By Steve Van Tiem - April 30, 2012 | Tickers: CMP, GLW, SRCL | 0 Comments
Steve is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.
There were three companies whose earnings conference calls last week promised to address three very different sets of circumstances. Stericycle (NASDAQ: SRCL) was having its first call after naming a CEO-elect in January. At Corning Inc. (NYSE: GLW), the weak global economy has caused a severe drop off in demand, which has hurt profitability and share price the past four quarters. And Compass Minerals (NYSE: CMP) has had to cope with three extreme weather events which, incredibly, all occurred within the past year.
As I listened to these calls, I paid attention to the tone of management (using a scale from extremely cautious to cautious, neutral, positive, and extremely positive), their candor in the question & answer session (using a scale from "not candid" to "uncertain candor", "candid",and "fully candid"), and information gleaned from answers to certain questions about revenue, cash flow drivers, and market conditions. I was also tracking updates to certain metrics, any substantive announcements made during the call, and of course earnings and sales guidance. Before listening to these calls I reviewed the previous call for each company to generate my set of expectations, metrics, and specific questions or issues to monitor.
With Stericycle's CFO, COO, and CEO-elect making brief statements in turn, the opening statements were more quantitative than qualitative, but overall the call was positive in tone. My belief is that management limits their comments so as not to produce artificially high investor expectations. I estimate that there were eight significant, open-ended questions from analysts that were adversarial or probing in nature. Of these eight, three were answered satisfactorily, four were not answered directly, and one was answered satisfactorily but indirectly. My impression is that management is satisfactorily candid with their communication but could improve to the preferred "fully candid" level with more direct answers. There were few, if any, company or industry specific metrics discussed and no substantive announcements.
I am satisfied that management answered all relevant questions and addressed all important business areas but I wanted to hear more from CEO-elect Charlie Alutto, whose only participation was his opening statement concerning guidance. Management guided EPS in the range of $3.24 to $3.28 for full year 2012 and revenue in the range of $1.85 billion to $1.9 billion for the year. This is a raise from EPS of $3.21 to $3.26 and revenue of $1.8 billion to $1.9 billion given as guidance last quarter. I rate this call a solid B and more importantly am confident in management's capability to guide the company forward. Investors bid the share price up from $87.10 before the call to $87.64 by week's end.
Of the three calls I listened to, Corning's was most likely to generate analyst skepticism because of continued economic weakness and share underperformance. As expected, there was a greater number and higher percentage of questions that I consider adversarial and these were much more pointed than either Stericycle's or Compass Mineral's questions. Fifteen of the questions were confrontational or accusatory with management satisfactorily answering ten of these, either directly or indirectly. The remaining five were not answered to my satisfaction so my conclusion is that management falls into my "candid" category. Corning did present a fair number of metrics, most importantly the Q4 supply chain inventory metric for the Display segment, which was essentially flat at 15.2 weeks. The company provided an informative summary of the recent acquisition of the Discovery Labware business from Becton Dickinson including reasons for the transaction and expectations going forward.
Unfortunately, Corning provided guidance for only limited information, by segment, for Q2 2012 rather than earnings and revenue guidance for Q2 2012 or an update for full year 2012. This call earns a B because I am satisfied that no important business areas were neglected and all relevant questions were addressed to an acceptable degree. The market reaction was very positive to this quarter's results and investors bid the share price up from $13.35 before the announcement and subsequent call to $14.45 by week's end.
Compass Minerals, whose primary businesses are de-icing salt and sulfate of potash production, was expected to report weak results due to a tornado that did significant damage to its primary salt mine, the warmest winter period on record and an unusually wet period in the Southwest, all within the past year. The reported results were essentially in line with these lowered expectations but management assumed a fairly positive tone centered on the notion that each of these weather events is exceedingly unlikely to recur in the foreseeable future, thus recent capacity additions and acquisitions should lead to increased growth.
Compass' management provided direct and satisfactory answers to three of the six important questions that were either adversarial or probing. The other three questions were answered in a satisfactory but indirect manner. Like Stericycle and Corning, I consider the responses of Compass' management as acceptably candid, just below "fully candid". Where I am disappointed in the call is the lack of explicit earnings or revenue guidance. These were given in relevant terms like "more", "less", "higher" and "lower" but specific figures were not given.
More here:
Anatomy of the Conference Call
- "The Secret Museum" Exhibition Opening, Observatory, This Saturday, April 10, 7-10 PM - April 6th, 2010 [April 6th, 2010]
- Job Opportunities at the Medical Museion, University of Copenhagen - April 9th, 2010 [April 9th, 2010]
- "The Secret Museum" Exhibition Opening, Observatory, TONIGHT! April 10, 7-10 PM - April 10th, 2010 [April 10th, 2010]
- Animal Body Worlds at the Neunkirchen Zoo, Saarland, Germany - April 11th, 2010 [April 11th, 2010]
- Congress for Curious People: Lectures Begin Tomorrow Night at the Coney Island Museum! - April 12th, 2010 [April 12th, 2010]
- A Brief History of Automata, An Illustrated Lecture and Demonstration by Mike Zohn, Obscura Antiques and Oddities, TONIGHT! Coney Island Museum - April 14th, 2010 [April 14th, 2010]
- "The Brading Collection of Taxidermy, Waxworks, Costume and Similar Items," Duke's Auction House, Dorset, April 13th (Today!) - April 15th, 2010 [April 15th, 2010]
- Charles Wilson Peale and the Birth of the American Museum, Coney Island Museum, Tonight!!! - April 16th, 2010 [April 16th, 2010]
- "The Congress for Curious People," Epic 2-Day Symposium Begins Tomorrow!!! - April 16th, 2010 [April 16th, 2010]
- "A History of Taxidermy: Art, Science and Bad Taste," An Illustrated Presentation By Dr. Pat Morris, Congress for Curious People, Coney Island Museum - April 17th, 2010 [April 17th, 2010]
- The Dance of Death, 1919, Attributed to Josef Fenneker - April 20th, 2010 [April 20th, 2010]
- "Stuffed Animals and Pickled Heads" Book and Lecture by Stephen Asma, Thursday April 22, Observatory - April 21st, 2010 [April 21st, 2010]
- "The Silken Web: The Erotic World of Paris, 1920-1946," Mel Gordon Lecture at Observatory, Tomorrow April 20th - April 21st, 2010 [April 21st, 2010]
- "Museums, Monsters and the Moral Imagination" Lecture by Stephen Asma, Tonight!, Observatory - April 22nd, 2010 [April 22nd, 2010]
- "The Rogue Taxidermy Kunstkammer," The Minnesota Association of Rogue Taxidermists, La Luz de Jesus, Los Angeles - April 23rd, 2010 [April 23rd, 2010]
- "Anatomical Art: Dissection to Illustration," Exhibition Curated by Marie Dauenheimer, Arlington, Virginia - April 26th, 2010 [April 26th, 2010]
- "Excellent Old-School Science Models," Life Magazine Photo Gallery - April 28th, 2010 [April 28th, 2010]
- "Three Unique Medical Museums in Northern Italy," Lecture by Marie Dauenheimer, Observatory, Saturday May 1 - April 29th, 2010 [April 29th, 2010]
- Tomorrow Night at Observatory! "Three Unique Medical Museums in Northern Italy," Lecture by Marie Dauenheimer - April 30th, 2010 [April 30th, 2010]
- "Imaging / Imagining the Skeleton," Symposium, Tomorrow, Friday, April 30, 1:00-4pm, CUNY Graduate Center - May 1st, 2010 [May 1st, 2010]
- Kabinett des Grotesken ("Cabinet of the Grotesque"), Berliner Medizinhistorisches Museum der Charité, Spiegel Online - May 4th, 2010 [May 4th, 2010]
- Head of Discovery and Engagement, Wellcome Library, Employment Opportunity - May 5th, 2010 [May 5th, 2010]
- "Experimenting with Death: An Introduction to Terror Management Theory," Lecture, Observatory, Thursday May 6 - May 5th, 2010 [May 5th, 2010]
- The Taxidermy of Mr. Walter Potter and his Museum of Curiosities, Melissa Milgrom - May 6th, 2010 [May 6th, 2010]
- Tonight!!! "Experimenting with Death: An Introduction to Terror Management Theory," Lecture, Observatory - May 6th, 2010 [May 6th, 2010]
- Original Fritz Kahn Posters and Key Booklet, Sotheby's Vintage Posters Auction, May 13 - May 6th, 2010 [May 6th, 2010]
- "The Saddest Object in the World," An Illustrated Meditation, Observatory, Friday, May 7th - May 7th, 2010 [May 7th, 2010]
- "An Atlas of Topographical Anatomy after Plane Sections of Frozen Bodies," Christian Wilhelm Braune, 1877 - May 7th, 2010 [May 7th, 2010]
- Tonight!!! "The Saddest Object in the World," An Illustrated Meditation, Observatory - May 9th, 2010 [May 9th, 2010]
- Various works by Francois Maréchal - May 13th, 2010 [May 13th, 2010]
- The Pennsylvania Medical Humanities Consortium, May 19-20, College of Physicians, Philadelphia PA - May 14th, 2010 [May 14th, 2010]
- Morbid Magicians, Demented Doctors, and Sinister Swamis: The Golden Age of the American Spook Show, Observatory, Monday, May 17 - May 14th, 2010 [May 14th, 2010]
- Frank Frazetta, Renowned Fantasy Artist, Dies at 82 - May 15th, 2010 [May 15th, 2010]
- San Francisco Zen Center presents ‘The Accidents of our Materials’ with sculptors Arthur Ganson & Elizabeth King - May 18th, 2010 [May 18th, 2010]
- Various Works by George Washington Thomas Lambert - May 19th, 2010 [May 19th, 2010]
- The Never-Realized Führermuseum, Linz, Austria - May 21st, 2010 [May 21st, 2010]
- Proteus Gowanus Benefit/Anniversary Party, Saturday, May 22nd, 7-10 p.m. - May 21st, 2010 [May 21st, 2010]
- "Many Dead Things: The Specimens of Alex CF," Superette Gallery, London - May 22nd, 2010 [May 22nd, 2010]
- "The Secret Museum," Photography Exhibition, Observatory, Closes June 6th - May 23rd, 2010 [May 23rd, 2010]
- Various Figure Drawings by Sergio Lopez - May 24th, 2010 [May 24th, 2010]
- "Another Science Fiction," Tomorrow, Tuesday May 25, 86th Street Barnes and Noble, 7 PM, NYC - May 24th, 2010 [May 24th, 2010]
- The Secret Museum Website and Exhibition Closing Party - May 27th, 2010 [May 27th, 2010]
- Oxberry Pegs Presents: Animators Are God? Series, "The Clay Animation of Jimmy Picker," Saturday May 29th, Observatory - May 28th, 2010 [May 28th, 2010]
- Exhibition to Revisit Contemporary Korean Art - May 28th, 2010 [May 28th, 2010]
- Portrait Sketches by Luke Kopycinski - May 28th, 2010 [May 28th, 2010]
- U.S. Fish and Wildlife Service Confiscated Items Online Auction, Ongoing - May 29th, 2010 [May 29th, 2010]
- Despite Tightening Up Of Society, Iranian Art Sees A Boom - May 29th, 2010 [May 29th, 2010]
- Various Works by Santiago Rusiñol - May 29th, 2010 [May 29th, 2010]
- Various works by Tina Spratt - May 30th, 2010 [May 30th, 2010]
- MAXXI Gallery, Rome’s First Contemporary Art Museum Opens Its Doors - May 31st, 2010 [May 31st, 2010]
- Michelangelo’s Hidden Sistine Chapel Message Discovered - May 31st, 2010 [May 31st, 2010]
- Various Works by Dorian Iten - June 3rd, 2010 [June 3rd, 2010]
- Monet’s Water-Lily Painting For Sale - June 3rd, 2010 [June 3rd, 2010]
- Secret Museum Closing Party and Morbid Anatomy Library/Observatory Open Studios, This Weekend! - June 3rd, 2010 [June 3rd, 2010]
- Art Students League of Denver Summer Art Market - June 3rd, 2010 [June 3rd, 2010]
- Saint Cosmas and Saint Damian (c. 200 CE) - June 3rd, 2010 [June 3rd, 2010]
- "I’m Officially Obsessed with Observatory," Melissa Stern for Time Out New York, June 2010 - June 4th, 2010 [June 4th, 2010]
- Gallery Nucleus Presents Enchanté - June 4th, 2010 [June 4th, 2010]
- Various Works by Edward Kinsella - June 4th, 2010 [June 4th, 2010]
- Renowned Sculpture Artist Louise Bourgeois Dies - June 4th, 2010 [June 4th, 2010]
- Various Works by Paul Gauguin - June 5th, 2010 [June 5th, 2010]
- Various Works by Stephen Pan - June 6th, 2010 [June 6th, 2010]
- Bravo Premieres “Work of Art” Reality Show - June 6th, 2010 [June 6th, 2010]
- Art of Photography Show – Entry Deadline June 7th - June 6th, 2010 [June 6th, 2010]
- "Anatomical Venuses, The Slashed Beauty, and Fetuses Dancing a Jig" Lecture, Coney Island Museum, Sunday June 13th, 4:30 PM - June 7th, 2010 [June 7th, 2010]
- Amazing Auction Alert! "The Gallery of Creation, a Museum of Natural History, Created by Joseph Hurt Studio, Inc.", Friday and Saturday, June 25 & 26 - June 9th, 2010 [June 9th, 2010]
- Various Works by Ron Hicks - June 10th, 2010 [June 10th, 2010]
- Two Upcoming Events at Observatory by Torino:Margolis - June 11th, 2010 [June 11th, 2010]
- This Sunday! "Anatomical Venuses, The Slashed Beauty, and Fetuses Dancing a Jig" Lecture, Coney Island Museum, Sunday June 13th, 4:30 PM - June 11th, 2010 [June 11th, 2010]
- Various Works by Lui Ferreyra - June 11th, 2010 [June 11th, 2010]
- "Borrowed from the Charnel House," Saul Chernick, Opening Tonight, NYC! - June 12th, 2010 [June 12th, 2010]
- Zoe Beloff London Engagements, Tonight and Tomorrow Night, June 10th and 11 - June 12th, 2010 [June 12th, 2010]
- Various Works by John M Collier - June 14th, 2010 [June 14th, 2010]
- “Show Time” by Mariano Steiner - June 15th, 2010 [June 15th, 2010]
- This Friday at Observatory! "The Anatomical Unconscious: X-Ray Specs, Visible Women, and the Eros of the Unseen," With Cult Author Mark Dery - June 18th, 2010 [June 18th, 2010]
- "Woman Advertising J.M. Dolph, Furniture Maker and Undertaker," Cabinet card, circa 1877 - June 19th, 2010 [June 19th, 2010]
- Various works by Karol Bak - June 22nd, 2010 [June 22nd, 2010]
- Amazing Auction Alert #2: "The Owsten Collection," June 25th and 26th, Sydney, Australia - June 23rd, 2010 [June 23rd, 2010]
- The Art of the Potentially Deadly Deal: Marketing Heroin on the Street - June 24th, 2010 [June 24th, 2010]
- This Tuesday at Observatory! Torino:Margolis Performance - June 28th, 2010 [June 28th, 2010]