in China. And yes, they’ve been growing very well as of late as new systems have been installed. There’s no doubt that the coronavirus has been affecting procedure volumes in China and likely had some impact on other countries around the region as well. We’ve seen incidences of outbreaks in Korea as well as Japan and lately, more lately in Italy and even here in Washington state. So it’s really we’re unable to predict what the ultimate impact will be, but clearly there has been some. And we’ll keep you informed as things go.
Yes. I mean we can see differences in trends, and we track them on a regular basis. We’re not going to report here to this group exactly what we see at this point in time because, again, it is very dynamic, and you can look for an update on — after our Q1 earnings.
Citrix Systems (3/3 – Raymond James Conference)
The coronavirus, okay. So I think like most other companies, we have travel restrictions now in place in certain countries. And so it’s too early to say what it would mean in terms of our own business in the near term, frankly. We, like most — like many software companies tend to have a pretty back-end loaded quarter. So it’s — so I don’t — so we don’t know yet.
But I think that, perhaps, more importantly, over the longer course of time, it is — there’s no doubt that the concept of business continuity is an increasingly important topic. And there’s clearly an opportunity for Citrix to be part of a corporation solution to ensuring that regardless of the environment, whether there’s a pandemic or whether there are natural disasters, that Citrix is undoubtedly a way companies can help to ensure that their business continues on and that people can remain productive regardless of the circumstances.
AT&T (3/3 – Morgan Stanley Conference)
There’s clearly impacts that are starting to emerge, and it’s a fluid dynamic. Kind of what we see this week may be different next week. I think we’re all prepared for that.
I do expect that there are going to be some impacts that flow through handsets, especially for those vendors that are more oriented towards China. And we’re already starting to see that happen. I don’t expect that those shortages are going to be anything that probably impact first quarter dynamics in any significant way for voice postpaid kind of constructs around things. We’re seeing some things in prepaid entities, like if — I shouldn’t say prepaid, but watches, tablets, maybe some shortages popping up there that are particular SKUs that may have some nominal impacts, but it’s not significant.
Look, I think the vendors right now are fairly optimistic that this is contained and it’s going to be isolated to several weeks of delay for particular SKU items, not that there’s going to be complete stockouts. I think this morning, Foxconn indicated that they felt like they were starting to get some of their production in China turned back up and that they would get themselves back to somewhat normal constructs around the end of March. Obviously, once they get back to normal at the end of March, it takes a period of time for that to work its way through the entire supply chain and replenish. But if that in fact happens, then we expect it’s going to be relatively contained and manageable, and all the tactics we’ve used to stockpile and allocate those types of things should be able to get us through with some reasonable confidence.
United Parcel Service (3/3 – Raymond James Conference)
The coronavirus was not in our 2020 guidance. And as our CEO, David, said during his February 24 interview on Bloomberg, we do anticipate an impact on our results. But given the uncertainties, I just think it’s too early for us to quantify the impact at this point with another month left in the quarter. We’re closely monitoring U.S. industrial production. And so despite some of those challenges, on a more positive note, I would say the enhanced flexibility of our network is going to allow us to minimize emerging headwinds where possible, and I think we have a track record of that.
So I’ve been meeting with investors all morning, and that’s generally been the first question that came up. So first, we have a lot of employees and customers on the ground over in China. So anyone who is impacted, we’re obviously focused first and foremost on making sure they have the right health care and needs from a protection standpoint. The business obviously slowed. I referenced in my comments, we maintained our Lunar New Year operations, coming out of Lunar New Year and sort of extended that by a couple of weeks, recognizing the downturn in the market. The — our planes are flying in and out of China right now. This week, we’re starting to see a rebound in activity in China and Hong Kong, specifically, Tyler. But this thing is moving quickly. I think we’re trying to position ourselves to take advantage of some pent-up demand, and we’ll take it week-by-week as far as extended impact. But we are seeing a rebound this week.
Answer – Tyler Brown: Okay, that’s great. And I don’t want to keep it too near-term focused, but what happens in the Air Freight market when something like this happens? All the wide-body domestic flights going to Asia are just not there. There was a lot of capacity that’s basically been taken out. It seems like the parcel carriers are still flying. Is that market getting extremely tight? And is that an opportunity, quite frankly?
Answer – Brian Newman: Yes. It’s — the big question is timing. They’re with the belly space and a lot of the commercial aircraft coming off-line. And I think expected deliveries that would be coming over from China in the next week or 2, it’s — there’s going to be a need probably to shift some from sea to air. And so I mentioned our planes are flying. So the real question for me is not if, it’s when and how. And so is it a gradual or accelerated recovery, and that’s one of the reasons we’re taking a look here in the month of March to see how that comes back online.
Alnylam Pharmaceuticals (3/3 – Cowen Conference)
I mean, we’ve done — obviously, as all companies are doing right now, done a systematic review of our supply chain in light of the COVID-19 epidemic, and we are in a very good position. We don’t see any implication for our commercial or clinical products. Most of our — we do no drug substance manufacturing or drug product manufacturing in China. And we do that in either the U.S. or in Europe as a company. And we have no — we have sufficient inventory of all of our commercial products as well as clinical development programs as well. So there’s no supply chain implications. Now turning to specific markets and where there might be issues, thus we can talk about Japan. Japan is a big market for us. It probably will exit 2020 as our second largest market. So far, we haven’t seen any implication of the COVID-19 epidemic in Japan.
Question – Ritu Subhalaksmi Baral: On demand?
Answer – John M. Maraganore: On demand. We obviously look at that closely, and we’ll monitor that very closely. But Ritu so far, so good on that side of it.
Moderna (3/3 – Cowen Conference)
And of course, we announced a few weeks ago that we shipped to the NIH or coronavirus vaccine for the NIH in the first Phase I.
The last one I’m going to go quickly on it because it has been massively covered is the corona vaccine. So this vaccine’s quite interesting. We have been working with the NIH on the Middle East respiratory syndrome in preclinical models. And so we were quite familiar, the NIH and ourselves, around coronaviruses. We had great preclinical data, including neutralization using the Spike S protein. And so as soon as the sequence was available from China, working with the NIH, we were able to pick a sequence, and the team is moving quite remarkable. In 42 days, we went from the day we pick the sequence to the day we ship the vials to NIH, and that included 2 weeks of sterility testing on the back end. So just to give you a sense of the speed that you can accomplish with a platform like Moderna given the investments we have made in GMP over the years. So the product is with the NIH now. The IND has been filed. And so the NIH will communicate when they start dosing, which will be pretty soon, we believe.
Verizon (3/3 – Morgan Stanley Conference)
But when we look at the economic and financial impact on us, right now, not significant, not material, not to say there’s been no impact, but not material at this point. I think you see the — that’s linked to the fact that our business model is obviously based off of being more of a monthly service revenue model than the — most of it linked to the upfront transaction. So we haven’t seen a material impact yet.
As you see on the handset side, I think there is a risk on the equipment revenue side that we’ll see an impact there. Not so much in the first quarter. Obviously, there was handsets in the pipeline as the impact started to come through. But if we see continued disruption, you’ve heard some of the handset companies talk publicly about. If that carries on for a significant time period, I think we’ll see a more material impact on our equipment revenue line. That doesn’t really impact the earnings profile as significantly for us, given that it’s not where most of the earnings come from. The earnings come from the service revenue. But certainly, there may be some — in the future months some impact on the equipment. So we’ll have to wait and see.
The other thing, as I think about the income statement side, that we haven’t got enough data on yet to see if there’s any change in consumer behavior. And as I say, we haven’t got the data yet to know, but we’ll stay close to that. And then you mentioned on the network side and not seeing anything material impacting our supply chain at this point. But I think, obviously, the major thing is, this is obviously a fluid situation, and we’ll have to wait and see how it continues to evolve. And as it evolves, if it’s going to impact either the income statement as we think about revenue or consumer behavior or the way that our supply chain on our network side will operate, we’ll update everyone as appropriate. But as of right now, not a material impact, but we’ll wait and see how it plays out.
And obviously, we’ll have to see how if the supply chain around that gets disrupted with the coronavirus. But we still have line of sight to 20-plus 5G devices coming into our ecosystem during the course of 2020. You’ve seen some of those announced already. You’ve got the Samsung models launching later this week. So absolutely still feel good about seeding the ecosystem with a lot more 5G devices this year than what we saw last year.
Stryker (3/3 – Cowen Conference)
Yes. So first of all, thank you, and thank you for everybody for coming here today. It’s obviously still a very fluid situation, and it’s going to remain so. I don’t think there’s anything magical about the end of the quarter that will suddenly make this disappear.
We have about 2% of our revenue comes from China. We have 3 manufacturing facilities there. They are all opening up and running, but they’re not at full capacity. And clearly, a lot of — essentially, all elective surgeries in China have stopped. And so there will be a revenue impact, certainly, in Q1. We would imagine there’ll be still an impact in Q2 as well as an earnings impact. And I think we have to wait and see how it plays out in some of the other countries like Japan, for example, as well as in the U.S., but we will call that out in terms of this is what we believe the coronavirus revenue and earnings impact is. You can see an adjusted, adjusted number, similar to what we’ve done in the past, whether we’ve had these extraordinary events, whether it’s natural disasters or something like this. So we’ll be able to call it out and give people a sense of the impact.
Target (3/3 – Earnings Call)
But first, I want to address the question of whether we’ve accounted for any known or anticipated impact related to the coronavirus. And the answer is that as of today, we haven’t seen a large impact on our business or outlook. Of course, we are monitoring our import programs down to the purchase order, and we’ve already made some slight adjustments to our plans to ensure we are well positioned throughout the year. But because of our size and the flexibility that comes from our multi-category portfolio, we haven’t seen anything so far that would cause our financial expectations for 2020 to deviate from our longer-term algorithm.
And certainly, from a merchandising standpoint, we know that we’re going to see some periodic delays. We’re out in front of that, making changes in our assortment and our promotional and presentation plans. But all that’s reflected right now in our view of guidance for certainly the first quarter and the balance of the year. We’ve also been working very closely with some of our domestic vendors, our DSD partners, as we see some growing demand in categories like household essentials and food and beverage to make sure we are supporting that with the right level of inventory.
But over the last few days as obviously everyone’s been reporting, we’ve certainly seen a U.S. consumer that’s starting to stock up on household essentials, disinfectants, food and beverage items. All those staple items that the CDC has recommended, they add to their pantry. And certainly, we’ve seen aggressive shopping across the country in our stores. So we’re obviously working closely with our domestic vendors, with our DSD partners to make sure that we’re elevating inventory in preparation for what we think is going to be a continued demand for stock-up items.
So certainly, we’re seeing that across our network. We expect that to continue over the next few weeks, and we’ll watch it carefully over time.
Autozone (3/3 – Earnings Call)
At this point, I’d like to talk about any disruption we may be seeing from the ongoing coronavirus epidemic. While we have not incurred disruption thus far, we must and are being diligent. We have created a contingency plan for each merchandise category sourced from China. Our teams have done a wonderful job planning for potential scenarios. At this point, we have nothing substantial to report. But the longer this outbreak lasts, the more it will impact ourselves in both our and the overall retail industry. It is currently a very fluid situation as many of the factories have just begun to reopen after an extended Chinese Lunar New Year holiday. Some are coming back online quickly while others quite slowly, and certain of them haven’t come back online yet. The next few weeks will be critical.
As you would expect, over the last month or so, we have been very focused on the supply chain aspects of coronavirus and, in the last week or 2, more and more focused on what’s happening here in the United States and, ultimately, Mexico and Brazil. We see no indications at this point in time of any demand destruction as a result to coronavirus. But just like we said with the supply chain, it’s an incredibly, incredibly fluid situation. I think the next couple of weeks to a month, are going to be critical to see what actually happens. We don’t have good insights into that.
WP Carey (3/3 – Citi Conference)
I mean it’s early to see how that flows through our tenant base right now. We have not seen any level of distress or any concerns about tenants’ ability to pay rent. Clearly, it looks like it’s going to impact consumer confidence. It’s almost impacting supply chains, especially those that go through China and other affected areas. I think what’s important to note is that within the broader real estate sector, I think net lease is viewed more as a safe haven asset given the duration of the leases and the focus on credit underwriting. I think within the net lease peer set, I would expect us to outperform in a down economy or a downside scenario. Again, we have close to 11 years as a weighted average lease term. More importantly, our focus on underwriting and on managing our portfolio is acquiring operationally critical real estate, and in many cases on master leases, which adds another degree of downside protection. We’ve seen that through past cycles. In fact, if anything, I think, given our business model, our flexible balance sheet, any kind of dislocation could create a buying opportunity for us to the extent our cost of capital maintains the current strength that it has now.
Agilent (3/3 – Citi Conference)
I mean, your guidance assumes a 1.5 to 3-week impact from coronavirus in China based on the fact that you got a factory up and running. The second factory is 70%, 75% up and running. It feels like things are not worse than what you — at least in China specifically.
Answer – Robert W. McMahon: Yes, that’s correct. Yes. I mean, things are tracking to kind of we expected. Now, I think we said this on the call that, at our earnings call, we expected February to be the brunt of it. And we’ve seen that. And — but we’re exiting February kind of where we expected it to be, not only from a factory perspective, but one of the other areas that we look at is service calls. And the service call rate at the end of this month was tracking pretty in line with where it was the end of February last year, which is actually very positive. Now how we’re actually doing the service is very different. So the investments that we’ve been making in WeChat over the last 2, 3, 4 years is really paying dividends because we’re actually doing service calls via WeChat as opposed to having people on site in certain factories and so forth.
Chevron (3/3 – Analyst Meeting)
First, let me address the short-term impacts of the coronavirus. No doubt, demand for our products is down. Our focus is on protecting our people and maintaining safe operations. This time, our operations and supply chains are functioning normally. We’re taking all appropriate precautions to keep it this way, but it’s a fast-changing situation.
United Rentals (3/3 – Evercore ISI Conference)
The coronavirus question is interesting one, very interesting times here. We’re fortunate enough to not have had that much exposure to it. We’ll see what the coming weeks and days even bring, but we’re not expecting a huge impact right now. I don’t think our crystal ball is any clear than anybody else’s on this. Personally, we’re more focused on making sure our employees and then, therefore, our customers are operating in a mindful manner of what’s going on around them. Supply chain seems to be what’s been disrupted in most industries right now. We have not had this disruption. And I wasn’t here for all of Terex’s commentary, but our suppliers have not pushed out any lead times for us, the things that would be meaningful for our business. We haven’t had any of those impacts. That’s one of the areas where we think coronavirus is showing up early.
So we don’t necessarily see a huge impact right now, and we don’t expect a huge impact on our end markets. But you know we’re going to stay tuned. The good news is we don’t need to know. We have enough flexibility within our annual CapEx cadence and within the way that we can run our business that we don’t have to the basis point predictability of the end market. We’re just going to adjust accordingly. But right now, the end market sees that 2.7% growth that we have at the midpoint of our guidance holds for us.
Qorvo (3/3 – Raymond James Conference)
Now to our updated view on the business, including the near-term financial outlook and the effects of the coronavirus on it. This morning, we’ve provided updated guidance for our March quarter to approximately $770 million revenue, down from $820 million to the midpoint of our January 29 earnings call guidance or a decrease of roughly $50 million from our previous midpoint.
If you recall, we were one of the earliest companies to comment on the potential impact of the virus on our results. Reflecting some impact in March, providing an expanded range given the uncertainty and providing a view on how we thought it may impact our June quarter. Unfortunately, COVID-19 effects worsened since we provided guidance, and our current view is reflected in today’s updated outlook.
As far as the commercial effects of the virus, we’re seeing both supply and demand effects. On the supply side, some parts of the supply chain are experiencing reduced labor, which is limiting throughput. There have also been some isolated component shortages. At present, neither of these factors appears to be getting worse and from recent customer comments and our interactions across the supply chain, it may be getting better. On the demand side, with the disruption around the Lunar New Year and some ongoing concerns, we are seeing some demand effects beyond what we anticipated. We are seeing demand stability and in some cases it improved, but the effects are likely to persist through the June quarter, a comment we made on our January earnings call.
We do see these effects as largely delays to be captured later. As far as our own operations, we have experienced no COVID-19 cases and are operating well. We took precautions early to safeguard our employees, and since we have been running strong. Most of our employees work through the Lunar New Year. With great credit to our team, our operations have been held up as a benchmark by local authorities for other factories in the area. We’ve provided an update with our best view at the moment. But as you know, there’s a lot of uncertainty with this situation. We are staying abreast of the situation, doing our best to support customers, suppliers and local authorities, while keeping the welfare of our employees and their families, the top priority.
Thermo Fisher Scientific (3/3 – Conference Call)
Financially, the net of how we see the world right now is because activity in China is still very slow, it will be a slowly ramping back up. We expect that the first half of the year will have less revenue than our original guidance back in January. And that we see opportunities for the second half to have positives, it’s very hard to quantify them right now because we know governments are going to stimulate the economies around the world. They’re already talking about it and doing that. We’ll see how it plays out.
So yes, I’d say that basically that we’re — we’ve put in a reasonable assumption for a net headwind from coronavirus for the year in 2020. Clearly, if they’re well positioned with some products that can assist health authorities address the virus then that will be a tailwind. But what to think about the macro — potential — macro impacts, I put them in a reasonable assumption into the 2020 numbers as the baseline.
SBAC (3/3 – Citi Conference)
Well, knock on wood, we haven’t seen any direct or even one-off indirect impacts yet. I think, I mean, it’ll pop in probably hard-to-imagine ways. Certainly, well, people stay at home. It probably actually benefits the communications sector, not that that’s anybody’s wish.
We don’t supply chain anything really from these affected areas. We are in Latin America, and we recently expanded into South Africa. I’m struggling to think, Mike, because I don’t see it yet. I mean, we’ve put in similar warnings to the government agencies about not travel bans, so to speak, but warnings and watching where people go to, go from. I mean, we canceled out a Mobile World Congress and wouldn’t be sending people to the Far East and things like that, but I don’t really see a direct or even an indirect impact at this point.
Duke Realty (3/3 – Citi Conference)
Now let’s talk a little bit about the coronavirus and the full impact. I don’t think any of us know clearly what the impact is. At this point, it would appear that there will be short-term disruptions in the supply chain of raw materials and finished goods. And I’ll reiterate short term. We spent a lot of time in the last 10 days talking to our clients. And they are anticipating short-term disruptions, 30 to 90 days. Depending on who they are and what their products are will ultimately determine what that impact is, but every one of our clients have said this has not changed their long-term real estate strategy. They are going to continue to move ahead with leases and build-to-suits acquisitions in 2020 and 2021. And just to reiterate: We signed leases last week with major clients across the country. So while it’s making clearly a lot of headlines and it has a lot of us nervous, most of our clients say it’s business as usual working forward.
Union Pacific (3/3 – Raymond James Conference)
The year is obviously off to a challenging start with volumes down 10% year-over-year. Now we came into the year expecting tough comparisons in International Intermodal as a result of the 2018 pre-shipping ahead of the 2019 tariffs. But we didn’t have a good line of sight or really had even heard much about the coronavirus impact. We are really just now starting to see the impact of the virus on our first quarter volumes as the Lunar New Year was extended and factory production in China is slow to ramp up. How that ultimately plays out, however, is a little still to be determined as we can’t predict the full extent or timing of the production lull. What I can state confidently, however, is that U.S. consumers are continuing to buy TVs, build houses, drive cars, et cetera. So when the impact of the virus is behind us and production ramps back up, we’ll stand ready to move the goods.
Microchip (3/3 – Conference Call)
Well, let’s see if we can talk through it. Longer term, or even nearer term, there should not really be any demand destruction if work were to — the whole world were to go normal for the June quarter, then there should not be a demand destruction. So the only issue for the June quarter is, will all the factories be back to work? Will coronaviruses should be resolved? We don’t really know that. At this point in time, the cases in China are starting to decline. But the cases outside of China are rising rapidly in Italy and Germany and Korea and Japan and lots of other places. So where would that net effect be? We don’t really know. But coronavirus itself, if you get out a couple of quarters, if coronavirus issue goes away, it should not be destructing demand. And some of the demand we’re losing right now, there should be some makeup for it because there’ll be a pent-up need for product from all the customers who wanted to buy it.
So Gil, I think as Ganesh mentioned in an answer to another question about the end market, coronavirus has not differentiated or distinguished between factories that’s an automotive factory or building consumer products, building communication gear and this has largely been — the demand has largely been the issue of factories were shut down longer than the normal 1-week Chinese New Year. Some were shut down for 2 weeks. Some were shut down for 3 weeks. And when they came back, they didn’t come back to full production. So this is not an end market kind of issue. All end markets have been affected because the factories have been affected in China.
Live Nation (3/2 – Morgan Stanley Conference)
We talked a bit and gave some of those numbers on the earnings call. But our business in Asia, if you look over the next 3 months, is a couple of hundred thousand fans. If you look at our business in Italy, it’s roughly the same scale. We said between — at the time, which were the 2 main hotspots between Italy and Asia over the next 3 months, makes up less than 0.5% of 1% of our fans expected for the year. From an overall timing standpoint, globally, we see about 70% of our fans are June onward. So depending on which version of what you read today, it gives us some comfort that we’ve got a little time for things to play out. I think, probably the most important piece for us, though, is to remember that we’re just — we’re in 100 offices in 40 countries, very diversified, geographically. So what we know because the CNN headlines are telling us constantly, there’s a hotspot in Kirkland, Washington today. There’s this that you assume over the next few months, they’re going to be hotspots. And when those hotspots occur, there will be some impact in terms of quarantines, whatever happens in those markets at that time.
I think the 2 things that just give us some level of comfort, as we look macro: first, we don’t see this as an existential change in fan behavior; we don’t see any drop in fan demand. Bonnaroo sold out today faster than it ever has. Pandora and [McGrath] sold out last week in Australia faster than it ever has. So the fan demand remains. We know that the artist wants to do the shows. This is how the artists earn their living. So we’re talking in the vast majority of cases about an artist saying, all right, if you have a — if we can’t do the show next Saturday night in Seattle, well, when do we come back in 3 months — when do we come back, we’re rescheduling that show, is the primary focus. And it’s just gaining some market by market. And when you do 40,000 shows across those 4 countries, I think, it’s our belief that on a macro basis, we’re unlikely to see something that, there is a real disruption at any one time.
Trimble (3/2 – Morgan Stanley Conference)
What we — what I’d anchor you is on December — February 12 on our earnings call, we talked about the impact within a Q1 context and within a Q1 context, we quantified about 3 weeks of delay minus a couple weeks of buffer equal to about 1-week impact on the supply chain plus a degradation in the sales within the China market that was baked into our Q1 — I think, our Q1 guide. And I think we are reasonably ahead of the curve of companies of talking about that Q1 impact. What we’ve seen in the days and, I guess, couple weeks that have unfolded since then is that it’s clearly — has clearly spread, and so we would expect to have some negative ramifications out of that. The quantification of such is way premature for us to be talking about. And so at this point, I would anticipate the update on our next earnings call. To put a little maybe context behind it, though, Trimble’s revenue today is about 1/3 ARR.
Stanley, Black and Decker (3/2 – Raymond James Conference)
Throughout the first quarter, we really have not seen much revenue being generated in the local Chinese business, as you might expect. And that probably will be the case through the remainder of the first quarter. But probably the bigger question you have in your mind is our supply chain. Our supply chain in China serves 40% of our capacity across the company.
As it relates to the virus and where we are on China as far as our manufacturing capabilities as of today. We shut down these 10 plants for the 2 weeks of the holiday season around Chinese New Year. The week after that, these plants began to open up and the production capabilities and utilization have got to about 50%, 60% on average across those plants sometime last week. We’re continuing to make progress on that. And those numbers continue to improve as we sit here today. And we’re continuing to focus on getting more employees back to work, that’s one of the challenges we have right now, where all the employees have not returned to the plants. We have a process that we need to go through with every employee before they get into the plant around checking for fever and other symptoms that are visible and then, obviously, wearing masks within the plant to try to protect our employees as much as possible in that environment. We do believe it will take another 2 or 3 weeks probably to get to 100% utilization in these plants. And that obviously is assuming that the virus doesn’t worsen in China, that it stabilizes and begins to — to begin to go — retract or go backwards.
If that happens to get worse, then obviously, those numbers could change. But right now, that’s what our plans are, and we believe that’s achievable based on where we are today. This will cause some pressure for us in March and April from a revenue perspective. So we see that revenue in the last 2 weeks of March will probably be pressured based on these capacity challenges we’re having and also in the month of April. We do believe it’s more of a timing-related matter at this stage. But obviously, that’s very dependent on where the virus goes and how significant it is. If things stabilize, and we don’t see a dramatic worsening, we think that’s probably where we are. We have a timing issue we have to work through for the first half of the year and the full year as well.
Fidelity National Information Services (3/2 – Raymond James Conference)
So we had our fourth quarter earnings call about 2 weeks ago and included some expectation for coronavirus impacting the guidance we provided at that time, which I just took you through on the screen. I think the way to think about the coronavirus impact is certainly the way we’re thinking about it is the part of the business where we would expect to see the most impact from corona would be in our merchant business, which is about 30% of consolidated revenue, and in specific, within our e-commerce segment within merchant, which is about 25% of merchant.
So in terms of revenue that could be most impacted by corona on a total basis, you’re looking at less than 10% of total revenues. We’ll certainly see some impact in terms of cross-border, airlines, travel-related e-comm transactions. But at the point in time, we believe that to be immaterial, which is consistent with our expectations when we provided the guidance a few weeks ago.
Exact Sciences (3/2 – Cowen Conference)
This year, on our fourth quarter call, we talked about the flu also having an impact on the business. Coronavirus, I think it’s still very early, so it’s something we’re watching closely. To the extent that it does have an impact on the business, again, I would think it would be temporary like the flu.
Regeneron Pharmaceuticals (3/2 – Cowen Conference)
So where are we right now? With the new coronavirus outbreak, we have already immunized mice to develop fully human antibodies to the infection. We are now at the point where we are identifying lead candidates for treatment and prophylaxis treatment. It’s our intent to have the lead antibodies manufactured and ready for clinical trial use later this summer. While we’re not able to share more details with you at this time, know that this is a priority for Regeneron to address this important human health need.
Twilio (3/2 – Morgan Stanley Conference)
Then as far as the business goes, I think that, obviously, we don’t know exactly if there will be an impact on the business. We can imagine scenarios that — where there’s an impact because of travel or hospitality industries are impacted, while we have those customers. And if there’s less usage of their products, then that could mean less usage of our product. We can also imagine some upside, wherein, for example, in the on-demand delivery of food, for example, people are staying in, instead of going out, that can be more usage of certain use cases like that. And obviously, we’re in the electronic communications business.
So if there are scenarios where people are using more electronic communications to communicate as opposed to in-person — in-person meetings, that could be an upside.
Weyerhaeuser (3/2 – Raymond James Conference)
So we had dialed back our China exports already even before the coronavirus. Certainly, I think the activity in China has slowed. I don’t think that’s a secret. And so I think that will be choppy for a little while. But again, the rationale behind having a diverse mix of customers is that we have opportunities to flex that volume. And so we had already started doing that in flexing some of that China volume back to the domestic market for higher-margin opportunities.
In Japan, to date, we really haven’t seen any impact from the coronavirus. We continue to have solid order files from our Japanese customers. Obviously, it’s a dynamic situation. So we’ll continue to watch that, but to date, we haven’t seen any real impact there.
Gilead Sciences (3/2 – Cowen Conference)
So remdesivir as a molecule, we’ve had at Gilead for a while. It was discovered and developed as an antiviral with a relatively broad antiviral activity in-vitro. It’s shown efficacy in-vitro against Ebola, which is a different class of virus, but also against SARS and MERS, which are both coronaviruses in-vitro. The homology of the polymerase that remdesivir inhibits is very high between SARS, MERS and this new coronavirus. So I think that’s probably one of the biggest drivers of why we are interested and others are interested in it.
More recently, we’ve gotten data from the Chinese CDC, where they’ve evaluated in-vitro efficacy and have demonstrated in-vitro efficacy of remdesivir against this particular isolate. We are awaiting data from our CDC here in the States to confirm that. There’s a slight difference between the 2 and that the Chinese CDC use vero cells or monkey cells and the U.S. CDC will use human cells. So we think that will be a little closer to what actual efficacy, at least a potency against the virus will be.
That’s in-vitro data. I think, really, it’s really important to emphasize there’s an investigational drug and we are in clinical trials right now, and those fall into several categories. We do have compassionate use work going on. You’ve seen the New England Journal article on that one patient. There have been other patients who’ve been treated with compassionate use. Those are all anecdotal.
There are 2 trials going on in China. They’re sponsored by and run by the investigator in China. We supply drug to them. There’s one in severe patients, one in more moderately ill patients and those studies are active and ongoing. And hopefully, we’ll see data from those in April, depending on enrollment.
And then the NIAID, we’ve been working with them to get another trial up and running. That study is now up and running in Nebraska and we’re looking to expand sites there. The NIAID will be doing that but we’re trying to support as best we can. And then, finally, we’ll be running sort of a simple trial that we’ve also been discussing with the FDA around making that trial available more broadly.
Microsoft (3/2 – Morgan Stanley Conference)
On the second half of your question, which is specifically on COVID-19, I think you really think about the adjustments we’ve made have been pretty narrow to the supply chain, as we have said for our guidance this quarter. Our focus primarily day-to-day is on the health and safety of employees, partners, customers and the communities in which we operate. And so that, for us, really is the first priority and then watching the pace of the supply chain recovery. We’ll continue to do what others are doing and continue to keep an eye on it.
American Tower (3/2 – Citi Conference)
These sites run autonomously, actually, and the leases are paid electronically through means of not having to either collect cash in a storefront or checks or anything like that. So the short-term impact of the coronavirus on our business should be de minimis. The long-term impact should be, I would imagine, neutral to positive depending on how this goes because mobile connectivity could get more important if people want to gather less or congregate less in offices or conferences or whatever it may be.
S&P Global (3/2 – Raymond James Conference)
Going to your question about coronavirus. First of all, we saw in the Ratings business, that you’ve talked about in particular, the first 8 weeks of the year, the ratings volume was up 7%. It was very robust. It was across the board most geographies, most asset classes. And last week, it really halted to a stop. This was based on the uncertainty in the markets about coronavirus, what impact it’s going to have on different industries, what kind of credit impact it might have. In addition, there were uncertainties about rates. Rates were plunging. Spreads were increasing. And when you get a market like that, the investment-grade issuers, they stop going to market. There were no investment-grade issuance last week at all. And then there were a few loans and a few noninvestment grade bonds. So you saw a very little amount of issuance.
Johnson & Johnson (3/2 – Cowen Conference)
With respect to the vaccine, I think you’re — what Dr. Fauci had referenced in terms of 12 to 18 months is probably a very reasonable time line. If you just think about what has to happen with respect to, first, having some animal studies, making sure it’s then safe in humans and then the efficacy part, that seems to be as quickly as, I think, anything can be done.
With respect to our candidates for a vaccine, we are screening possible vectors. Where we have a differentiated capability, we believe, is around our scalability. So the ability to produce hundreds of thousands of vaccines is something that’s not uniquely possessed within the industry. And if you think about what we did on both the Ebola and HIV front in terms of some clinical development trials that we are now conducting, those are in the hundreds of thousands.
So if you remember an acquisition we did many years ago known as Crucell. They had a PER. C6 technology there that allows us to have this kind of manufacturing capacity. So whether it’s a vaccine that we potentially discover or some other vaccine that may be a candidate to contain the virus, I would imagine, we’re some part of the discussion. In fact, I believe, Alex and Paul are with the administration this afternoon with other health care CEOs and management to help figure out what is the best solution and best path forward.
In terms of business impact because I’m sure that’s on everybody’s mind as well, right now, I would say I don’t anticipate — and I’ll caveat my comments to be first quarter contained, right? Until we find out how long the duration of this is, the pervasiveness of the virus is, it would be hard to say we would certainly provide the best information we have available on our April call to recap the Q1 results.
I would say, though, from a supply perspective, I’m not overly concerned. I think if you look at where our supply chain exists, we’re pretty well covered. On the demand side, I could see some modest impact in Consumer, around Skin Care in terms of just people buying less. There’s less activity in that, but perhaps that’s offset by self-care. So think of MOTRIN or even LISTERINE potentially.
On the Pharmaceutical side, people still will take those drugs. You may see some lower demand from closed or limited hours for infusion centers or even pharmacies. But by and large, I think we’re pretty well covered there.
Medical Device, as other peers in our industry have indicated there, we are seeing a much reduced level of elective surgeries. And so we’ll probably track to the market there. Overall, though, I think if I look at the overall health of Johnson & Johnson’s business, I see this as a temporary blip that will largely be recovered.
Analog Devices (3/2 – Raymond James Conference)
So coronavirus, we are an off-quarter company, so we did have our earnings call just a couple of weeks ago, and we took the opportunity to reflect in the guidance for the coming quarter how we were thinking about the coronavirus. At the time, we knew there was quite a bit of unpredictability. So what we tried to do to be helpful to investors is not only give you our view on what the impact in the current quarter is, but also the assumption set that we put in to arrive at that.
And that assumption set is basically a few things: One, for our China business, we assumed that our industrial, our automotive and our consumer business would basically bottom out near 0 for the month of February and then begin to return after that. And we looked at the 5G deployment activity and said some of that 5G deployment would be shifting just as the availability of employees to work in the technology companies necessary to build the products was going to have some level of delay. Though there would be some existing inventory, they will be able to come back a little bit faster. So we did assume that there was a slippage in that. We sized that at $70 million of impact to us for the quarter, and that’s reflected in our guide of $1,350 million for the quarter. At this point, we are not changing our guidance. I think it’s — the world is evolving at such a rapid pace. It would be difficult for us to constantly be giving you an updated point of view.
I would say that as you hear more and more semiconductor companies report their impact, you’ll find that sort of on a relative basis, that seems to be in line with what everyone else appears to be saying, although we were a little bit early. But I think from what we’ve heard so far since that time, we feel good with where we are.
Zimmer Biomet (3/2 – Raymond James Conference)
Sure, yes, happy to do it. As you said, the situation is incredibly fluid. Every morning, you wake up, open up the Wall Street Journal, there’s a new article on the coronavirus and how it continues to evolve. Look, the way I look at it is our most acute challenge is within China. That should be obvious. Just to kind of put it into frame and give some perspective, China is about a little less than 5% of our overall global revenue. It’s growing in the low double digits. So it’s a very meaningful market for us from not only a scale perspective or from a growth perspective as well. And what we’ve seen relative to Coronavirus is actually a pretty significant reduction in elective procedures. In fact, about 85% to 90% reduction in elective procedures through February. So it’s been a pretty significant headwind for us. We’ve not seen any significant or material improvement or recovery in February. So we expect that at a minimum to continue through March, right?
Fleetcor (3/2 – Raymond James Conference)
We don’t have any business in Asia. So we’re not really impacted, certainly, directly by shutdowns in those countries or we’re not that impacted by being — we’re not a manufacturing concern, so we don’t have inventory coming in that we’re dependent upon. But we are transportation, related to some of our businesses are transportation-related, and we have seen some softness, particularly in the over-the-road sector as the manufacturing category has slowed down a bit in the United States. But although we may see a little bit of softness there, we certainly expect to see that come back at a later date when this is resolved. So we don’t see a meaningful impact from coronas to us.
Dentsply Sirona (3/2 Earnings Call)
At the current time, we have not experienced a significant disruption to our global supply chain due to coronavirus. However, in many parts of China, dental clinics and hospitals remain closed for business. And in other parts of the world, we are beginning to see an impact.
Given the unique situation, today, we’re letting you know that China, Japan, Korea and Taiwan, represented approximately 10% of 2019 sales. While we hope the impact of the virus is controlled as soon as possible, it is difficult to estimate at this time when commercial activity, and more specifically, the dental market will return to normal levels.
We estimate that in the first quarter of 2020, we have an exposure of approximately $60 million to $70 million in sales stemming from coronavirus. Assuming activities get back to normal in April, we estimate a non-GAAP EPS impact of $0.10 to $0.12.
We acknowledge it is more difficult to forecast accurately in the current environment, and this explains the wider than usual EPS guidance range we are providing today.
With that said, these are the key elements of our guidance for fiscal ’20. We expect 3% to 4% internal revenue growth. However, accounting for the potential impact of coronavirus in the first quarter, we believe growth will likely be towards the bottom end of the range.
Camden Property Trust (3/2 – Citi Conference)
We have not seen any changes in patterns or people coming into our properties or web traffic or what have you. We have looked at and tried to sort of think through forward what happens in a corona environment — in corona, sort of virus maybe induced recession or a slowdown in the economy.
And there are probably 2 periods in time that were interesting in the sense that — so if you think about a normal kind of recession, recessions are sort of different than sort of event-induced recessions.
Let’s take 9/11 as an example, and also the financial crisis as an example. One of the things, I think, was instructed by those 2 recessions and the — was that, people sort of sheltered in place, if you will. It’s kind of an interesting concept, given corona. And the turnover rates dropped dramatically. Even though demand went down, we had fewer people moving out to buy homes and fewer people moving out generally. Now demand did go down and people had to consolidate. So people who couldn’t afford their apartment because they lost their jobs or what have you, move back with their parents or they consolidated within the community, a 1 — two 1 bedrooms became 1 2-bedroom, and we had vacancy in our in 1 bedroom. So it’s likely to — the corona-induced slowdown is likely to create more, sort of shelter in place as long as people have jobs. They aren’t going to move around as much, and that should keep turnover down. The question will be, how much demand is destroyed? And what happens to jobs, overall, if there is a kind of corona-impacted recession.
Week of 2/24
Updated Guidance via Press Release
“PayPal’s business trends remain strong; however, international cross-border e-commerce activity has been negatively impacted by COVID-19. We currently estimate the negative impact from COVID-19 to be an approximate one percentage point reduction, on both a spot and foreign currency-neutral basis, to PayPal’s year-over-year revenue growth for the first quarter, as compared to the revenue guidance provided on January 29, 2020.
Stronger performance quarter-to-date across our diversified business is partially offsetting this one percentage point negative impact. We now expect to report first quarter 2020 revenue towards the lower end of our previously guided range of $4.78 – $4.84 billion. We are reaffirming our first quarter 2020 GAAP and non-GAAP EPS guidance.
At this time, the duration of COVID-19’s impact is difficult to estimate. We are continuing to closely monitor this evolving situation. We will provide further updates on our first quarter earnings call in April.”
“We have been closely monitoring the impact of COVID-19 and our thoughts are with the individuals and families whose lives have been affected by the spread of the disease. Our top priority is to ensure the health and safety of our employees and support those in need.
The fundamentals of our business remain strong, as our switched volume and switched transaction growth remain in-line with our expectations. However, cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the Coronavirus. As a result, we now expect that if the trends we have seen recently — primarily in our cross-border drivers — continue through the end of the quarter, year-over-year net revenue growth in the first quarter will be approximately 2-3 percentage points lower than discussed on our January 29, 2020 earnings call. Under these circumstances, we would expect year-over-year net revenue growth of 9-10% in the first quarter on a currency-neutral basis, excluding acquisitions.1
There are many unknowns as to the duration and severity of the situation and we are closely monitoring it. If the impact is limited to the first quarter only, we expect that our 2020 annual year-over-year net revenue growth rate would be at the low end of the low-teens range, on a currency-neutral basis, excluding acquisitions. We anticipate giving further updates on our first-quarter earnings call.”
Commented on Coronavirus with Earnings Release:
Best Buy (2/27 8K)
Best Buy CFO Matt Bilunas commented, “As we enter FY21, we are closely monitoring the developments related to the coronavirus outbreak. This is a very fluid situation, which makes it difficult to determine exact financial impacts from disruptions in supply chain. Based on what we know today, we have assumed the majority of the impacts occur in the first half of the year. Therefore, we view this as a relatively short-term disruption that does not impact our long-term strategy and initiatives. Our guidance ranges for both Q1 and the full year reflect our best estimates of the impacts at this time.”
CBRE (2/27 8K)
“We continue to see a backdrop that supports our business performance. Based on what we know today, the global economy is expected to grow this year on par with 2019, though we are closely watching the potential impact of ongoing risks, particularly the coronavirus. With this in mind, we expect that continued favorable macro conditions and our ability to take market share across business lines should drive our 11th consecutive year of solid double-digit adjusted earnings per share growth in 2020.”
Earnings and Conference Call Remarks
Carlyle Group (2/28 – CS Conference)
There’s definitely going to be a short-term financial hit. You can’t have half of the world’s second largest economy be dormant and not have an impact to global economy. You can’t have 55% of global manufacturing output go through China in some shape or form without there being a short-term hit. And I think people underestimate the disruption to the supply chain. We’ve got estimates of close to 60,000 containers that are in the wrong places, wrong ports, wrong railway stations because everything is disrupted. To get that all moving and going in sequence in the right way, it’s going to take a long time.
Paypal (2/27 Earnings Call Transcript)
Teleflex (2/27 Conference Transcript)
“Answer – Liam J. Kelly: Yes. So again, we’re really happy with the 8.1% that we delivered last year. Our long-range plan was to get to 6% to 7%. I think that, as we guided for the year, we wanted to be relatively conservative and realistic right out of the gate. There are a couple of one-off impacts that we see, in particular, in the first quarter, the quarter we’re in right now, such as the coronavirus sterilization issue. If you add both of those together, they have an impact of about 30 basis points in our full year growth, and that’s a bit of a headwind. But the other side of that is — and we have one less billing day in the first quarter as well, which will cost us around $9 million.
The upside to that is, and what I expect should happen during the year is, you get those 2 items behind us, hopefully, coronavirus will act like a normal flu, once you get into April and the weather warms up and incidents start to go down, that’s what we would expect, sterilization issue will be behind us at the end of the quarter. We have the final cycle being validated as I sit here. And the billing day will actually come back in the fourth quarter. And this is a unique year because it’s a leap year obviously. We actually have an additional billing day in the fourth quarter as well. So — and as you go through the year, you will begin to see the UroLift ramp, you’ll see the other core parts of our business start to ramp as we go through the year, and obviously MANTA, which is one of our nice growth opportunities, will also continue to ramp during the year.”
Universal Health Services (2/27 Earnings Call Transcript)
“As far as the coronavirus, like everybody else, I think any commentary that I would give at this point would be purely speculative. It’s impossible to know what the impact will be, specifically in the first quarter, but we’re certainly prepared. Our hospitals are prepared as best as they can be. If the coronavirus becomes more widespread, but I think virtually impossible to predict a financial impact.”
BKNG (2/26 Earnings Call Transcript)
“Now turning to more recent events. The coronavirus has had an impact across our business since it made news headlines on January 21. The early impacts were in Greater China, but we also saw these impacts across Asia and to a lesser extent, in other regions outside of Asia as well. To help with context, the APAC region represents a little over 20% of our room nights with no single country accounting for more than a mid-single-digit share of total room nights. In APAC, we’ve seen an increase in cancellations, reduction in new bookings and pressure on ADRs.
As you all know, it’s not possible to predict where and to what degree outbreaks of the coronavirus will disrupt travel patterns. While the incidence of infections has slowed in China, in the last week alone, new outbreaks have occurred in South Korea, Iran and Italy. We’ve been able to measure the impacts on our business so far in Asia and we’ve seen a recent impact on room night bookings in Europe following the outbreak in Italy. As a result, we’re providing only a near-term outlook with a wider guidance range to account for the possibility there will be a growing travel disruption in Europe.
Based on where we are in the quarter and considering the continued impact of the coronavirus, we’re forecasting Q1 booked room nights to be down 5% to 10% versus the prior year. Clearly, we’re dealing with a very fluid situation and it’s extremely difficult to predict where Q1 will come out, but this is our best estimate based upon the data we have available now. We forecast total gross bookings to decline 8% to 13% on a constant currency basis and about 200 basis points more in U.S. dollars. Our Q1 forecast assumes that constant currency ADRs of the company will be down about 4%…
Question – Kevin Campbell Kopelman: Great. Could you give us more color on the latest trends in Europe travel bookings that you’ve seen over the last few days following the outbreak of the coronavirus in Italy?
Answer – David I. Goulden: Yes, Kevin, this is David. Let me take that. Maybe just kind of maybe frame it in the way that the quarter shapes up and our projections do take into account what we’ve seen in the last few days. So let me kind of give you a lay of the land, first of all, by region, not surprising. We already mentioned that China is the worst impacted. Asia, excluding China, has also been impacted for some time. The rest of the world, which obviously includes Europe and Europe’s a big piece of that for us, was growing through February, but we also expect it to be impacted to the negative in March as well. And to give you a bit more color in terms of just how it played across the quarter, on a consolidated basis, we, of course, saw room night growth in January, even though we saw some tapering off at the end with the virus hitting the news on the 21st. Expect February to be approximately flat from a growth rate point of view. And therefore, to get to our guidance for the quarter, expect to see declines in March.
Question – Kevin Campbell Kopelman: Got it. And that March expectation is based on just the worsening kind of trend over the last few days?
Answer – David I. Goulden: Yes. I mean, we really, obviously, as I mentioned, we’re dealing with a very fluid situation, very difficult to predict what’s going on because we’re responding to something that we have no control over. We’re giving you kind of our best view on it. So when we built what we expect to happen in March and created the guidance range, we’re looking very specifically at what has happened over the last few days after the outbreak in Italy and the response we’ve seen in Europe in response to that, which is not surprising has been negative. So yes, we are expecting and we’re seeing, even though we’re going to get room night growth through rest of world in February, towards the end of February that is already in decline. And we expect it to continue to decline into March.”
Ameren (2/26 Earnings Call Transcript)
“Of course, we continue to work closely with the developers for both projects to monitor the time of the manufacturing and shipment of certain facility components coming from China, due to the potential for issues associated with the coronavirus. At this time, both projects remain on schedule to be in service by the end of 2020, and we expect to see meaningful contributions to earnings in 2021 from these investments.”
Baxter International (2/26 Conference Transcript)
“It might have been in general — a general (inaudible), I don’t know. But — so the ultimate impact of coronavirus, it’s not clear how widespread this is going to be.
So let me share a few things in terms of these puts and takes. The takes are, look, we’re very reliant on China suppliers for a variety of our products. Also, people are not going to hospitals in China for any elective procedures. So things like our anesthesia gases business in China will suffer as a result of this. That’s a downside. So those are things that could be very — that could be disruptive to us, the former more disruptive than the latter. So the supply chain impact could be more, depending on how sustained this is.
Now on the upside, to the extent that people do go to hospitals as a result of this, our acute business will benefit. One of the things I love about our acute business is that it literally saves patients lives because their kidneys are failing, and we are there at the moment of need to address a critically important need. And so we’re seeing strong performance in that business, and that will continue.
IVs as well. So IV bags is another business that will benefit from this. So those are — there are puts and takes. It will depend on how this goes. Of course, depending on the global nature of this virus and how severe it is — does it start to impact our manufacturing operations? It’s an open question. So this is a great uncertainty for us, and it’s something that we will have to — we’re going to — we’re watching on a daily basis as you can imagine.”
ILMN (2/26 Earnings Call Transcript)
“Yes. I mean, we’re evaluating this closely as I’m sure a lot of people with any China exposure is. And China exposure isn’t just the revenues that you have in China, but also the supply chain exposure that you might have. So we’re definitely evaluating this closely. Listen, the main thing here is that we’ve been actively working on is making sure our employees are safe, making sure our customers are also — they have what they need. They’re safe, but they’re also — they have — any instruments or consumables that they need, that they can also test for coronavirus because some of our reagents and instruments are used for it. And we are actually seeing, in fact, some customers ramping up some work on coronavirus. But at the end of the day, this will likely have an impact.
It’s having an impact in China in terms of people having access to be able to get to their place of work, to be able to go outside. This could have, especially if protracted, if this gets prolonged, this could have an impact on clinical testing in terms of people being able to do reproductive health or oncology testing. I mean the type of testing that gets done on our instruments in the clinic is usually pretty critical testing. It’s not just routine or, really, things that you could avoid doing. But having said this, when there’s access challenges to the clinic or to the hospital, it could have an impact. At this stage, it’s early to tell. We’ll obviously be giving more information.
In terms of supply chain, Puneet, I mean that’s the other thing that we’re focused on. We have very limited exposure when it comes to China. We don’t manufacture in China. In terms of distributing in China, getting product into China, we haven’t had any exposure there or we haven’t had any impact there. So we’re very focused on getting product into China, as I mentioned. We’ve got distribution in China. We haven’t had any impact. We have limited — very limited exposure in terms of third-party suppliers that actually supply from China or that supply components out of China. And we have redundancies in the supply chain to address that. We have also safety stock, inventory on hand for a number of months to help us offset that. So on the supply chain, obviously, we’re also evaluating closely, but we don’t feel we have — we have limited exposure from China.”
“Now looking into the coronavirus. Well, we already mentioned that we believe that — well, we hope that it will be contained, that the damage that it may create at the Chinese as well as the world economy will be limited. So far, on the commercial side of our operations, we have not — we haven’t had any impact related to the project. Our shipments, even the ones for China are moving forward as scheduled. And we are, in that regard, tranquil. Regarding the supply chain impact, we haven’t had any so far. As you know, our operations both are in Mexico and Peru, and we have not experienced any trouble in any of these countries and nothing related to or parts from China. In some cases, our suppliers are bringing in the parts that we require and some other materials from different sources. Obviously, that may take a little bit longer, but nothing specifically has affected us. Our inventories are sufficient to cover our operations at this point, and we have nothing to report regarding delays or anything like that, neither on the commercial side, as I say, nor at the supply chain for the corporation.”
“Amrita Ahuja: Sure. In short, we didn’t see any material impact in our Q4 results, as you can see, nor do we expect a material impact in Q1 for our results. When you look across the Seller and Cash ecosystems today, we continue to see healthy trends in performance. We have sellers in a variety of industries on our platform, and we’re actually under-indexed to tourism. Although, of course, we’ll continue to monitor any impact to the overall consumer spend numbers that we see.”
“Before I turn the call over to Scott, we know you may have a lot of questions related to coronavirus. What I have to say is that at this time, we have not seen an impact to our business and it is too early for us to speculate about the future. Again, our priority is the health and well-being of our associates and we have made certain adjustments in terms of travel in our global buying offices. We are monitoring the situation closely and thinking of everyone worldwide who has been affected… Thanks, Ernie. As Ernie mentioned, we are monitoring the coronavirus outbreak closely. But at this time, we have not included any potential financial impact in our fiscal ’21 guidance.“
Abbvie (2/25 Conference Transcript)
“Question – Geoffrey Craig Porges: Okay. One last question for Rob. Just can you talk a little bit about what your demand and your supply exposure is to China, assuming this coronavirus then continues?
Answer – Robert A. Michael: Yes. So on the demand side, we don’t have a very large business in China as AbbVie so — HUMIRA is fairly small in China. So we don’t have a significant exposure there.
In terms of — on the supply chain side, we have enough redundancy globally. That’s been part of our supply chain strategy all along, to ensure that we don’t have any supply disruptions related to China.”
Arista Networks (2/25 Conference Transcript)
“Yes. I mean, I don’t know that we have anything new to add at this point. It’s only been, to your point, less than a couple of weeks since we did the call. We don’t have any direct manufacturing footprints in China. But obviously, we do have some supply chain impacts that — there’s a lot of those components and subcomponents that are manufactured in China. So it’s a question of working through piece by piece, right? There’s a lot of detailed work that’s ongoing now. Planning for various outcomes and understanding where we’re at in terms of near-term supply. But there’s, obviously, supply in the supply chain already, which will help. And then it’s a question of just blocking and tackling around every single component and understanding where they are.
I mean it’s changing, obviously. Some factors are coming up. They’re coming up at different schedules. So it really is just a — it’s a supply chain — detailed supply chain exercise to go figure out exactly where we are, and then look at alternatives, and plan out for some period of time. And that’s all in play now. But we don’t really have anything new to add from what we said on the call, which is we don’t have a direct manufacturing footprint there. We do have some existing supply chain availability, and then we’ll go figure out where we are from there.”
“The strong supply growth, warm weather and slowing economic growth that we saw in the fourth quarter of 2019 have continued into early 2020 and have recently been compounded by the impact of the novel coronavirus outbreak. Since the start of 2020, we have seen JKM spot prices decrease by approximately 50%, with prices for March falling below the previous record low of $3.65 recorded in May of 2009. While it’s currently too early to gauge the potential impact of the coronavirus on the near-term market balance, decreased short-term LNG demand in China is putting additional pressure on a market still working to absorb the wave of incremental supply into the market over the past 2 years. I’ll speak more about our 2020 outlook in a few moments…
That being said, we await clarity on the impact of coronavirus on Chinese economic and foreign trade priorities. While the impact of the outbreak on China’s economic growth is uncertain, we see potential for Chinese gas demand to decrease in the near term, followed by a rebound with the resumption of normal industrial activity and as a result of stimulus measures already being implemented by the Chinese government. Longer term, we believe that the U.S. and China are natural partners on energy trade and are hopeful that the tariffs can be removed permanently to facilitate new long-term agreements.”
“With respect to the coronavirus, I’m sure Marc will have some comments on that, but it’s not affecting us right now. Certainly, we’re concerned. We’re watching to see what happens here. And we’re empathetic to those who it is affecting. But overall, I think we are — the company is in a terrific spot, and I think we’re all proud of the results here.
Answer – Marc R. Benioff: Well, number one, I think all of our hearts go out to all of the families around the world who have been impacted by the coronavirus and certainly, the world governments and their impact to contain what is possibly going to be a serious pandemic. So we have been listening and paying attention closely to what’s been happening around the world. Certainly, we’ve had a number of customers come to us just in our normal course of business and talk to us about how their businesses have been impacted. Those have been mostly limited to airlines and hospitality companies, companies who have their operations primarily in China or who have significant supply chains based in China.
I think that when we’ve looked at architecting Salesforce over the last 21 years and as we’ve looked at navigating the economic crises that we’ve been through before, we’ve been through 2 serious recessions. Now as we look at navigating a biological crisis — when we started Salesforce, Parker and I really built a business model that was designed to transcend these situations so that we would have durable growth over time regardless of the crises. I think that really played out in a surprising way with a level of strength in 2009, ’10 and ’11 financial crisis that if you look at our revenue curves, it looks like it never happened because whether our bookings are up or down 1 quarter or the next, the strength of our revenue model and the resulting cash flow and commitment we’ve had to incremental operating margin over 21 years has really paid out to have a level of durable capability for the company that I think has been unprecedented in the technology industry and given our investors, the returns that have been so strong for them and something that we’re very committed to continuing to do more than I think Mark will know, 93%, 92%. What is it?”
Insulet (2/25 Earnings Call Transcript)
“Finally, turning to our manufacturing innovation and global operational excellence. First, I would like to acknowledge that as we all deal with the global challenges of the coronavirus and its impact on families, employees and the operations of many global organizations, it highlights the importance of our investment in manufacturing and supply chain redundancy…
Question – Robert Justin Marcus: Okay. And I’m sorry if you touched on this in the prepared remarks, I’m jumping across a couple of different calls tonight. But can you touch on your supply chain in China and any impact from coronavirus? How manufacturing in China is? How much safety stock do you have? And if you foresee any potential supply disruptions here?
Answer – Shacey Petrovic: Yes, Robbie, it’s a great question. And I want to first just commend our team because they are managing through this incredibly capably, and we do not anticipate any product supply issues due to the coronavirus at this time. Our — as we mentioned earlier, our automated facility in the U.S. is starting to provide manufacturing redundancy and risk mitigation and additional capacity as line 1 ramps, and then we bring line 2 on. And we’ve got our best people, frankly, on this here and on the ground in Shenzhen. We have a comprehensive plan in place to make sure that we’ve got risk mitigation. So plenty of inventory on hand. And then, Acton continues to produce more and more every day. And then our facility in Shenzen is also up and producing again.”
HP (2/24 Earnings Call Transcript)
“Before I turn the call to Steve, I want to briefly address the coronavirus situation. First and foremost, the well-being of our employees, partners, customers and their families is our #1 priority. We are following the processes and protocols outlined by public health authorities. We are also providing resources to assist with the public health response.
From a business perspective, as you all know, the situation is fluid. We are actively working to return to full production as quickly as possible. We are working with our logistics providers to ensure we get the necessary capacity to meet customer demand. Overall, we are viewing the situation as temporary in nature and we are aggressively navigating the challenges… With regards to the financial impact from the coronavirus, we are factoring in our best assumptions at this time, recognizing that the situation remains highly dynamic…
Answer – Steven J. Fieler: Yes. And what we saw in Q1 was our demand remained solid certainly on the commercial side, and so I think that’s an important factor. Ironically, I think the coronavirus may ultimately push out some of the Win 10 refresh time lines, given some of the constraints we’re going to see in Q2, so that could support a better second half than we originally anticipated.
Answer – Enrique J. Lores: Additionally, to some of the shortages we have seen on processors during the last quarter, so this really is smoothing out the transition to the new system.
Answer – Rajagopal Raghunathan Kamesh: And on the coronavirus impacts, does your guidance include any impacts to demand outside of China?
Answer – Steven J. Fieler: No, the guide really reflects the economic conditions as we saw today. And the demand impact was really China-based as well as the supply chain and logistics impact from the China production and manufacturing.
Answer – Enrique J. Lores: And as we said before, the biggest impact is driven by the supply chain impact. That, of course, will have an impact in sales all over the world.”
HPQ (2/24 Earnings Call Transcript)
“Candidly, if we just reflect on the current situation with coronavirus and the working capital required to run our Personal Systems business, it’s really important that you have that flexibility in your operating cash as we do today… Yes. So we increased our full year outlook by $0.10. I think what we’ve demonstrated is we do have multiple levers to drive profit at the company, and our outlook does assess the various risks and opportunities that we see. Maybe just a few high-level points. The first is we have factored into our guidance, what you see in Q2, the impact of coronavirus. We see it as a temporary issue at this point. Again, it’s dynamic. But that is both in Q2 and does reflect our overall full year guide.
In the second half, Personal Systems is going to have a tougher compare, whereas Print should show a better compare and year-over-year improvement. But also second half, and I think what’s important is we do expect to see more of the structural cost reductions and savings, and we have increasing confidence in that. You factor all those elements together, which is why we increased the full year by $0.10, and we’ve got confidence in delivering that, albeit the coronavirus remains dynamic.”
Keysight Technologies (2/24 Earnings Call Transcript)
“This guidance incorporates our current assessment of the coronavirus impact. Given the dynamics of the situation, we expect any impact from coronavirus to simply be a pushout in demand and do not anticipate any impact on our full year results at this time…
Answer – Ronald S. Nersesian: Yes, John, this is Ron. I’m going to give you a little bit of a long answer on this because I figured there’s a lot of interest in the effects of the coronavirus. First of all, it’s a very unfortunate situation affecting not only China, but we’re seeing it, obviously, in South Korea, Italy and other countries, including customers around the world. The situation is changing. So here’s an up-to-the-minute update as far as what we know at this point. The first thing I’d like to say is that we have a lot of sales in China, but we do not do much manufacturing at all. Over 99% of our products are not manufactured in China. We do receive about 10% of our parts or a little bit less than 10% of our parts from China, but all of this is built into what our guide is.
So let’s talk about our employees. We have 991 people in China and another about 233 non-Keysight workers that help us in sales, support and research & development. Of those, 1,224 workers, luckily, none have reported coronavirus cases at all. The other thing that’s worthwhile to note is, if you look at Hubei province and Wuhan, they’re not a big employment center for us. We have folks in Beijing, Shanghai, Chengdu, in Sichuan province and Shenzhen primarily as well as some salespeople that are scattered throughout the rest of China. 1/3 of those people are back at work already as we’ve opened up offices in Beijing, Shanghai, Chengdu and Shenzhen. And the rest, the other 770 folks are working remotely through video conferences, remote support — with remote control of instruments and giving daily reports to sales management. So we get a daily report on the health status of everyone, the sales funnel and how everybody is doing in order to make sure we’re taking care of our customers as well as our employees.
We’re working through that same process in other parts of the field or in other regions. But clearly, the impact in other regions is smaller and not as big of a center for us. So let’s talk about the business implications as we know it. Last quarter, we guided $1.055 billion in revenue, and we delivered $1.141 billion in orders or we delivered $86 million in orders above what we said, assuming a book-to-bill of 1. Of that $86 million in orders, we shipped $40 million of it, so we actually delivered revenue of $1.095 billion, not $1.055 billion. But the additional $46 million we have in backlog that could help smooth out any timing delays that we would see from the coronavirus. We have guided $1.158 billion, plus or minus $20 million, and we’ve built in approximately $20 million worth of impact into our guide. The key point, though, that you should remember is that we have a good backlog situation. We have very differentiated products. And we’re very confident at this point that we’ll be able to make up any delays that we see in the second half of the year, therefore, not affecting Keysight’s performance in fiscal year ’20. I hope that helps, John.”
Palo Alto Networks (2/24 Earnings Call Transcript)
“Please note that our guidance does not reflect any potential disruptions in our global supply chain that could result from the coronavirus, which we are carefully monitoring.”
“Answer – Unidentified Analyst: Got you. And then just another question, something that’s come up a lot that’s topical is coronavirus and your exposure to China. Obviously, you talked about your overall revenue exposure at length given all the ASF impact. So first one to ask, is there any direct exposure that you would think of or that you’ve seen either in the companion animal or the livestock business? But then also what about indirect exposure in terms of API, sourcing, supply chain?
Answer – Glenn C. David: Yes, yes. So sure, as you size the market for China, for us, it’s about a $200 million market. What we’ve seen and what we’ve heard to date in terms of the impact of coronavirus that could have an impact on that direct revenue, as you mentioned, will be 2 things: a, from a companion animal perspective, our customers bring in their pets into the vet for visits, and we expect that traffic to be slower now, obviously, based on the impact of the coronavirus. The other factor and what we’re hearing a lot is the food and beverage industry has been negatively impacted based on the coronavirus obviously due to less travel into the markets and also people just going out less for dinner and things of that nature. So that, from a short-term perspective, will limit the amount of protein consumption. So those are 2 areas that we expect will impact our direct business. We don’t expect it at a material level to date. But again, based on the amount of time that the virus stays out there, that can have an impact over time, but it’s a little too early to tell the magnitude of that.
From an other area perspective in terms of our supply chain, APIs, things of that nature, we typically carry, for the most of our products, over 6 months of inventory of API. So we don’t expect a disruption to our overall supply chain based on what we know today.”
Added Coronavirus Detail to 10K
Ansys (2/27 10K – Added Detail)
“In addition, our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of respiratory illness caused by a novel coronavirus first identified in Wuhan, Hubei Province, China. Any outbreak of contagious diseases, and other adverse public health developments, may cause us or our customers to temporarily suspend operations in the affected city or country. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products, our ability to collect against existing trade receivables and our operating results.”
Avery Dennison (2/26 10K – Added Detail)
“Although the outbreak originated in China, cases have been confirmed in other countries as well. The extent to which the novel coronavirus will impact our results is dependent on future developments, which are uncertain and unpredictable. Any widespread health crisis could adversely affect the economies and financial markets in impacted countries, potentially leading to an economic downturn that could adversely affect demand for our products and negatively impact our business. We expect that the coronavirus will adversely impact our first quarter and full year 2020 results; while we will take measures to try to mitigate this impact, there can be no assurance that these actions will be able to partially or fully offset the impact.”
Valero Energy (2/26 10K – Added Detail)
“Global concern about the coronavirus outbreak could result in lower demand for and consumption of transportation fuels, which would have a negative impact on our results of operations.”
McDonald’s (2/26 10K – Added Detail)
“Severe weather conditions, natural disasters, hostilities and social unrest, any shifting climate patterns, terrorist activities, health epidemics or pandemics (or expectations about them) can adversely affect consumer spending and confidence levels and supply availability and costs, as well as the local operations in impacted markets, all of which can affect our results and prospects. For example, the recent outbreak of the coronavirus in China has disrupted local operations, and neither the duration nor scope of the disruption can be predicted. Therefore, while we expect this matter to negatively impact our results, the related financial impact cannot be reasonably estimated at this time. Our receipt of proceeds under any insurance we maintain with respect to some of these risks may be delayed or the proceeds may be insufficient to cover our losses fully.”
Updated Guidance via Press Release
EOG Resources (2/28 Earnings Call Transcript)
“Question – Arun Jayaram: Yes, Bill, I was wondering if you could comment on how EOG is thinking about some of the demand impacts from the Coronavirus and the state of the oil market today? And what would be the company’s game plan if we did move into an environment where we have sustained oil price that caught in the low 40s for some bit of time?
Answer – William R. Thomas: Yes, Arun, certainly, this is a huge world event, and it’s developing. And we like everybody else is watching really daily the developments around the world, and we certainly hope and pray it’s a short-term event. But if it turned to a longer-term event, as Billy said, we’re in a fantastic position. Number 1, we got a great balance sheet, and we are committed to that, and that’s certainly been a strength of EOG for years and years and years. And so that puts us in a great position. And then we’re very flexible. We have an operational ability to adjust activity. And I think I’ll let Billy comment a little bit more about that, maybe some of the specifics.
Answer – Lloyd W. Helms: Yes, Arun. So the way I would add to that is we have the capability to adjust our rig activity and frac fleets down to really be in line with our sustainable CapEx or smart maintenance capital numbers. So we’ve set out a plan that really allows us to capture the highest performing rigs and frac crews in the market, but we have a tremendous amount of flexibility to adjust downward if we need to and so — and the same would apply to our allocation of capital to our infrastructure spend and other things. We have the same capability to adjust that downward if needed. So we’ll just be patient here and watch to see how the market unfolds and adjust accordingly.”
AES Corp (2/28 Earnings Call Transcript)
“Before I turn the call over to Gustavo, let me address the issue of COVID-19 or the coronavirus. As a long-term contracted generator, overwhelmingly in U.S. dollars and the U.S. utility business, we see limited impact from most likely scenarios from the coronavirus epidemic. Furthermore, as I have previously laid out, AES has a strong pipeline of contracted, mostly renewable projects, that ensure our growth over the coming years. Although we may suffer some delivery delays, both our solar and energy storage businesses have largely secured their supplies of lithium-ion batteries and photovoltaic sales for this year. We will continue to closely monitor the situation and take proactive measures to ensure the resiliency of our business.”
Vistra Energy (2/28 Earnings Call Transcript)
“I think one of the things they’d like to see is whether we can withstand the business cycles, including things like what’s going on with the coronavirus right now, which I think in 2020 we’re going to have a very good year despite what could be symptoms of a recession off of that — off the coronavirus. So I think we’re a very strong company. I think we’ll show that in 2020, but I think it’s very important for us to do that.”
Dell (2/27 Earnings Call Transcript)
“Obviously, we’re trying to be thoughtful around the dynamics in the environment right now, although our guidance doesn’t specifically include coronavirus… Yes, the coronavirus is a — has created some level of uncertainty, if you will, and we signaled in the guidance conversation that I had in my prepared remarks that we did expect our sequentials — or normal sequentials from Q4 to Q1 to be softer as a result of the coronavirus impact. We are not looking at that at this point with what we know that, that isn’t — that it affects the full year. The question that we’ve been thinking our way through is, as we look at the impact of the coronavirus is, there’s 2 principal impacts right now. One is in our domestic China business, which has been, obviously, with the Chinese economy softening, and given the — what they’re going through to try to contain the virus. We do expect an impact in Q1 in the China business itself. And then the question becomes to this extent that there’s supply chain or lead time dynamics, how do you think about demand as a perishable, or does it defer? I think our thinking right now is that, to the extent that it’s the only demand that we see that is perishable at this point is that consumer demand, where they want to buy a product now, and if you don’t have the right product or the lead times don’t work, perhaps they move elsewhere.
Now, we’ll obviously continue to refine that as we move forward and learn more about impacts. But I do think for the full year, we feel good about our cash forecast at this point in time. We’ve got a very efficient working capital model. I think if you look at the amount of debt coming due, I think it’s very, very manageable this year. And our whole goal was to get ahead and try and drive some of the future maturity stacks down.”
Trade Desk (2/27 Earnings Call Transcript)
“Of course, we’re also watching the virus around the world, the coronavirus, and trying to measure the impact that, that will have on everything globally. And while we don’t think it will have a significant impact, in the current environment, it’s prudent to be measured. So we’re more comfortable moving expectations up as we go, but our optimism is as strong as it could be.”
Autodesk (2/27 Earnings Call Transcript)
“First off, the whole coronavirus situation is a human situation. It’s kind of a human tragedy. And the best thing that can happen here for all of us is that it just gets resolved and contained relatively quickly and there’s a vaccine next year for the next flu season. But from a business perspective, how it impacts you is it depends on your business, and we’ve looked pretty deeply at our business. And here’s kind of a lay of the land I’ll give you. If you are a software vendor that’s exposed to big deals from especially large industrials that have kind of global supply chain disruption, you’re going to feel some effects from this, all right? That’s not us. In addition, if you’re in the travel industry, obviously, you’re going to feel some effects from this.
But here’s what’s different about Autodesk, and here’s why I want to help you understand how we look at the business and why we took into account some China effects in Q1, but we don’t see longer-term effects at this point, okay? Now I will say, if this becomes a pandemic, all bets are off and we’ll have a different discussion. But right now, our business is what we call almost micro-verticalized. We cut across lots of different verticals. And it’s not just industrial verticals, it’s company-sized verticals. We go from the biggest to the smallest. Our business, especially in the first half of the year, is not heavily dependent on large deals and large companies, particularly large industrials. So we don’t see that kind of sensitivity in our business.
But in addition, and I think this is super important for you to understand, it’s one of the great things about being an indirect company, our business happens hyper-locally. And what I mean by that is the VARs, especially in APAC, that transact with the customers are actually new to customers, all right? You’re not dealing with a situation where people travel or there’s a diaspora of salespeople heading in various directions to get the business done. Customers need our software. They need our softwares now. And the VARs are there. So this combination of this micro-verticalization is spread across various companies of various sizes. And it’s hyper-locality of our business is why when SARS hit last round, we didn’t see much impact on our business.
So right now, what we’ve done, we looked at China. Obviously, we just said, all right, more China. China was already having issues as well. So we’ve prudently looked at Q1 with regards to China, looked at the short-term impacts. But we don’t see right now any other impacts in our business. Of course, like I said earlier, if the pandemic hits, we’ll have a different discussion. But right now, I just want you to pay attention to that notion of highly verticalized, micro verticals, different customer segments and hyper-local, which is a great advantage of where we’re at… it’s not a — we haven’t taken into account a significant headwind from coronavirus. We expect our recurring revenue to actually show slight growth sequentially gain.”
Monster Beverage (2/27 Earnings Call Transcript)
“And then if I could just talk about the coronavirus for one second, I’ve been asked and I haven’t really answered it because I was waiting to answer it on the call. And we don’t normally give numbers, sales in various countries. But what I can tell you is that our sales in China in 2019 were less than 1% of our consolidated net sales for the company. So that puts a little bit in perspective because it was a little bit of nervousness, but it’s less than 1%.”
Live Nation (2/27 Earnings Call Transcript)
“The coronavirus has had a lot of press lately, so I wanted to give some context for us. First, as it relates to China and Asia shows generally, show cancellations have been minimal given our activity levels in China, with 17 shows totaling approximately 75,000 fans. Looking over the next 3 months, our Asia activity is limited, with 70 shows and 200,000 fans in the region.
Second, as it relates to Italy, we have 30 shows booked over the next 3 months with approximately 125,000 fans. Collectively, this accounts for less than 0.5% of our 100 million-plus fans we expect to attend our shows this year. More broadly, while we expect that there will be further areas of breakout over the next few months, one of our strengths is that we are highly diversified geographically. Thus far, we have seen no pullback in fan demand or ticket buying outside of the specifically affected areas. And overall, our attendance is weighted toward the latter part of this year with over 70% of our attendance expected from June through the end of the year.”
VMWare (2/27 Earnings Call Transcript)
“I’d also point out with — even in today’s coronavirus, right, customers are anxious, saying, “How can I have more resilience for a work-at-home environment?” And again, that even accelerates today’s offering of EUC.
But what we talked about at the RSA conference is entirely consistent with our Intrinsic Security strategy where it isn’t about end-user computing, it’s about secure end-user computing. And we’re going to redefine the category and really bring management and security into a singular, integrated set of solutions for customers. And this idea of, right, the security industry today is highly bespoke, highly fragmented, way too many products, complexity for customers to manage and validating and putting these pieces together, this has to come to an end. And that’s really the strategy that we’ve laid out is to bring security intrinsically into the core platforms, redefine these categories, minimize the space that customers need to test, validate, operationalize by making it part of the environments that they’re already running.”
Factset Research Systems (2/27 Earnings Call Transcript)
“No, it’s definitely a very serious topic. First and foremost, for us, our employees are safe, which is key. And we’re also very used to working remotely. So that’s been a question mark. And from that perspective, I’d say it’s business as usual, though there’s no as usual right now, right?
In terms of ASV, if I think about Hong Kong and China, it’s less than 1% of our total ASV. So that’s what’s going on in that, right? But from the perspective of exposure directly to that, there isn’t a lot. I think we’ll see how this progresses and the impact it could potentially have. But I think right now, for lack of a better word, it’s contained because our exposure to that — those countries aren’t as large at this point.”
W.R. Berkley (2/27 – Credit Suisse Financial Services Forum)
“Why don’t I give a broad based in (inaudible) specifically (inaudible) network. Broad-based, in general, there’s nothing about the coronavirus that would cause particular claims or considerations. Business interruption generally is not covered by these things, workers’ compensation generally would not be covered by these things. I think that the likely issues are — have responsibilities because (inaudible) take decisions in order to prevent adverse consequences, none of which would be covered by insurance. So you close a plant for a week or a month, not an insured loss. So those are the kinds of things that are likely to happen. A hotel in Canary Islands got quarantined by the Spanish government. It’s not an insured event. I’m not sure what the people who were inside the hotel think. And most of them wouldn’t have insurance that would cover. So to the most part, the coronavirus is a noninsurance event, not in a 100%, you never know specifics within (inaudible).”
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