The economic slowdown was the fastest growing topic discussed by S&P 500 executives for the second consecutive month, according to an analysis of earnings conference conference calls held in August. As leadership debated the severity of the downturn, inflation took center stage, and was the most popular topic this month behind only revenue, guidance and margins, as higher prices continue to have an effect on operations and speculation over what the Federal Reserve will do next moves shares. Company backlogs, general headwinds and solar were also discussed.
Read what S&P 500 executives had to say below:
- Economic Slowdown (63 mentions, +933% year-over-year)
- Loews Corp, Chief Executive Officer James S. Tisch: “I don’t foresee a deep and debilitating recession. Rather I can imagine that the slowdown will be relatively shallow, which is consistent with a full employment recession… So, overall I foresee a recession that I would characterize as benign. I have enough self-awareness to realize that I’m an optimist, but I consider myself a realistic optimist.” (8/1)
- Vornado Realty Trust, Chief Executive Officer Steven Roth: “There are signs of a slowdown all around: a rapidly slowing housing market, falling consumer confidence and companies announcing hiring pauses or even layoffs. The inverted yield curve signals market participants expect a recession and the forward yield curve predicts rates will come back down within a couple of years. While we are protected by long-term leases with about 1,500 tenants, we do expect and are prepared for choppy conditions.” (8/2)
- Marathon Oil Corp, Chief Executive Officer Lee Tillman, “The potential for a recession looms and American families are suffering. But the US energy renaissance, led by the shale revolution, has provided a measure of protection from the forced and more austere measures now being considered in Europe.” [However,] “we could be in for an extended period of elevated commodity prices globally, both for oil and natural gas.” (8/4)
- Inflation (1,012 mentions, +140%)
- Starbucks Corp, Interim Chief Executive Officer Howard D. Schultz: “While we are sensitive to the impact inflation and economic uncertainty are certainly having on consumers, its critically important that you all understand that we are not currently seeing any measurable reduction in customer spending or evidence of customers trading down.” (8/2)
- Home Depot Inc., Chief Financial Officer Richard McPhail: “We find ourselves in a unique environment with many crosscurrents. We’re operating in a broad-based inflationary environment not seen in four decades while managing through constrained global supply chain conditions, all against the backdrop of monetary policy shifts intended to moderate demand. We also see engaged and resilient homeowners who have strong balance sheets, consumers spending more time in their homes and continued structural support for improvement project demand.” (8/16)
- PVH Corp, Chief Financial Officer Zac Coughlin: “Revenue is lower than planned primarily due to an increasingly challenging macro environment which particularly effected our North America wholesale business as inflationary pressures weigh on consumer demand and our wholesale partners take a more cautious approach.” (8/31)
- Backlog (452 mentions, +94%)
- Caterpillar Inc., Chief Financial Officer Andrew Bonfield: “Overall, we are not seeing signs of slowing demand as order levels and backlog remain healthy. Our retail statistics, or sales to users, are normally strongly correlated to demand in a typical environment. However, the ongoing supply chain constraints continue to impact our ability to ship equipment.” (8/2)
- Applied Materials Inc., Chief Executive Officer Gary E. Dickerson: “Resolving supply chain issues has required new levels of collaboration between our global teams suppliers and customers. While all of this hard work is yielding results, global supply chains remain stretched. Demand for Applied’s products is still higher than our ability to fulfill it and our backlog continues to grow.” (8/18)
- Hewlett Packard Enterprise, Chief Executive Officer Antonio Neri: “New orders exceeded our expectations, despite finally starting to decelerate the growth rates, bringing our quarterly exit backlog to another record level. That is significant considering that for the previous four consecutive quarters we had grown orders 20% or more year-over-year. We continue to see robust consumer demand in the market and a high quality durable sales pipeline.” (8/30)
- Headwinds (929 mentions, +85%)
- Starbucks Corp, Chief Financial Officer Rachel Ruggeri: “Looking ahead however, the international segment may face near-term challenges. Given the prolonged lockdowns in China with limited mobility recovery in Q3, the headwinds now extended to Q4 as the market continues to recover. The current pace of recovery implies that China’s operating income contribution as a percent of global operating income may be reduced further than what we had previously anticipated to roughly a quarter of the contribution realized in a typical fiscal year. Outside of China, the increasing COVID cases around the world may damper the rapid growth we are seeing in many markets.” (8/2)
- Principal Financial Group, Chief Executive Officer and President, Principal Global Patrick G. Halter: “I think the second half of 2022 obviously has macro headwinds. And as we talked to the managers, particularly on the private equity side, about their current market outlook, and the lagging nature of the return cycle, we could see some pullback clearly in alts performance and probably be below trend to what we’ve seen in the past.” (8/9)
- Cisco Systems Inc., Chief Executive Officer Chuck Robbins: “While the component supply headwinds remain they have begun to show early signs of easing. The decisions we made and the multiple actions we have taken over the past two years are helping to improve our resiliency and will help offset cost inflation. These include adding new suppliers, leveraging alternative suppliers, redesigning hundreds of products to use alternative components with similar capability and targeted price increases, all of which position us for the future.” (8/17)
- Solar (138 mentions, +82%)
- WEC Energy Inc., Chief Executive Officer Scott J. Lauber: “Now you may recall our recent announcement about an adjustment that we made to our schedule of power plant retirements… We base this decision on two critical factors. First, tight energy supply conditions in the Midwest power market and expected delays in the delivery of solar panels and batteries, delays that will clearly affect the in-service states of renewable projects.” (8/2)
- SolarEdge Technologies Inc., Chief Executive Officer Zvi Lando: “The topic of renewable energy and climate change has a lot of governments and leadership around the world busy. And what’s interesting is that there is, in countries that are strongly linked to fossil fuel like in the case of Saudi Arabia, a push from the leadership over there to implement renewable energies and solar in particular.” (8/2)
- Dominion Energy Inc., Chief Executive Officer Bob Blue: “Let me touch on the solar supply chain. As we’ve discussed on prior calls, there continue to be challenges. Supply is still tight and prices for certain components are still up.” (8/8)
- Source: Bloomberg
