Calcbench

When in doubt, announce a restructuring program. It’s one of the most go-to moves in the CEO playbook. That has been on our mind at Calcbench lately as the Q3 earnings reports come flooding in. Lots of companies announced restructuring programs one or two years ago when inflation and high interest rates were exerting severe pressure, so a fresh set of filings is always a good time to see whether those original restructuring announcements lived up to their promise. One good example is Colgate-Palmolive ($CL). In early 2022, Colgate announced a restructuring plan that the company expected to complete by mid-2023, and would cost somewhere between $200 million to $240 million.  Things didn’t quite go according to that plan. According to Colgate’s most recent quarterly report , filed on Oct. 25, the restructuring plan didn’t finish until this summer, one full year later than originally forecast. The program did cost $225 million, smack in the middle of the $200 million to $240 millio...

Boeing today filed its latest quarterly report , which was awful, although everyone knew it would be awful; so let’s instead quantify the extent of the awfulness in chart form. The headlines are that Boeing ($BA) reported a $6.2 billion loss on the quarter, compared to a $1.6 billion loss from the year-ago period. Operating cash flow also turned negative, which is why new CEO Kelly Ortberg recently said the company will likely shell shares and take on new debt to raise $25 billion in new capital. Lord knows the company needs it. That said, Boeing is not solely a maker of commercial aircraft. The company is also one of the world’s largest defense contractors and a provider of aviation services. So how are each of those operating segments performing lately? Figure 1, below, tells the tale.  As you can see, the commercial aircraft segment is certainly down from prior periods — but that’s largely driven by a surge in revenue from late 2022 into 2023, which was a rebound from terrible...

Now that the big Wall Street banks have all filed their third-quarter earnings, we can dig into the data to consider one of our favorite questions: How is the lending business these days, and what does that tell us about the broader economy? OK, technically that’s two questions jammed together, but that’s precisely our point. If you want a glimpse into broader economic trends, one good way to do that is to study how cautious the Wall Street titans are with their lending business. For starters, we looked at the quarterly provisions for loan losses for Bank of America ($BAC), Citigroup ($C), JP Morgan ($JPM), and Wells Fargo ($WFC) since the start of 2022. See Figure 1, below. Those numbers fluctuate quite a lot, but the overall trend is clearly upward. That means the banks have been setting aside more money each quarter for loans that might go sour.  (And for the eagle-eyed among you, that’s not a typo — Wells Fargo did report a negative provision number at the start of 2022. Tha...

Here’s a question any financial analyst could appreciate: what makes a good zombie? Not the ‘Walking Dead’ type, of course, although that was a great show. We’re talking about zombie companies — firms that have such anemic growth and high debt costs that all they can afford to do every year is pay the interest on their debt. They have no other cash to invest in the business and get themselves growing briskly again, so they lurch from one fiscal year to the next, devoting all their operating income to debt service. How many such companies exist these days? How long have they been zombies? And most importantly, how much longer could they exist as zombies?  That question has been on Calcbench’s mind since the Federal Reserve cut interest rates in September. If the Fed keeps cutting rates, it will get easier for firms to refinance that debt, especially if they racked up the debt in 2022 or 2023 when interest rates were high. Maybe zombies will come back into fashion. To find the answer...

Delta Air Lines ($DAL) kicked off third-quarter earnings season today, filing its earnings release at 6:31 a.m . Of course Calcbench had that data indexed immediately, so let’s take a quick peek at what Delta had to say. The keyest of key performance metrics in the airline industry is a non-GAAP metric known as TRASM, or total revenue per available seat mile. We quickly found Q3 TRASM in today’s earnings release, at 20.58 cents per mile. Chart Delta’s TRASM over time, and you get Figure 1, below. At first glance Q3 TRASM might seem underwhelming since it’s trending downward from Q2 and is a fair bit below the year-ago period, when it was 21.15 cents — but wait! Remember that CrowdStrike IT disaster back in August? The one that grounded Delta flights for days? That disruption was so far-reaching that Delta had to include an explanatory note about the outage in today’s press release. The outage was so severe that it actually pushed TRASM down for the quarter by a material amount. Specif...

Hold up, everyone — are food businesses suddenly going on a diet? We can’t help but ask that question this week, since both Conagra Brand s ($CAG) and Lamb Weston Holdings ($LW) both filed their latest quarterly earnings releases this week, and both reported underwhelming growth. Then we started researching what their peers have said in recent filings, and those companies weren’t reporting anything great either. What’s going on? Let’s start with this week’s filings. Conagra filed an earnings release for its fiscal first-quarter 2025 , which ended on Aug. 26. That release included the following: Net sales decreased by 3.8 percent; and organic net sales decreased 3.5 percent. Operating margin declined by 247 basis points to 14.4 percent.  EPS rose 44.8 percent to $0.97 (good), but adjusted EPS fell 19.7 percent to only $0.53 (bad).  And as icing on the cake, Conagra forecast that organic net sales for fiscal 2025 would be flat to 1.5 percent compared to 2024.  Then we noti...