Earnings Call Transcripts Analysis, Q2 FY2017. August 31, 2017

Transcription

1 Earnings Call Transcripts Analysis, Q2 FY207 August 3, 207

2 Executive Summary Hamilton Place Strategies conducted an analysis of quarterly earnings call transcripts of U.S. public companies to identify key issues influencing the business community s decision making. We analyzed earnings call transcripts from the fourth quarter of fiscal year 206 to the second quarter of fiscal year 207, with the goal of tracking a broad range of topics impacting the U.S. economy from quarter to quarter. Key Findings: Earnings calls mentioning President Trump declined 84 percent between January and late August. Mentions of tax reform have declined by 38 percent since the beginning of the year. Not surprisingly, healthcare reform saw the largest increase in policy mentions. Of the total number of all-time earnings calls that mention "artificial intelligence," two-thirds of them occurred in the past year. Discussion of millennials in earnings calls has grown steadily, outpacing mentions of Baby Boomers in 204, as their purchasing power has increased.

3 Agenda Government And Policy Issues Special Economic Issues

4 GOVERNMENT AND POLICY OVERVIEW Combined, Mentions Of Government And Policy Issues Declined By 6 Percent Over The Last Three Quarters Total Earnings Call And Mentions Total Earnings Calls Total Govt. Or Policy Mentions 3,27 3,7 2,956 Percent Of Earnings Calls Mentioning Government Or Policy Issues 4% -6% 23%,225 6% Q4 206 Q 207 Q2 207 Q4 206 Q 207 Q2 207 Source: Bloomberg, HPS 3

5 GOVERNMENT AND POLICY ADMINISTRATION AND CONGRESS The Percentage Of Companies Mentioning The Administration Declined Significantly In Q2 207 Government Mentions In Earnings Calls 25-79% Administration Percent Of Earnings Calls % 4% 0% % 5% Congress 8% 0 Q4 206 Q 207 Q2 207 Source: Bloomberg, HPS 4

6 GOVERNMENT AND POLICY TRUMP Direct Mentions Of President Trump In Earnings Call Transcripts Plunged Between January And Late August Earnings Calls Mentioning Trump Trump Admin. By The Numbers Number Of Earnings Calls Q4-84% 64 Q 23 Q2 84% percentage drop in calls mentioning President Trump by name from January to August 9 calls mentioned the White House in Q2 207, down from 49 in Q4 206 Materials Industry had the largest percentage of calls mentioning the Trump Administration in Q2 207 (0.% of industry calls) Source: Bloomberg, HPS 5

7 GOVERNMENT AND POLICY SECTOR BREAKDOWN Earnings Calls By Utilities Had The Highest Rate Of Government And Policy Issue Mentions In Q2 207 Percent Of Total Issue Mentions By Industry Mentions No Mentions Utilities 37% 63% 76 Financials Real Estate Industrial Telecom Healthcare Materials 23% 2% 8% 8% 7% 7% Energy % 89% 249 Consumer Staples IT Consumer Discretionary % 0% 0% 77% 79% 82% 82% 83% 83% 89% 90% 90% Count Of Total Earnings Calls By Industry Source: Bloomberg, HPS 6

8 GOVERNMENT AND POLICY ECONOMIC ISSUES While Tax Reform Was The Most Discussed Policy Issue For Q2 207, It Also Saw The Largest Decline Select Issues In Earnings Calls Mentioning Policy* Percent Of Earnings Calls Q % -38% Tax Reform Q % 45% +00% 32% 22% 6% Healthcare Q % 20% 8% Financial Regulation Policy Issues 3% 3% 0% Infrastructure *Total number of earnings calls mentioning policy issues in Q4 903, Q 449, Q2-304 ACA Highlights May 4, 207: House passes measure to repeal and replace Affordable Care Act July 27, 207: Senate rejects slimmed-down ACA repeal bill 0% 0% Trade 2% 3% 2% Immigration Reform Source: Bloomberg, HPS 7 2%

9 GOVERNMENT AND POLICY TAX REFORM Discussion Of Tax Policy Issues On Earnings Calls Declined In The Absence Of Concrete Action Earnings Calls Mentioning Tax Policy Issues February 2: 52 Day after Senate Finance Committee advances Treasury Secretary Mnuchin nomination, tax reform mentions peak April 26: Mnuchin & Cohn release tax plan, and mentions spike in the days after Count Of Earning Calls July 27: Admin & GOP leaders announce BAT is dead January February March April May June July August Source: Bloomberg, HPS 8

10 Agenda Government And Policy Issues Special Economic Issues

11 SPECIAL TOPICS MILLENNIALS Discussion Of Millennials In Earnings Calls Has Risen Steadily As Their Purchasing Power Has Increased Number Of Company Earnings Calls Mentioning Millennials 982 First millennials born 2000 Last millennials born Millennials Boomers Count Of Earnings Calls : First group of millennials turn 25, becoming established in the workforce and as consumers * *Mentions through Aug. 23, 207 0

12 SPECIAL TOPICS ARTIFICIAL INTELLIGENCE, AUTOMATION, ROBOTS Two-Thirds Of All Earnings Calls That Mention Artificial Intelligence Occurred In The Past Year AI, Automation, and Robots By The Numbers All Earnings Calls Mentioning Terms 54 2,600 0, calls mentioned artificial intelligence in the past year, out of 54 total all-time 56% of total artificial intelligence mentions came from companies in the IT sector 67% 5% 3% 2.35x annualized increase in mentions of AI in the IT sector alone from 206 to 207 Artificial Intelligence Robots Automation Jan Aug. 206 Aug Aug. 207 Source: Bloomberg, HPS

13 SPECIAL TOPICS ARTIFICIAL INTELLIGENCE, AUTOMATION, ROBOTS Earnings Calls Of Tech s Big Five Have Increasingly Included Mentions Of AI, Automation And Robots Earnings Calls Mentioning Automation, AI, Or Robots, By Company 3 Alphabet Amazon 3 Apple Facebook* Microsoft *Facebook did not conduct public earnings calls before their 202 IPO **Mentions through Aug. 23, ** 2

14 SPECIAL TOPICS BLOCKCHAIN Mentions Of Blockchain Have Grown Modestly Since Its First Appearance In Earnings Transcripts In 203 Number Of Earnings Calls Mentioning Blockchain Key Findings Q Q2 Q3 Q * Total Since the first mention in 203, only 0 earnings call transcripts total have mentioned blockchain technologies or cryptocurrencies. Only two of the ten largest U.S. banks by assets, U.S. Bancorp and PNC Financial Services Group, have mentioned blockchain during earnings calls. Overstock.com accounts for 5% of all-time blockchain mentions, with Nasdaq and IBM rounding out the top 3 with 8% and 5%, respectively *Mentions through Aug. 23, 207 Source: Bloomberg, HPS 3

15 METHODOLOGY Methodology Our analysis examined earnings call transcripts to determine the quantity of earnings calls mentioning key topics and sub-topics. The transcripts we examined roughly corresponded to a given quarter. To conduct our analysis we: Reviewed roughly 3,000 earnings call transcripts of U.S. domiciled companies per quarter. Earnings calls analyzed for Q2 were held between July, 207 August 23, 207 (37 total calls). Earnings calls analyzed for Q were held between April, 207 May 3, 207 (327 total calls). Earnings calls analyzed for Q4 206 were held between January, 207 February 28, 207 (2956 total calls). 4

16 This Analysis Was Developed By The Following Members Of The HPS Team: Matt McDonald, Partner Rob Terra, Managing Director Jim David, Managing Director Brai Odion-Esene, Senior Director Michael Adams, Senior Associate Kayla Cross, Project Associate Josh Price, Associate 5