The Rising Influence of Rising Affluence

[DewDiligence]

UPS and FedEx vans are among the worst polluters. (Do their vehicles ever get engine tune-ups?) If these companies actually convert to EVs, it will be a major quality-of-life upgrade for anyone who takes walks in residential areas.

[n4807g]

Indeed.....seems to be a trend developing. Maybe that ?????? landing is coming.

[n4807g]

FedEx and UPS hit the wall on EV adoption
https://finance.yahoo.com/news/focus-ups-fedex-transition-electric-152931566.html

[DewDiligence]

CAT reports 1Q24 results—shares_slide_on_soft 2Q24 guidance:

PR:
https://www.caterpillar.com/content/dam/caterpillarDotCom/releases/1q24/1q24-caterpillar-inc-financial-results.pdf

CC slides:
https://s25.q4cdn.com/358376879/files/doc_financials/2024/q1/1Q-2024-Analyst-Slide-Deck_Final-1.pdf

1Q24 sales were $15.8B, flat YoY, with price increases offsetting lower volume. Sales in the Construction and Resources Industries (mining equipment) segments were -5% and -7% YoY, respectively, while sales in the Energy & Transportation segment were +7% YoY. The E&T segment comprised 45% of CAT’s product sales in 1Q24.

1Q24 non-GAAP EPS was $5.60, up from $4.91 in 1Q23. 1Q24 GAAP EPS was $5.75 up/down from $3.74 in 1Q23.

(Excluding restructuring costs from non-GAAP EPS is a policy that disapprove of because multinational, multifaceted businesses such as CAT have restructuring costs continually. In 1Q24, however, non-GAAP EPS came in slightly lower than GAAP EPS due to the exclusion from non-GAAP EPS of a one-time tax benefit.)

CAT does not provide specific guidance for sales or EPS, but it expects full-year 2024 sales to be similar to 2023. However, CAT guided to lower 2Q24 sales compared to 2Q23 (see slide #17), and this is apparently what caused today’s rather sharp selloff.

[jbog]

While trying to keep peace LG has given the USW everything. His contracts are all settled well in advance of their due date.

I believe his attitude is to spend whatever it is to keep everyone happy and then he expects the marketplace to pay the piper. Business doesn't work that way.

What if Nippon gets shunned and decides to enter the U,S, market through Southern Expansion? Good Night Irene

[DewDiligence]

All I see is that LG is building a company that will never flourish in a competitive industry.

Are you saying that CLF is giving away too much to the USW? If that’s not your point, what is?

[jbog]

All I see is that LG is building a company that will never flourish in a competitive industry. He should hope that Nippon acquires US Steel so it is saddled by the obligations.

Didn't any of these guys read about the history of the steel industrials. The unions won everything until they didn't

[DewDiligence]

More on the same topic:

https://www.wsj.com/livecoverage/stock-market-today-earnings-04-23-2024/card/cleveland-cliffs-counting-on-biden-to-block-u-s-steel-purchase-hUHIUr7P15Rnk93TyUjB

p.s. Today's CLF CC was another one for the ages. It didn't help the share price, but it was great entertainment as well as educational.

[DewDiligence]

CLF 1Q24 CC transcript:

https://finance.yahoo.com/news/cleveland-cliffs-clf-q1-2024-170011838.html

Much discussion of the non-takeover of US Steel.

Caution: this transcript has several OCR-generated errors. E.g., the transcript says “gold” in several places where the actual word is GOS (Grain-Oriented [electrical] Steel).

[DewDiligence]

CLF 1Q24 CC slides:

https://d1io3yog0oux5.cloudfront.net/_3efb7c3d63ae6bae87e3b8ff1637f911/clevelandcliffs/db/1111/11752/file/CLF+-+Q1+2024+Earnings+Presentation.pdf

[DewDiligence]

CLF 1Q24 CC notes re capital allocation:

CLF’s targeted debt leverage is <=2.5x EBITDA. There is ample room for CLF to continue to repurchase shares while staying well below the 2.5x ceiling.

CLF has no debt maturities until 2027.

[DewDiligence]

LG isn't someone who just hangs around the hoop buying back shares and watching the grass grow.

II don't know about the grass growth, but LG just repurchased 6% of CLF's shares outstanding in 1Q24 and wants to buy more.

[jbog]

I agree it's a non-cash charge but it does reduce the assets of the corporation similar to depreciation.. Cliffs also would benefit by reducing it's tax liability by a substantial sum,

[DewDiligence]

The 1Q24 GAAP loss of $67M includes a $177M mostly-non-cash writedown from idling the Weirton, Ohio plant. This is shown in the GAAP-to-non-GAAP earnings reconciliation table at the bottom of the press release.

[jbog]

Adjusted EBITDA of $414M, +70% YoY and +48% QoQ

Gaap Loss of $67 mil.

[DewDiligence]

CLF reports 1Q24 results—authorizes new $1.5B buyback—reiterates 2024 guidance:

https://www.clevelandcliffs.com/investors/news-events/press-releases/detail/635/cleveland-cliffs-reports-first-quarter-2024-results-and

In 1Q24, CLF repurchased $608M of stock at an average price of $20, reducing shares outstanding by 6% and exhausting the pre-existing $1.0B buyback authorization. As a result, CLF has now authorized a new $1.5B buyback.

1Q24 highlights

• Revenue of $5.2B, -2% YoY

• Steel shipments of 3.94M net tons, -3% YoY

• Adjusted EBITDA of $414M, +70% YoY and +48% QoQ

• 3/31/24 net debt of ~$3.6B, up from $2.9B @12/31/23 (the increase is due primarily to the $608M share buyback)

Re-iterated 2024 guidance

• Steel shipment volumes of 16.5 million net tons, compared to 16.4 million net tons in 2023

• Steel unit cost reductions of approximately $30 per net ton, corresponding to ~$500M adjusted EBITDA benefit compared to 2023

• Capital expenditures of $675 to $725 million

The stock is down slightly in AH trading. CC Tuesday at 8:30am ET.

[n4807g]

Tesla cuts US prices of Models Y, X, S by $2,000
https://finance.yahoo.com/news/tesla-cuts-us-prices-models-053202257.html

Without much lower price options EV's will never achieve wide acceptance in the USA. Tesla and the legacy auto companies can cut prices but it doesn't fix the base problem. The USA needs reliable entry level EV's at the $25k price point. All the political stunts and posturing about the new energy economy are a costly distraction.

[flatlander_60048]

I agree with the other comment. CERCLA liability from Landfills, Superfund sites, etc could be as much if not more than the PWS settlement. This liability will take many years to play out and is only worsened by the fact that the new EPA drinking water limits for PFAS are ultra low. This means they will be tested and found more frequently.

FL

[Biowatch]

Tesla crushed in Consumer Reports reliability rankings despite_improvement

From November, 2022. Can’t win ‘em all.

https://www.teslarati.com/tesla-placed-bottom-consumer-reports-reliability-rankings/

Consumer Reports‘ annual reliability rankings have been released, and with data from 24 brands and over 300,000 vehicles, Tesla fell near the bottom (19/24) along with Mercedes-Benz, Jeep, Volkswagen, GMC, and Chevrolet. Electric vehicles overall also placed poorly, being the second least reliable category of vehicles. Hybrids/plugin hybrids, especially those from Toyota, were found to be the most reliable…

…Tesla scored a reliability score of 40/100, while electric vehicles overall scored 36/100. It isn’t all bad news for Tesla; its score matches the average for domestic automakers, the company was able to improve its ranking by four places compared to last year, and none of its vehicles made it to the list of 10 least reliable vehicles in America. A list that notably included the popular Hyundai Kona EV scoring 5/100.

… Conversely, hybrid and PHEV vehicles crushed the competition with an average score of 78/100. And unsurprisingly, the brand with the most extensive representation within that segment, Toyota, achieved the number 1 spot with an overall reliability score of 72/100. Toyota was joined by Lexus, BMW, Mazda, and Honda in the top 5 (descending order).

[semi_infinite]

MSFT - It's not just about .gov systems. You have utility companies involved. It's easy to blame mainframes and COBOL but the fact is that MSFT is the front end and edgeware for almost all these systems and "integration" and O/S substitutions have been happening since the 80s. There may never be a solution without turning off the power and junking entire systems and turning on an entire new system with new software. In the latter case, do you still go with MSFT? It's their turn to answer the question instead of IBM.

https://www.reuters.com/technology/cybersecurity/fbi-says-chinese-hackers-preparing-attack-us-infrastructure-2024-04-18/

[DewDiligence]

GE Vernova—(ticker: GEV)—GE’s power spinoff, is a thematic investment for this board:

https://www.wsj.com/business/energy-oil/general-electrics-power-spinoff-could-be-formidable-once-fully-charged-0bd15005

GE Vernova does appear to be well positioned to ride the electricity-demand growth story, which has gained more attention lately because of the hefty energy requirements that artificial-intelligence data centers come with. Its gas turbines represent roughly 51% of global capacity, according to JPMorgan. That comes with an attractive stream of recurring service revenue, especially as natural-gas-fired power plants run more frequently to make up for the loss of coal-fired power plants.

It is also the top onshore wind installer in the U.S., a market that now has robust and prolonged policy support from the Inflation Reduction Act. Electrification, the unit that sells equipment and software for the grid, is its smallest segment but also comes with high growth and margin potential.

No position (yet).

[n4807g]

Indeed...thanks for posting. For me, trading copper miners has been profitable. Recently sold all my miners (too early) but I am holding on to SA. SA ticks a lot of the "positive" boxes, friendly jurisdiction, capital improvements pre-construction. Permitting on track. Very large resource with long mine life. Hopefully they will be granted substantially started status which moves them one step closer to setting the stage for a partnership. Assuming the KSM project is funded and permitted it would be a large addition to annual copper production that the world needs.

[Biowatch]

Aging copper mines turn into money pits despite_demand

https://www.mining.com/web/column-aging-copper-mines-are-turning-into-money-pits-despite-demand/

[Biowatch]

US government computers include “legacy” dinosaurs. And a rat’s maze of different systems that are hard to coordinate. Plus, any decent programmer can make a lot more money in the private sector than as a government employee. It can be difficult to find young programmers who even know how to run the old systems.

Look at how hard it was to sign up for healthcare online when they first announced “Obamacare.” Look at the nightmare applying for college financial aid became when they put it online. By all reports, the IRS rollout of filing taxes online has gone smoothly, but they’ve started very slowly and still warn you to be careful about spam, scams, and phishing.

From a 2021 article:

https://www.gao.gov/products/gao-21-524t

The U.S. government plans to spend over $100 billion this fiscal year on information technology. Most of that will be used to operate and maintain existing systems, including aging (also called "legacy") systems. These systems can be more costly to maintain and vulnerable to hackers.

This testimony discusses our work in this area. We analyzed 65 federal legacy systems and identified the 10 most critical at 10 agencies, including the Departments of Defense and the Treasury. The systems were 8 to 51 years old. Three agencies had no documented plans to modernize. Two had plans that included key practices for success.

… In June 2019, GAO identified 10 critical federal information technology (IT) legacy systems that were most in need of modernization. These legacy systems provided vital support to agencies' missions. According to the agencies, these legacy systems ranged from about 8 to 51 years old and, collectively, cost about $337 million annually to operate and maintain. Several of the systems used older languages, such as Common Business Oriented Language (COBOL). GAO has previously reported that reliance on such languages has risks, such as a rise in procurement and operating costs, and a decrease in the availability of individuals with the proper skill sets. Further, several of the legacy systems were operating with known security vulnerabilities and unsupported hardware and software.

Of the 10 agencies responsible for these legacy systems, GAO reported in June 2019 that seven agencies (the Departments of Defense, Homeland Security, the Interior, the Treasury; as well as the Office of Personnel Management; Small Business Administration; and Social Security Administration) had documented plans for modernizing the systems (see table). Of the seven agencies with plans, only the Departments of the Interior's and Defense's modernization plans included all of the key elements identified in best practices (milestones, a description of the work necessary to complete the modernization, and a plan for the disposition of the legacy system). The other five agencies lacked complete modernization plans. The Departments of Education, Health and Human Services, and Transportation did not have documented modernization plans.

[DewDiligence]

CVX—US ends importation of Venezuela oil—sanctions reimposed:

https://finance.yahoo.com/news/us-reimpose-venezuela-oil-ban-142402038.html

[DewDiligence]

ABT 1Q24 Results by Business Segment

  
                  %Corp      YoY Growth    
 Segment          Sales   (const currency) 
 Medical devices*  45%       +14% 
 Diagnostics       22%       -16%† 
 Nutrition         21%        +8% 
 Pharmaceuticals‡  12%       +14%

61% of overall corporate sales were ex-US.

*Includes diabetes care.
‡Branded generics and biosimilars in emerging markets.

†Excluding COVID diagnostics, 1Q24 diagnostics sales were +5% YoY. 1Q24 COVID-diagnostics sales were $204M (9% of total 1Q24 diagnostic sales) vs $730M in 1Q23.

[DewDiligence]

ABT reports 1Q24 results—raises 2024 guidance slightly—stock sells off because ABT didn’t raise 2024 guidance to a larger degree:

https://abbott.mediaroom.com/2024-04-17-Abbott-Reports-First-Quarter-2024-Results-and-Raises-Midpoint-of-Full-Year-Guidance-Ranges

2024 guidance for organic sales growth excluding COVID diagnostics is now 8.5-10%, up from the prior guidance of 8-10%.

2024 guidance for non-GAAP EPS (which excludes FX and restructuring costs) is now $4.55-$4.70, up from the prior guidance of $4.50-4.70.

1Q24 non-GAAP and GAAP EPS were $0.98 and $0.70, respectively, versus $1.03 and $0.59 in 1Q23. The YoY decline in non-GAAP EPS was due to lower sales of COVID diagnostics, which were $204M in 1Q24 vs $730M in 1Q23.

4Q23 FreeStyle Libre sales were $1.5B, +23% YoY in constant currency. FreeStyle Libre is the largest-selling medical device, ever, from any company.

Please see #msg-174255202 for a breakdown of ABT’s 1Q24 sales by business segment.

[n4807g]

Tesla cutting labor cost won't fix the fundamental problem; competition. How low could the share price go......?????

[n4807g]

to big to fail......

[semi_infinite]

MSFT - It's not a good thing when a company charges extra for being careless and they feel they are too big to be fired.

https://www.wired.com/story/the-us-government-has-a-microsoft-problem/

[DewDiligence]

https://www.prnewswire.com/news-releases/bluu-seafood-opens-new-headquarters-in-hamburg-with-europes-first-pilot-plant-for-cultivated-fish-and-prepares-for-market-entry-302113366.html

[n4807g]

Meta, Google and Intel have announced upgraded and in-house chips to compete with Nvidia in recent days. I expect this trend to continue and expand to other tech firms. Nvidia is currently the leader, but doesn't have a lock on the market.

[n4807g]

I know....but I wonder when we'll see individual and class action suits made by individuals and parties outside this agreement?
https://www.robertkinglawfirm.com/personal-injury/pfas-class-action-lawsuit/

I don't know where this could go, but I still see a lot of potential problems related to health impact.

[DewDiligence]

3M has already settled drinking-water claims with US states and municipalities:

https://d1io3yog0oux5.cloudfront.net/_0eae5261e0f791dc08315189ed6e845d/3m/news/2024-04-01_3M_Settlement_with_Public_Water_Suppliers_to_1836.pdf

[n4807g]

US sets first standard to curb 'forever chemicals' from drinking water
https://finance.yahoo.com/news/us-sets-first-standard-curb-090000945.html

Experts have predicted that the release of new regulations will spur more PFAS-related litigation. Last year alone, lawsuits accusing major chemical companies of polluting U.S. drinking water with toxic PFAS chemicals led to over $11 billion in settlements.

A study released last year by the U.S. Geological Survey found that nearly half of U.S. tap water samples contain PFAS.

Can of worms.

[Bluewingcap]

As a gold price update, ETF outflows have now stopped. That is the next leg of support for this rally. Central Banks continue to buy (although at lower volumes). Will speculative fever come into the market while supply is limited? I would prefer slow and steady, but some follow through by the miners and royalty players seems like the next rotation. M&A should pick up in the industry.
GROY has consolidated and technically looks ripe for another 25%+ leg up. Cote Mine is now operational and commercial volumes expected to commence in Q3.
Cote First Pour

[n4807g]

AI processors. I wonder if the effort to build AI processors beyond NVDA & AMD will significantly impact their revenue streams in the future. Alphabet, Microsoft, Apple, Amazon and others have deep pockets, and could potentially build out their own AI hardware systems. Are AMD and Nivida moats sufficiently wide to justify their lofty valuation?

[n4807g]

I doubt that Reuters is lying

......no doubt. So now the USA will be left behind in the mass adoption of EV's. Tesla will dominate the market with higher priced cars while the legacy companies flounder about, making pronouncements about EV's while doing nothing. Looks like BYD will be the mass market provider. The robotaxi declarations are getting stale.

[semi_infinite]

TSLA - The writing was on the wall, the Great Wall (see linked Seagull review in prior post) . Musk accusing Reuters as lying. I doubt that Reuters is lying.

https://europe.autonews.com/automakers/tesla-abandons-plans-low-cost-ev-report-says

[DewDiligence]

CLF 2023 Sustainability Report:

https://d1io3yog0oux5.cloudfront.net/_e5447df1cf84e93e74cd99479cde07f0/clevelandcliffs/files/pages/clevelandcliffs/db/1149/description/2024+Documents/CLF_SustainabilityReport_Spreads_042023.pdf

[DewDiligence]

TSLA has much further to fall, IMO. If the SEC, which is currently investigating TSLA's accounting, finds evidence of fraud, look out below. Moreover, it's inevitable that China is going to put the squeeze on when they decide they don't need TSLA anymore.

[n4807g]

Yikes....TSLA coughed up a hairball!

[DewDiligence]

FDA approves ABT’s TriClip device for repair tricuspid heart valve:

https://finance.yahoo.com/news/abbott-receives-fda-approval-triclip-130000245.html

EW is the only other company with a similar device.

[DewDiligence]

SHEL pulls back on—(unrealistic)—decarbonization goals:

https://finance.yahoo.com/news/shell-oil-revises-climate-goals-220000675.html

The target for 2030, which had been a 20% reduction, was lowered to 15-20% and the corporate carbon intensity target for 2035 was “retired.”

LOL re the use of the word, “retired.”

[n4807g]

BYD sells 302,459 NEVs in Mar, 2nd-highest on record
https://cnevpost.com/2024/04/01/byd-sales-mar-2024/

BYD Denza launches updated N7 SUV with 20.5% lower starting price
https://cnevpost.com/2024/04/02/byd-denza-launches-updated-n7-suv/

Looks like BYD is setting the pace......

[n4807g]

A Million Simulations, One Verdict for US Economy: Debt Danger Ahead
https://finance.yahoo.com/news/million-simulations-one-verdict-us-210022706.html

[jbog]

I think you're missing the point that CLF's bloodline is the government and someday that will change and they'll be in big trouble. Others in the industry are thriving while the Old boys will continue to disappear.

Nippons takeover of USS would be a huge bonus to the industry but it probably won't happen

[DewDiligence]

I'm just not impressed with a industry that needs Government assistance to survive, The two things that saved Cliffs was first a President who loved tariff's and then a President who needs unions at any cost.

I find this a tad hypocritical insofar as you’ve invested in a wide array of industrial companies who have benefited from the politics of a specific industry.

[DewDiligence]

STKH implements 1:10 reverse split, LOL:

https://www.prnewswire.com/news-releases/steakholder-foods-announces-ads-ratio-adjustment-302104528.html

[DewDiligence]

FDA clears ABT’s 15-minute test for TBI/concussion:

https://finance.yahoo.com/news/abbott-receives-fda-clearance-whole-130000849.html

Note: This is not the hand-held diagnostic ABT is developing to give TBI results from a simple finger prick (#msg-172397644).