Q3 2024 Earnings Conference Call Recaps: Generac (GNRC)
Bespoke’s Conference Call Recaps use AI to summarize lengthy earnings calls. The commentary below is AI-generated and then edited by Bespoke for quality control. As always, none of these summaries should be construed as recommendations to buy or sell any securities, and investors should do their own research and/or consult with a financial professional before making any investment decisions.
Our latest recap available to Bespoke subscribers covers Generac’s (GNRC) Q3 2024 earnings call.
Generac (GNRC) is a designer and manufacturer of power generation equipment, specializing in home standby and portable generators, as well as clean energy and energy storage solutions. GNRC provides critical backup power during grid outages, serving residential, commercial, and industrial markets. The company’s expertise offers insights into rising trends in energy reliability, clean technology, and grid resiliency as extreme weather events drive demand for backup power across the US and globally. GNRC’s Q3 results exceeded expectations due to elevated power outage activity. This surge boosted home standby generator sales by 28% YoY and pushed gross margins to 40.2%, the highest since 2010. Notably, GNRC’s PWRcell 2, an upgraded energy storage system, is set to launch commercially, anchored by the Ecobee Smart Hub. While US demand was strong, international sales painted a less rosy picture, particularly in Europe, where economic challenges weighed on the C&I segment. In reaction to earnings, on 10/31, GNRC shares gapped down but recovered intraday to close marginally higher…
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The Closer – Rates Reconfigure, Bank Lending, Consumers – 11/12/24
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Looking for deeper insight into markets? In tonight’s Closer sent to Bespoke Institutional clients, we begin with a recap of the latest earnings (page 1) followed by a look into how trading in rates markets has shifted (page 2). Next, we review the latest Senior Loan Officer Outlook Survey (pages 3 and 4) before finishing with a rundown of the latest NY Fed Survey of Consumer Expectations (pages 5 and 6).
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Daily Sector Snapshot — 11/12/24
Q3 2024 Earnings Conference Call Recaps: Altria (MO)
Bespoke’s Conference Call Recaps use AI to summarize lengthy earnings calls. The commentary below is AI-generated and then edited by Bespoke for quality control. As always, none of these summaries should be construed as recommendations to buy or sell any securities, and investors should do their own research and/or consult with a financial professional before making any investment decisions.
Our latest recap available to Bespoke subscribers covers Altria’s (MO) Q3 2024 earnings call.
Altria (MO) is a US-based tobacco company known for its premium cigarette brand Marlboro and its investments in smoke-free alternatives like nicotine pouches and e-vapor products. NJOY, MO’s e-vapor product, saw an 85% volume increase in promotional tests, though its success doesn’t go unchallenged by the rising illicit e-vapor market. MO’s on! nicotine pouches captured an 8.9% market share, supported by a 46% rise in shipment volume. Meanwhile, economic pressures are pushing consumers toward discount brands, and MO is launching a $600 million cost-saving initiative to streamline operations using AI. The company also remains in a heated patent dispute with vape giant JUUL. On EPS and revenue beats, shares of MO rose 7.8% on 10/31…
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Chart of the Day – It Took Long Enough
Q3 2024 Earnings Conference Call Recaps: Caterpillar (CAT)
Bespoke’s Conference Call Recaps use AI to summarize lengthy earnings call transcripts. The commentary below is AI generated then edited by Bespoke for quality control. As always, none of these summaries should be construed as recommendations to buy or sell any securities, and investors should do their own research and/or consult with a financial professional before making any investment decisions.
Our latest recap available to Bespoke subscribers covers Caterpillar’s (CAT) Q3 2024 earnings call.
Caterpillar (CAT) manufactures heavy machinery and equipment for industries like construction, mining, energy, and transportation. Known for its iconic yellow machines, the company produces excavators, trucks, engines, turbines, and power generation systems. The company’s hand in the energy transition and efforts in autonomous mining solutions make it a bellwether for industrial and economic trends. In Q3, CAT saw a 4% revenue drop due to lower-than-expected sales in Construction and Resource Industries, though Energy & Transportation grew 5% on strong demand for power generation from data centers and AI. Looking forward, the company expects mixed demand across segments, with strength in power generation and moderate growth in Latin America but headwinds in construction in North America and Europe. Despite some pricing pressures, margins remained resilient, and Caterpillar anticipates strong free cash flow through year-end. On the weaker results, CAT shares fell 2.1% on 10/30…
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Bespoke Stock Scores — 11/12/24
Small Business: Poor Sales and Politics
Early this morning, the NFIB updated their latest gauge on small business sentiment. The headline number came in at 93.7 this month compared to a lower number of 91.5 last month. That was a larger than expected uptick as it was forecasted to only rise to 92. At current levels, the index remains in the bottom quartile of its historical range, but it’s tied with this past July for the strongest reading since February 2022.
In the table below, we show each category of the report including non-inputs to the Optimism Index. We show this month’s reading, last month’s reading, and the month over month change in addition to how each of those rank as a percentile of all periods. As shown, improvements were broad in October with no inputs to the Optimism Index falling and many of those MoM gains ranking in the upper quintile of monthly changes or better. Breadth was a bit weaker for indices that are not inputs to the Optimism Index. For example, higher prices was lower, although that can be considered a good thing.
Even though the release showed most categories moving higher, overall it was somewhat of a mixed bag. As we discussed in today’s Morning Lineup, labor readings are weak but showing some signs of stabilization. When it comes to many demand gauges, as shown below, outlook for general business conditions remains negative as has been the case for a record span of almost four years running (47 straight months). Granted, October saw the best reading since the 2020 election (this survey’s political sensitives discussed in more detail below). Meanwhile, the share of firms reporting now as a good time to expand their business is still very low historically, albeit picking up to 6%. Elsewhere in outlook/expectations indices, sales expectations have rebounded significantly but remain negative.
Those weak but improving expectation indices contrast with much weaker readings for actual sales and earnings. Actual sales changes continue to plummet reaching a new low of -20 in October. The only periods in which this was lower was the depths of COVID and during the Financial Crisis years. Actual earnings changes moved higher for a second month in a row, but current levels are likewise some of the worst on record. As for inflation, the higher prices index is no longer falling at the same pace as yesteryear having stabilized around still historically elevated levels.
The NFIB has some auxiliary data within the report that surveys businesses reporting lower earnings on the reason for such a response. Weak actual sales are again reflected here. The share of businesses reporting sales volumes as the cause for lower earnings jumped to 16%. That matches last November for the highest reading since March 2021 and unseats increased costs for the number one reason. While increased costs are no longer the most common response, the reading is still well above pre-pandemic norms and has been mostly flat over the past few years.
More broadly in response to the question posed to all businesses of what is their most important problem, 9% of firms reported poor sales. That reading has been trending higher and is now the most elevated since March 2021. While poor sales is rising, other issues like inflation (23%), quality of labor (20%) and taxes (16%) all rank higher at the moment.
Circling back on expansion outlooks, again a historically low share of firms see now as a good time to grow. As shown below, economic conditions are far and away the most common reason given for this outlook. However, the next most common reason is political climate. As we often note including in today’s Morning Lineup, one downside to the NFIB data is consistent sensitivity to politics.
In the chart below, we show the combined share of businesses reporting politics as their reason for a negative or uncertain expansion outlook. As shown, this reading has tended to rise sharply ahead of an election. After Trump won in 2016, this measure dropped sharply while the opposite played out in 2020 when Biden was elected. This go around, it has again risen into the election, but since Trump has won, it will likely head lower (maybe even dramatically so) in the next report. It also wouldn’t be surprising to see this sort of positive turnaround in other categories of the report.
October 2024 Headlines
Bespoke’s Morning Lineup – 11/12/24 – Slip-Sliding
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“No one ever accomplishes your dreams for you” – Nadia Comaneci
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Is this the hangover from the post-election rager? There’s a downside bias to equities around the world this morning, including the US which has been surging to kick off November. In Asia overnight, equities were lower across the board with the Nikkei down 0.5% while China and India were down over 1%. In Europe, it’s the same story as the STOXX 600 is down 1% after Economic Sentiment from ZEW fell slightly more than expected while German CPI ticked up 0.4% on a m/m basis which was right in line with forecasts. The only economic indicator on the calendar this morning was NFIB Small Business Sentiment for October which came in higher than expected. Given the political leanings of this report, you can expect a much larger increase next month.
With futures pointing to a modestly lower open this morning, it would be the first day this month that the S&P 500 tracking ETF (SPY) gapped lower at the open with the last five trading days being especially strong. The snapshot from our Trend Analyzer below shows the performance of major international ETFs and where they stand relative to their short-term trading ranges. While US stocks have surged, foreign ETFs have performed much less impressively. Just over the last five trading days, SPY has rallied over 5%, while the next closest performer of the group shown has been the FTSE Pacific ETF (VPL) which is only up a bit more than 1%. SPY’s rally also makes it the only one of the six ETFs trading above its 50-day moving average (DMA). Additionally, while SPY closed more than two standard deviations above its 50-DMA yesterday putting at ‘extreme’ overbought levels, three of the five other ETFs shown closed in oversold territory yesterday, including the FTSE Europe ETF (VGK) which settled in ‘extreme’ oversold territory (2+ standard deviations below its 50-DMA).
Below we show one-year price charts of each of the six international regional ETFs summarized above. While most of the charts look similar, SPY stands out from the rest.
