The earnings season for Q2 2022 is upon us already and we’ve created this earnings tracker to provide earnings analysis in real-time. Given the state of the market, macro influences at play, and consensus forecasts covering a wide spectrum, the results this season are sure to uncover insights that could indicate broader market shifts. This quarterly earnings tracker is meant to be the first step of your earnings analysis every quarter, as we help you monitor the top companies across various industries to deliver critical insights as they unfold.
Following 35 organizations across seven industries, this tracker serves to highlight key themes, trends, and insights from their individual earnings transcripts. Starting July 18, with Bank of America’s earnings call, through August 24 with NVIDIA’s earnings, we’ll dynamically update this page with the relevant takeaways and respective earnings transcript snippets designed to give a briefing of the company’s earnings call.
A few macro trends we expect to see mentioned throughout this earnings season include inflation, remaining supply chain issues, stock price volatility, the ongoing fallout of Russia’s invasion of Ukraine, COVID-19’s lingering ripple effect, and recent spike, and companies bracing for a potential recession.
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Jump to section, bold companies held their earnings
Meta Platforms, Inc. [META]
Earnings: Wed Jul 27, 2022 05:00 PM EST
- META reported revenue of $28.8 billion, up 3% YoY (excluding FX), vs. up 10% in 1Q22 & and up 50% in 2Q21. Advertising revenue in the quarter declined 1.5% YoY, the first decline in the Company’s history. Operating Income fell 32% to $8.4 billion, which was above consensus and resulted in a 29% operating margin.
- EPS of $2.46 missed consensus of $2.54, falling 32% YoY.
- Q3 revenue guidance of a 6% decline YoY at the midpoint was 10% below the Street’s +5% but assumes 6% points of negative FX impact.
- Management announced that the current CFO, Dave Wehner, will become META’s first Chief Strategy Officer, and Susan Li (current VP of Finance) is becoming the new CFO.
When asked about META’s future plans regarding Apple’s iOS changes, which impacted their ability to target and measure for advertisements, the COO responded:
“…we use data very effectively and in a very privacy-safe way all along to build out very measurable results and very measurable personalized targeting for advertisers… And now we’re in a new era, where we have to do that same form of targeting, that same form of measurement using less data… We’re going to do it by investing on our own, investing in AI, investing in machine learning. We’re going to do it in rolling out products, like we have recently. That help us and advertisers measure where we’re sharing less data between… This is a challenge that anyone that’s running on the Apple iOS platform has.” -Sheryl Kara Sandberg, COO & Director
Amazon.com, Inc. [AMZN]
Earnings: Estimated Thu Jul 28, 2022
- 2Q net sales grew 7% YoY, while operating income fell 57%, beating company guidance and consensus estimates. Management noted that a combination of inflationary pressures, reduced productivity, and reduced fixed cost leverage were a $4 billion year-over-year headwind to operating income.
- Amazon made progress on reducing productivity headwinds in 2Q, while inflationary pressures and reduced fixed cost leverage were similar headwinds in 2Q compared to last quarter.
- 3Q projected net sales are between $125-130 billion (up 13-17% YoY) and operating income is between $0-3.5 billion (vs. $4.9 billion the year prior).
- Amazon completed its 20-for-1 stock split during the quarter, which has no negative implications for institutional ownership but will further attract retail investors.
Amazon reported a QoQ decline in headcount. When asked how they are preparing for the upcoming holiday, the CFO responded:
“…we added 14,000 workers in Q1. Prior year, we had reduced our net head count by 27,000. So we’re pretty transparent about the fact that we had hired a lot of people in Q1 for the coverage of the Omicron variant. Luckily, that variant subsided, and we were left with a higher headcount position. We’ve — that has come down through adjusting our hiring levels and normal attrition… So that is dominating the quarter-over-quarter reduction in head count. I would note that we’re still up 188,000 year-over-year and nearly double the headcount of what we had heading into the pandemic in early 2020. So you’re right, there will be adjustments to that as we move forward into more holiday-level demand. Right now, we see a stabilization in the workforce. I think we see good hiring rates. And so I think — if you remember, it was a very difficult labor period in the second half of last year. And it didn’t — it arrived kind of quickly out of nowhere. So we’re certainly diligent on that and making sure we have a good workplace and an environment that will attract employees.” – Brian T. Olsavsky, Senior VP & CFO
Apple Inc. [AAPL]
Earnings: Thu Jul 28, 2022 05:00 PM EST
- Apple’s 2Q revenue of $83.0 billion (+2% YoY) was above the Street’s $82.8 billion expectation. iPhone revenue totaled $40.7 billion (+3% YoY) versus the $38.6 billion consensus. GAAP EPS hit $1.20 versus the $1.16 consensus.
- Supply chain impact was slightly below the $4-8 billion guidance range and management noted that FX and the Russia wind-down were 300 basis points and 150 basis points, respectively. Without these headwinds, baseline growth would have been ~8% YoY.
- Management noted an uptick in switchers coming to iOS from Android, setting a new June quarter record for switchers with strong double-digit YoY growth. The uptick may be driven primarily by Huawei holders upgrading after holding out for the OEM to make a comeback. Some are likely also coming from Samsung and to a lesser extent LG given Huawei never sold in the US.
- Apple did not provide guidance but noted YoY revenue growth is expected to accelerate in F4Q vs. F3Q, despite negative 600 basis points FX impact. Additionally, constraints on Products is expected to be lower in F4Q vs. F3Q. Lastly, Services revenue is expected to grow in F4Q but decelerate from F3Q due to macro factors and FX.
When asked about the supply chain constraints Apple faced for Mac quarter, and its impacts going forward, Tim Cook (CEO) responded:
“…when the COVID restrictions hit in the Shanghai corridor (last quarter), we lost the primary source of supply for Mac units. And that was either running at a reduced rate or down completely for the majority of the quarter. And so it was a very big impact to the Mac business. We felt good, frankly, that we were able to, by the end of the quarter, get this back to where we were down 10 points. But the negative 10 I would classify as being driven by supply. And of course, FX feeds into this as well because of the translation issues around the world. There’s also some impact because of the business in Russia. But those are the 3 kind of reasons that I would tell you.” –Timothy Cook. CEO & Director
Netflix, Inc. [NFLX]
Earnings: Tue Jul 19, 2022 6:00PM EST
- Netflix reported 2Q22 sales of $7.970 billion (up 9% YoY) and EPS of $3.20. Street consensus was $8.035 billion and $2.94, respectively.
- Netflix plans to roll out a paid sharing offering in 2023 and launch an ad-supported subscription tier through a partnership with Microsoft in early 2023. Moreover, the content on the platform remains strong as evidenced by Stranger Things 4.
- Netflix expects 3Q22 revenue of $7.838 billion (Street at $8.078 billion), operating income of $1.255 billion, EPS of $2.14 (Street at $2.75), and paid global streaming net adds of positive 1.0 million (Street at positive 1.84 million). Netflix expects a positive free cash flow of ~$1 billion in 2022 and a 19-20% operating margin.
When probed on why Netflix estimated subscriber count next quarter was lower than expected at 1 million, the CFO responded:
“Well… it’s the combination of growth in connected TV homes around the world… It’s a little bit of paid sharing. It’s competition and some of these macroeconomic factors like higher inflation as well as the invasion of the Ukraine and the knock-on effects around EMEA and other parts of the world. So we’re still kind of working through that.” – Spencer Neumann, CFO
Earnings: Tue Jul 26, 2022 05:00 PM EST
- GOOG reported revenue growth of 12.6% to $69.69 billion, narrowly missing consensus. Diluted EPS decreased from $1.36 to $1.21 (-11% YoY), also narrowly missing consensus. Despite missing consensus, the Company reported strong growth in all its key segments: Google Search & Other grew 13.5%, YouTube was up 4.8%, Google Network was up 8.5%, and Google Cloud was up 35.6%.
- Management noted that tough YoY comparisons caused by last year’s pandemic recovery will continue to weigh on ad growth rates through 2H22, alongside larger-than-expected FX headwinds. For YouTube and Network, recent pullbacks in ad spending reflect ongoing macro uncertainty across industry verticals. In Other revenue, there is an ongoing impact from the 1/1 Play Store fee changes, alongside a slowdown in buyers’ spend.
- Operating Income was $19.45 billion, or 4.6% below Street consensus, driven by the slight revenue miss and higher R&D and S&M expense, partially offset by lower G&A. While GOOG plans to slow their pace of hiring, this won’t be fully reflected in reported numbers until 2023.
Tech, Media, Telecom
Microsoft Corporation [MSFT]
Earnings: Estimated Tue Jul 26, 2022
- Total revenue came in 1.0% below consensus and missed the midpoint of updated guidance by 60 basis points. This is in contrast to the 13Qs prior where MSFT beat reported consensus by 3.3% on average. FX headwinds, production shutdowns in China related to Windows OEM, and reduction in ad spending impacting LinkedIn revenues were the reasons for the lower revenue.
- Azure grew by 46% YoY, noting larger and longer-term commitments in its business, signing a record number of $100M+ and $1B+ deals in 4Q.
- Commercial bookings growth stayed flat at 35% YoY. This was driven primarily by LT Azure contract strength.
- LinkedIn grew 29% YoY in 4Q22, down from 35% in F3Q22.
- Despite operating margins contracting 180 basis points in the quarter, management expects FY23 operating margins to be flat YoY.
In response to the question ”Are you embedding a worsening macro environment or a similar environment that we’re in to get to that type of growth?”, Microsoft’s CFO responded:
“if you try to look over the course of the year with some of my comments… I would point out 3 things that changed a bit over the course of that time. First, of course, if we’re talking about USD would be FX, it’s a bigger headwind in H1, it’s less of a headwind in H2. The second thing I would point to would be OpEx. As we’ve talked about in H1, we’ve obviously added 22% headcount this quarter. We still have 11,000 hires that we have starting in Q1. We’ve still got Nuance and Xandr in acquisitions, and we anniversary a lot of that as we focus our hiring and focus on the productivity of all of the hiring we’ve done over the past year.And then the OEM comparables obviously get a lot different when you get from H1 into H2. And so as you’re trying to think about the shape and how did I consider it, I sort of took those things into account, thought about the trends we’ve been seeing in June and applied them as best we can.” – Amy Hood, Executive VP & Chief Financial Officer
Tesla, Inc. [TSLA]
Earnings: Thu Jul 21, 2022 12:00 PM EST
- 2Q22 revenue of $16.93 billion was ~2% above the consensus of $16.54 billion. EPS of $2.27 was also above consensus of $1.75. The Company’s gross margins for auto remained strong at 26.2%, and margins for its energy business was also above expectations at 11.2%.
- TSLA reiterated that 50% Y/Y production growth still appears achievable, with June 2022 the highest vehicle production month in company history, driven by Shanghai and Fremont both recording their largest ever monthly production.
When asked about his recent Tweet about lowering car prices once inflation cools, Elon Musk responded:
“Yes… It’s possible that there could be a slight decrease in car prices, but this is fundamentally dependent on macroeconomic inflation. It’s not something we control. If I were to guess, and I would take this with a grain of salt, I think inflation will decline towards the end of this year. We’re certainly seeing prices of commodities trending lower. Yes. But take it with a grain of salt.”
NVIDIA Corporation [NVDA]
Earnings: Wed Aug 24, 2022 05:00 PM EST
- NVDA reported 2Q revenue at $6.7 billion (down 19% QoQ, up 3% YoY), in line with recently lowered preliminary results but 17% below original guidance, mainly due weaker Gaming GPU sales.
- Gaming revenue of $2.04 billion was down 44% QoQ and 33% YoY, with the QoQ and YoY decreases attributable to lower sell-in of Gaming products, a consequence of elevated partner channel inventories.
- The Company reported marginal growth of 1% in Data Center revenue, but noted decreasing demand in China hyperscalers. Although the datacenter momentum remains robust in 3Q22, the YoY momentum is slowing down (+71% in 1H vs. +32% in 3Q) and management’s comments about the data center supply chain could indicate potential downside risk to data center hardware spending in the next few quarters.
- The Oct-quarter revenue guidance of $5.9 billion (down 12% QoQ, down 17% YoY) was still 12% below Street estimate, mainly due to inventory destocking for Gaming GPU at both channel partners and OEM customers
When asked about the company’s supply chain constraints, the CFO responded:
“…Our execution has absolutely been phenomenal, when we think about the challenges of we’re almost putting together a full data center for our customers and getting it shipped out… These are the same supply issues that some of our CSPs are having. So our supply arrived a little bit late in the quarter for some of our key products that we needed to get out. And putting that together caused some disruption in our logistics and distribution.” – Colette M. Kress, Executive VP & CFO
Earnings: Wed Aug 10, 2022 04:30 PM EST
- Disney reported adjusted EPS of $1.09 beat consensus of $0.98. Total evenue of $21.5 billion (+26% YoY) also beat consensus of $21.0B. Segment EBIT of $3.57B (+50% YoY) was primarily driven by Parks. The Parks division beat consensus revenue and EBITDA by 9% and 27%, respectively. The 30.4% June quarter domestic park margin is ahead of pre-pandemic levels of 2018 and 2019 with advanced bookings and intent to visit remaining robust.
- Disney+ and overall DTC subs gains of 14.4 million were 2% and 3% ahead of consensus, driven by Hotstar adds of 8.3 million. Disney raised the prices of its various streaming services between 23% and 43% which should help achieve the profitability target in 2024.
During Q&A, Disney’s CEO alluded to a change in consumer spending trends post-pandemic.
“…there is pent-up demand. But what we’re seeing is far more resilient, far more long-lasting in terms of increase in the affinity for our parks, both from the willingness to come to our parks and its attendance, but also in terms of what guests are willing to spend when they get there in order to personalize their experience… our business looks very strong with forward-looking bookings and intent at pre-pandemic levels, and we see nothing in the future that’s indicating anything to the contrary of what we’ve seen. “ -Robert A. Chapek, CEO & Director
Paramount Group, Inc. [PARA]
Earnings: Thu Aug 4, 2022
- Paramount reported 2Q revenue of $7.78 billion (+19% YoY), beating consensus of $7.34 billion.
- Key drivers included lower TV Media revenue of +1%, reflecting a 6% advertising decline as pricing partially offset the impact of lower linear impressions
- Lower Direct-to-Consumer revenue of +56%, as advertising revenue of $363 million was driven by increased impressions on Pluto TV and Paramount+, and subscription revenue of $830 million was driven by paid subscriber growth on Paramount+
- Better Filmed Entertainment revenue of 126%, driven by the robust performance of Top Gun at the box office
Paramount’s Top Gun: Maverick just cleared $1.34 billion at the global box office and became 1 of the top 10 domestic movies of all time. But with this came questions regarding what is the appropriate level of content spending for the future. In response to this, the CFO responded:
“The most important thing to remember is that when we think about our content investment, we’re always looking at it in the context of the growth and the return that it unlocks. And so of course, when you think about it through that lens, you have to focus on the fact that we added 5 million Paramount+ subs in the quarter. Paramount+ revenue growth was 120%, and we continue to be very bullish about growth going forward. So our content investment is definitely working. It’s producing very real results in the momentum that you’ve seen.” – Naveen Chopra, Executive VP & CFO
Consumer and CPG
Earnings: Fri Jul 29, 2022 09:00 AM EST
- PG reported 4Q organic sales growth of +7% (vs. consensus of +7.3%) and EPS of $1.21 (vs. consensus of $1.22), providing an initial FY’23 EPS guidance midpoint of $5.93 (vs. consensus of $6.01).
- Every business segment besides Beauty saw solid organic sales growth, with Health Care and Fabric & Home Care (+9%) tied for the lead. Strong pricing was the driving factor behind each segment. Fabric & Home Care saw pricing growth (+10%) while Heath Care was driven by both pricing (+5%) and mix (+4%).
- Gross margin declined by about 370 basis points, driven primarily by increased commodity costs and higher freight costs.
When probed on its challenged performance in China, specifically in comparison to its competitors, management responded:
“We have been significantly impacted by the COVID lockdowns. The read for us across our category footprint and regional footprint in China is that the market contracted double digits over the quarter periods that we’re reading, and that is reflected in the results. More importantly, since consumer mobility started to resume, the COVID lockdowns are easing, we’re seeing a return to growth in our categories. Our shares are responding favorably. So we’re hopeful that we return to mid-single-digit growth in China over the next few quarters. Certainly, the team on the ground is excited, capable and has everything ready to go, but we need to see that consumer mobility come back.” – Andre Schulten, Chief Financial Officer
Sysco Corporation [SYY]
Earnings: Estimated Mon Aug 8, 2022
- SYY’s Q4 adjusted EPS grew 61% YoY to $1.15, slightly above consensus of $1.12; this was also above 4Q19 EPS of $1.10 and marked the first post-pandemic period in which earnings beat the similar period pre-pandemic numbers. SYY estimates its sales growth of 39% in the U.S. was 1.3x the market rate in F22, boosted by better supply chain performance.
- Consolidated sales increased 17.5% YoY, to $18.96 billion, beating consensus of $18.29 billion. When adjusting out the extra week in Q4 last year, sales grew 26.5% on an equal-weeks basis.
- Management provided FY23 adjusted EPS guidance between $4.09 – $4.39, up 31% from $3.25 in FY22 and 20% above SYY’s previous record of $3.55 achieved in FY19. Sysco guided to total sales growth of at least 10%, which is predicated on mid- single-digit inflation and solid internally-generated volume growth supplemented by acquisitions. 1Q23 guidance for adjusted EPS is ~$0.98, up 20% YoY.
When asked about any changes in the restaurant industry as a whole, and the difference between chains, independents, QSR, and casual dining, the CEO commented:
“There are winners and there are losers within each segment. We are not seeing meaningful shift from the top end of the spectrum to QSR are within the sectors… (There is also) some shift from the beef category into poultry that was publicly communicated yesterday. And I would say, yes, beef has been highly inflationary. It was the most inflationary category over the last couple of years and customers of ours are looking at portion size. They’re looking at alternative protein options… The good news on the protein side specific to beef, beef prices have normalized…” Kevin P. Hourican, President, CEO & Director
Kellogg Company [K]
Earnings: Thu Aug 4, 2022 09:30 AM EST
- K reported adjusted EPS of $1.18 versus consensus of $1.05. Organic sales growth of 12.2% was due to increased volume and favorable price/mix. Organic sales growth came in strong in every region, but the biggest contributor was in North America, where K’s cereal business got back on track faster than the company anticipated.
- Kellogg’s gross margin was ~60 basis points ahead of the Street. SG&A as a percentage of sales was lower than consensus; however, this was due to strong sales — total SG&A was also reported above Street consensus.
- Kellogg raised its outlook for organic sales growth to 7-8% (from 4%), its pre-FX EBIT growth to +4-5% (from 1-2%), and pre-FX EPS to +2% from +1-2%. The EPS growth is lower than the EBIT growth because of a reduction in expected income from pensions.
When asked about potential labor strike or unionization at one of Kellogg’s Morningstar plants, the CEO responded:
“…there’s a union that has been talking to our workers about a possible unionization effort at our owned Morningstar Farms plant. And obviously, we have a lot of unions in the United States, and we successfully negotiate and renegotiate contracts all the time… We believe that despite having great relations with our unions, we still believe that the best way forward for this particular plant is to remain a nonunion plant and not have somebody in between us and them. It’s been a very successful plant. Great wages at the plant, great benefits at the plant. But we’ll continue talking and we’ll see where we get to.” – Steven A. Cahillane Chairman, CEO & President
Earnings: Fri Jul 29, 2022 08:00 AM EST
- Q2 organic sales growth of 9.0% was above the 6.3% consensus, with share gains in toothpaste in the quarter.
- Most regions came in above expectations, with the only exception of Africa and Eurasia given the impact of Ukraine and Russia conflict. CL reported weaker performance in Europe (+0.5% organic sales with -3% drop in volumes), on the back of the price increases, but management believes this is temporary.
- CL reiterated its FY22 adjusted EPS range of $3.01-3.08, vs. the $3.02 consensus. CL raised organic net sales growth guidance to the 5-7% range from 4-6%, with reported sales growth still at the high end of the previous 1-4% range.
The Kraft Heinz Company [KHC]
Earnings: Wed, Jul 27, 2022 9:00 AM EST
- Net sales of $6.554 billion were ahead of Street consensus of $6.390 billion, driven by 10.1% organic growth compared to consensus of 7.8%. KHC also reported a marginal beat on adjusted EPS of $0.70 compared to Street consensus of $0.68. Strong organic sales were due to strong price realization (12.4%) and strong demand in retail and foodservice channels that was dampened by supply constraints and elasticity impacts from pricing actions.
- Management raised topline guidance but maintained EBITDA outlook. Adjusted EBITDA is expected to be in the range of $5.8-$6.0 billion (vs. Street consensus of $5.9 billion).
PayPal Holdings, Inc. [PYPL]
Earnings: Tue Aug 2, 2022 05:00 PM EST
- PYPL’s 2Q22 core EPS of $0.89 beat consensus of $0.87 by 3%; lower-than-expected costs and slightly higher OVAS (Other Value Added Services) more than offset lower transaction revenues.
- PYPL raised EPS guidance and expects 2022E EPS of $3.87-3.97 (prior $3.81-3.93), revenues +11% YoY (prior 11-13%), OVAS low- double-digits %, eBay revenue headwind $725 million, TPV (total payment volume) +16% (prior 15-17%).
- The Company is gaining share, with branded transactions up low-single-digits % (versus industry-wide e-commerce “roughly flat” including travel). Revenues are affected by FX and economic deceleration, but the headwinds should be offset by margin expansion and capital return.
- PYPL announced $900 million of 2022E cost-saving initiatives across transactional and non-transactional operating expenses, for 2023E total savings of at least $1.3 billion.
Visa Inc. [V]
Earnings: Tue Jul 26, 2022 05:00 PM EST
- V’s 3Q EPS of $1.84 beat consensus of $1.75 by 5% due to higher-than-expected revenues as well as lower incentives.
- Visa reported revenue growth across all segments, with consumer payments, new flows, and OVAS all hitting 20%+ YoY.
- Cross-border revenues beat expectations by 19% as growth accelerated to +48% YoY (123% of 2019 levels) and continued in July (+60% YoY and 130% of 2019 levels). Inbound domestic travel is still only 86% of 2019 levels, and inbound to Asia is only 58% of 2019 levels, implying ongoing growth potential.
- Visa expects 4Q22 net revenue growth to be in the high-teens-to-20s YoY (including a 5% drag from Russia) and FX headwinds between 4-5%.
American Express Company [AXP]
Earnings: Fri Jul 22, 2022 08:30 AM EST
- AXP reported 2Q EPS of $2.57, beating the Street’s consensus of $2.4. Volumes increased 25% YoY, contributing to a 30.8% growth in net revenues.
- Net card fees growth continued to accelerate in 2Q22, rising to +19% YoY as proprietary new cards acquired reached a new post-pandemic high of $3.2 million. Total network volume growth of 25% YoY was better than consensus expectations of 22%.
- Total Travel & Entertainment spending exceeded pre-Covid levels in April for the first time at 108% of 2019 levels, led by strong growth in global consumer and small and medium enterprise spending, and a significant uptick in large & global corporate travel.
- AXP increased its full-year revenue growth guide to 23-25% (from 18- 20% previously), but kept its full-year EPS guide at $9.25-9.65.
When asked about the potential slowdown of Travel & Entertainment expenses going forward, management responded:
“When you think about 8% growth over 2019 from a T&E perspective, and you think about sort of airline prices, you think about some of the inflation built in, I’d say there’s more room to run on T&E… We’re seeing a tremendous growth, like 48% growth in restaurant. Lodging is huge. Airline is way up. But lodging and airlines are still below 2019 levels in aggregate… and the airline industry is probably only about 85%, 90% of their capacity… I think there’s a huge pent-up demand, obviously, to get out and travel and see the world or see anybody at this particular point in time. But no, I’m not really concerned about a pullback because I don’t think we’ve gotten to a normal level yet. I really don’t believe we’ve gotten to a normal level of T&E.”
Capital One [COF]
Earnings: Thu Jul 21, 2022 09:00 AM EST
- 2Q22 reported core EPS of $4.96, missing consensus of $5.10 by 3%. Lower than expected net interest margin (NIM), lower other revenues, and higher provisions more than offset lower operating costs and share count.
- COF reported 2Q22 domestic card loans were up 21% YoY and commercial loans were up 27% YoY. Domestic purchase volumes also grew +18% YoY.
When asked about their thoughts on their business in the context of the current economy, management responded:
“…it’s not lost on us that there’s a lot of noise out there in the economy… There’s probably, I think, more uncertainty at the moment and probably on average… There has been some trimming around the edges in card, quite a bit more so in auto… So I think your net impression should be that while we have a very watchful eye on the economy and obsess about it every day, our underwriting decisions underwrite systematically. At Capital One, we underwrite to a worsening scenario. And so we feel good about our originations.” – Richard Fairbank, CEO
Earnings: Mon Jul 18, 2022 08:30 AM EST
- Overall positive results driven by its consumer banking (fastest quarterly loan growth in nearly three years) and commercial banking businesses (+15% YoY), partially offset by weaker than expected capital markets results, specifically in investment banking and equities trading.
- Deposit costs increased by +4 basis points compared to the peer average of +13 basis points. Loan growth was better than anticipated, with average loans up +4% QoQ, which compares favorably to peer average loan growth of +2%.
Mastercard, inc [MA]
Earnings: Thu July 28, 09:00 AM EST 2022
- MA reported $5.49 billion in adjusted net revenue and $2.56 for adjusted EPS, beating Street consensus by 4% and 9%, respectively.
- Management noted easing border restrictions, with cross-border reaching 118% of 2019 levels in the second quarter and volumes up +58% YoY, globally.
- Through July 21st, MA’s volume trends were solid but management noted that risks include interest rates, inflation, and geopolitical tensions.
- The Company expects 3Q reported net revenue growth at the high-end of low double digits (inclusive of a 7-8% FX headwind and 1% M&A benefit), vs. Street consensus at 15%.
Mastercard raised full-year guidance during the call, noting the following:
“…there are a number of macroeconomic factors that could influence future economic growth: employment and wage levels, consumer savings levels, persistent and elevated inflation and rising interest rates and geopolitical tensions in particular. We are monitoring each of these, but on balance, expect a modest improvement in cross-border travel versus 2019 levels and a generally resilient consumer spending through the remainder of 2022. Taking this all into account, including our well-diversified business model, we are increasing our expectations for net revenue growth for the full year 2022… It is worth highlighting that this performance is despite the cessation of our Russian operations in Q1.” – Sachin Mehra, Chief Financial Officer
Industrials and Energy
Earnings: Tue Jul 26, 2022 08:30 AM EST
- UPS reported 2Q22 revenue and adjusted diluted EPS that were 1% and 4% ahead of consensus, respectively.
- The beat was driven by improving revenue quality and supply chain performance, and domestic margins improved YoY despite a 4% decline in average daily volume. Total revenue grew 5.7% YoY, Package volumes were down 4.8% YoY, and RPU (restricted performance units) increased 12% YoY. Consolidated operating profit grew 9.3% YoY led by the asset lighter Supply Chain segment (+27% YoY).
- Looking ahead, the Company reiterated their 2022 revenue ($102 billion) and total company EBIT margin (13.7%) targets, respectively.
UPS remained optimistic about volumes returning in 2H22, despite the fact that GDP forecasts had come down. When asked how management “read the economic tea leaves,” the CEO responded:
“…more than half of the volume decline in the United States was based on actions that we took with a few of our customers under our better, not bigger framework. One of those customers is Amazon… That means that both volume and revenue for Amazon is coming down… (but) in the second quarter, we won new great revenue quality business in the enterprise part of our segment than we have in the past 5 years. Now, that volume hasn’t come into the network yet because we just won it, but it’s coming in the back half. So we are running our business the way that we want to run it in this better, not bigger framework despite the macro environment.” – Carol Tome, CEO
Deere & Company [DE]
Earnings: Estimated Fri Aug 19, 2022
- Deere missed 3Q EPS consensus by 7% (actual of $6.16 vs. consensus of $6.73). However, the company reported total revenues of $14.1 billion, up 22% and beating consensus by 2%. Pricing was strong, up double digits on a consolidated basis (+12%), with Production & Precision Ag up 15% y/y, Small Ag & Turf (+10%), and C&F (+10%).
- The Company lowered its F22 outlook, calling for Net Income to be ~$7.1 billion at the midpoint (prior: ~$7.2 billion) with a reduced margin outlook in comparison to consensus at $7.2 billion. Note that this guidance implies a ~15% incremental EBIT margin.
When probed about the company’s performance in Europe in the context of the recent drought and geopolitical strain, management responded:
“… there’s been a lot of discrete issues with a lot of industry players this year in terms of production capabilities. We are seeing the overall market as remaining strong and steady. There is definitely differing weather patterns, depending on what part of Europe we’re talking about… But overall, elevated wheat prices are largely offsetting some of the surging input prices that they’ve seen. Arable margins, the outlook will remain supportive for the rest of the year. As we pivot into the dairy and livestock sector there, fiscal year ’22 margins were really better than expected from elevated dairy prices…, the flat outlook for the year is really a reflection of production capabilities more so than any demand concerns that we have at this point.” – Brent Norwood, Director of Investor Relations
Illinois Tool Works Inc. [ITW]
Earnings: Estimated Tue Aug 2nd, 20222
- ITW’s 2Q sales of $4.0 billion were $30 million above consensus. GAAP EPS of $2.37 also beat the consensus of $2.20. Total sales were in line with expectations as better-than-expected revenues in Food Equipment and Welding were offset by lower Auto and Specialty Products. Margin outperformance in Food Equipment and Construction helped to offset weakness in Auto and Specialty. Price/cost was a 160 basis points headwind in the quarter vs 250 basis points last quarter.
- OP margin of 23.6% (excluding restructuring costs) reaffirms the resiliency of ITW’s portfolio with 6 of the 7 segments delivering positive organic growth in the quarter.
- ITW reiterated 2022 guidance for organic revenue growth of 7%-10% (~$15.7-$16.2 billion at the midpoint with Street consensus of $15.79 billion) and GAAP EPS of $9.00-$9.40 (Street consensus of $9.00).
When asked about ITW’s supply chain and potential improvements in the near future, the CEO responded:
“What I would say overall is we have no visibility to any improvement. We are not planning on it. I’m sure that it will get better at some point. I think we have been — our business has been very resilient in terms of working their way through various issues and challenges, computer chips, you name it. And we are finding a way to serve our customers, and that remains, I think, the posture that we have. And until it changes, we’re not changing what we’re doing and I think we’re on it, but it’s still not easy.” – E. Scott Santi, CEO
ExxonMobil Corporation [XOM]
Earnings: Estimated Fri Jul 29, 2022
- XOM reported 2Q EPS of $4.14 vs. Consensus of $3.98. The strong performance was driven by upstream earnings and international downstream.
- 2Q margins are elevated as OECD product inventories stood at ~8%below the 5-year average and crude/product market flows have been upended by sanctions on the Russian energy sector.
- During the quarter CFO was $19.963 billion, while CAPEX came in at $4.609 billion. CFO covered both the CAPEX and dividend, generating ~$11.6 billion in discretionary FCF.
- 2022 capital investment is anticipated to be in the range of $21-24 billion, vs guidance of $20-25 billion per yr. From 2022-27 with low-carbon investments totaling $15 billion. The company is on pace to exceed $9 billion in structural savings through 2023 (vs 2019), capturing >$5 billion in 2020-21 and $4 billion in 2022-23.
Earnings: Tue Jul 26, 2022 09:00 AM EST
- MMM reported adjusted 2Q22 EPS of $2.48 vs. Street consensus EPS of $2.41. Segment EBIT was also +4% Street consensus.
- 2Q22 organic total sales were +1% YoY. By segment, Safety and Industrial was +0.7% YoY, Transportation and Electronics was +0.5% YoY, Health Care was +4.4% YoY, and Consumer was -1% YoY. By region, Americas organic sales growth was +3.9% YoY, EMEA was down 2% YoY, and Asia Pacific was down 1.8% YoY.
- MMM announced its intent to spin off its Health Care segment (expected by the end of 2023) with net leverage of ~3.0x – 3.5x EBITDA. MMM will retain a stake of 19.9% in the segment, which will be monetized over time.
In regards to lowering 2022 FY EPS guidance, the CFO remarked:
“As you know, the macro environment remains uncertain with mixed trends and signals across geographies and end markets. For example, improving build rate trends in automotive; continued strong demand in semiconductor, data center and factory automation; increasing health care elective procedure volumes; and a strong bounce back in China, following April and May COVID-related lockdowns.
However, there are also continued challenges and areas of concern that we are monitoring, including the stubborn and evolving impacts of COVID; global supply chain and logistics challenges; persistent and broad-based inflation, which is pressuring consumers’ purchasing power and shifting spending patterns; softening trends in consumer electronics; and geopolitical uncertainties, particularly in Europe.
…the strength of the U.S. dollar is having an increasing impact on our top and bottom line, which is the primary factor driving our update to full year guidance… This FX headwind is resulting in a reduction of over $1 billion in annual sales and is also accounting for nearly 80% of the adjustment in our full year earnings expectation. Therefore, we now expect full year earnings in the range of $10.30 to $10.80 versus a prior range of $10.75 to $11.25.” – Monish Patolawala, CFO
AbbVie Inc. [ABBV]
Earnings: Fri Jul 29, 2022 09:00 AM EST
- AbbVie’s 2Q22 results were relatively in-line with revenue of $14,583 million (+4% YoY) vs. consensus of $14,623 million, and non-GAAP EPS (+$0.05 YoY).
- By segment, I&I outperformed, with Humira (+$131M million) and Skyrizi ($175 million) offsetting misses for Imbruvica (-$124 million) and Venclexta (-$33 million). On AbbVie’s aesthetics business, Botox performance was strong (+$33 million) despite inflation and consumer concerns, but the lingering effects of Covid-19 in China and geopolitical volatility remained an overhang on the Juvederm collection.
Johnson & Johnson [JNJ]
Earnings: Tue Jul 19, 2022 8:30 AM EST
- JNJ delivered revenue and EPS of $24.0B and $2.59 vs. Street forecasts of $23.8B and $2.54. Adjusted operation revenue growth was up 6% YoY, excluding the Covid vaccine contribution. This was largely driven by strength in Pharma, which reported sales up 12.4% YoY (or 8.6% excluding Covid vaccines).
- JNJ maintained its 2022 operational sales (up 6.5% – 7.5%) and EPS guidance (up 8.7% – 9.7%), although incremental currency pressure led to downward revisions to the reported ranges.
Pfizer Inc. [PFE]
Earnings: Thu Jul 28, 2022 10:00 AM EST
- Pfizer’s reported Q2 sales of $27.742 billion (+46% YoY), $1.617 billion above Street consensus. Q2 EPS of $2.04 (+92% YoY) also beat consensus of $1.80.
- Pfizer beat 2Q estimates on the COVID side and reaffirmed COVID guidance for the year despite FX headwinds.
- Overall 2022 sales guidance was maintained at $98 billion – $102 billion, reflecting an improved operational outlook despite an anticipated negative $5 billion impact of FX (vs. prior negative $2 billion).
- EPS guidance was raised to $6.30-6.45 compared to prior guidance of $6.25-6.45 for FY 2022. FX impact on guidance is now negative $0.31, up from prior guidance of negative $0.19.
Merck & Co., Inc. [MRK]
Earnings: Thu Jul 28, 2022 08:00 AM EST
- Q2 sales of $14.593 billion (+28% YoY) was $31MM above consensus. Q2 EPS of $1.87 (+205%) also beat consensus by $0.18.
- In addition to the recent approval of Vaxneuvance in pediatrics, management reiterated high confidence in the clinical profile of V116, noting that the drug differentiated itself from other pneumococcal vaccines because it addresses the “distinct needs” of vaccine-naïve adults relative to the pediatric population
- 2022 non-GAAP EPS guidance was narrowed to $7.25 to $7.35 from $7.24 to $7.36 previously, including a negative impact from FX of ~3%. Merck’s top two products—cancer drug Keytruda (up 30% YoY) and HPV vaccine Gardasil (up 40% YoY)— are expected to remain strong next quarter.
- MRK also noted that it would have been in a position to raise EPS guidance by ~$0.25 based on the strong underlying performance of the business. However, this was offset by F/X headwinds and higher US pension settlement expense.
Abbott Laboratories [ABT]
Earnings: Wed Jul 20, 2022 09:00 AM EST
- ABT reported 2Q22 revenue of $11.3 billion (+14.3% YoY, organic), beating Street estimates of $10.3 billion by 8.6%. Stripping out COVID-19 diagnostic testing, revenue missed by approximately 1% at $10.3B. 2Q22 adjusted EPS was $1.43, also beating Street consensus of $1.06.
- COVID-19 diagnostic testing ($2.3 billion) was the largest driver of the upside, but all divisions except Medical Devices beat estimates. Nutrition performed better than expected despite a manufacturing shutdown in the US in 2Q and should improve further in the 2nd half of the year as it resumed production in July.
- FY22 adjusted EPS guidance has been increased by $0.20 to at least $4.90, marginally ahead of consensus at $4.89.
Earnings: Estimated Mon Jul 18, 2022
- IBM reported Q2 revenues of $15.5B with reported revenue growth of 9% YoY, which was 2% higher than the consensus. By segment, software grew 6% YoY, consulting grew 10% YoY, and infrastructure grew 19% YoY.
- IBM’s PTI (payment-to-income) margins improved by 200 basis points YoY, while the street estimated ~600 basis points of margin improvement. The weakness in profitability is tied to lower mainframe sales as well as weaker profitability in the consulting segment, where investments in the business and a competitive labor market continue to weigh on margins. IBM also divested its Russia business, which will impact margins for ~3 years.
Earnings: Fri Jul 29, 2022 08:00 AM EST
- Total revenues increased 13% YoY (~8% organic) to $2.25 billion (consensus: $2.193 billion). By customer: Defense increased 5% YoY; Civil gained 28% YoY (12% organic); Intelligence was up 8% YoY, and Commercial increased 45% YoY (20% organic). Adjusted EBITDA margins of 11.2% came in ahead of the 10.8% implied by consensus with an adjusted EBITDA of $253 million (consensus: $237 million).
- Management noted margins were impacted by billable expenses trending below normalized levels and continued growth investments in the platform. Adjusted EPS increased 6% YoY to $1.13 (consensus: $1.06).
- BAH is executing on the headcount front with 2.6% YoY headcount growth despite a tough environment — which should dampen the prevailing bear case for the company.
- BAH’s recent efforts to position the portfolio for higher growth areas including cyber, AI, directed energy, and quantum computing is paying off, evidenced by strong win cadence.
Earnings: Thu Jul 21, 2022 8:30 AM EST
- MMC reported 2Q adjusted EPS of $1.89 (+8% YoY), beating consensus of $1.85. This was primarily from strong organic growth of 10%, with beats in both Risk & Insurance Services (RIS) and Consulting, as well as a modest beat in RIS adj. margins.
- Total revenue was up 7.2% YoY to $5,379. The firm’s brokerage segment continued to benefit from higher pricing in insurance markets (+9% YoY excluding acquisitions and FX). The consulting side also reported YoY growth of 10%, excluding acquisitions and FX. Oliver Wyman, which tends to be the most volatile segment, was up 16% YoY.
- Adjusted operating margins improved marginally by 30 basis points to 26.7% as growth appears to be outweighing an increase in travel expenses.
Management provided commentary on macro impacts, noting that inflation and macro uncertainty are generally good for the business:
“Since we went public in 1962, we have grown EPS during all recessionary periods, most notably in the severe recessions that accompanied the global financial crisis and the pandemic in 2020. We have demonstrated our ability to manage the expense base in both good and tough times and run our business to grow revenues faster than expenses.” Daniel Glaser, CEO of MMC
Gartner, Inc. [IT]
Earnings: Estimated Tue Aug 2, 2022
- Revenues of $1.377 billion rose 17.9% YoY compared with the $1.325 billion consensus. IT also reported 2Q22 adjusted EPS of $2.85, beating the consensus of $2.13 driven by better-than-expected margins.
- Adjusted EBITDA margin was 28.3% versus 23% consensus, with -210 basis points YoY contraction due to higher SG&A. Consolidated gross margins weredown ~70 basis points YoY, with contribution margins falling YoY in Conferences, flattish in research and up in Consulting.
- 2022 guidance was revenues of at least $5.35 billion (vs. prior $5.275 billion and consensus of $5.311 billion), adjusted EBITDA of $1.235 billion (vs. prior $1.135 billion and consensus of $1.157 billion), and adjusted EPS of at least $8.85 (vs. prior $7.80 and consensus of $8.06).
When asked about headcount growth and current attrition trends, the CEO responded:
“…we want to retain our great associates. With attrition, like many companies, went up over the last couple of years. We worked hard to understand the causes and then making sure we address that. And actually, our return — associate turnover has actually gone down now to kind of what we would call normal levels. And so we’re very happy with that turnover. In addition to that, we have a very strong recruiting team. We have a truly world-class recruiting team, and that recruiting team has been doing a great job. And of course, we have a great employee value proposition as well. If you combine those 3 things: lower turnover, a great employee value proposition, a great recruiting team, that’s allowed us to get our net associate headcount growth back up to where we need to support the growth in our business.” – Eugene A. Hall, CEO & Director