Facts from the Week: April 29, 2022

Highlights from $RHI $TBI $CMG $MA $V $JPM $GPS $FCFS $RICK $DAL $TSCO $CL $SKX $GOOGL $CCS $JOE $RDFN $FMCC $SHW

Apr 29

Summary

Freight costs appear to be coming down from the top and Maersk lowered demand expectations for 2022
In housing, affordability is down though availability remains slim
Consumer spending is mixed with Visa and Mastercard reporting April trends inline with prior months
Demand for labor remains high as reported by Robert Half, Indeed and others

NOTE: I will be in Omaha for the Berkshire Hathaway meeting this weekend - please reach out if you would like to connect.

Staffing

Robert Half - $RHI

“We are very pleased to report another very strong quarter driven by a robust demand environment across the globe. First quarter revenues grew 30 percent, and net income grew 52 percent on a year-over-year basis. Our permanent placement talent solutions operations again led the way, achieving year-over-year revenue growth of 67 percent. Our contract talent solutions and Protiviti also continued to post very strong results, growing year-over-year revenues by 30 percent and 19 percent, respectively.” -CEO

TrueBlue - $TBI

We are very pleased with PeopleManagement's growth this quarter, with revenue up 8% compared to Q1 2021. Same site sales and our on-site business produced year-over-year growth despite global supply chain challenges and demand for our commercial trucking services remained robust.

Chipotle - $CMG

I would say the good news is we're in the, call it, 85%, 90% of restaurants being staffed at model, which is really tremendous. We'll always want to strive for 100%. But seeing that 85%, 90% range is really something that I would say is better than we were pre-pandemic, just to kind of give you a gauge. Pre-pandemic, we're probably more in the 80% range.
Going forward, one of the things that we're really happy to see actually is at the manager level and above. We're seeing more stability. So we're seeing less turnover take place there. Usually, how that works, then as that cascades into the crew.

Indeed.com

Consumer

Mastercard - $MA

Visa - $V

JP Morgan Chase - $JPM - Spending Tracker

Gap - $GPS

In light of the macro-economic dynamics as well as the execution challenges at the Old Navy brand, the company is updating its first quarter fiscal 2022 net sales growth guidance to approximately low to mid-teens year-over-year declines from its prior guidance of mid to high single digit year-over-year declines. The company has also taken a more aggressive approach to assortment balancing resulting in increased promotional levels primarily at Old Navy.

First Cash - $FCFS

Pawn receivables increased 42% in total at March 31, 2022 compared to the prior year, while same-store pawn receivables were up 38%. The growth was driven by a significant recovery in pawn balances and lower-than-normal seasonal pay downs normally associated with tax refunds. Pawn receivables are currently above pre-COVID levels when compared to the same point in 2019.

RCI Hospitality - $RICK

Record $24 Million March Sales: While January was affected by Omicron and February by severe weather, March was a record month, with approximately $24 million in sales.

“We had a strong 2Q22, with favorable trends in March and new developments expected to benefit 3Q22 and 4Q22. As we have seen a return to more normal everyday life around the country, people just want to go out and have fun.” -CEO

Delta - $DAL

“We are seeing an historic level of sales activity and booking volumes at levels higher than we’ve ever seen in our history,” Delta Chief Executive Ed Bastian said. Even concerns about the spread of the Omicron BA.2 variant, which recently has driven increases in case numbers in some parts of the country, haven’t derailed demand, Mr. Bastian said in an interview. “There appears to be no concerns, candidly, about any variant or the virus,” he said. “Everyone is ready to get past it.”

Tractor Supply - $TSCO

Net sales for the first quarter 2022 increased 8.3% to $3.02 billion from $2.79 billion in the first quarter of 2021. Comparable store sales increased 5.2%, as compared to an increase of 38.6% in the prior year's first quarter. Comparable store sales for the first quarter of 2022 were driven by comparable average ticket growth of 6.7% and a decline in comparable average transaction count of 1.4%. Comparable store sales growth reflects robust demand for everyday merchandise, including consumable, usable and edible (“C.U.E.”) products and strength in winter seasonal goods, partially offset by a slower start to the spring selling season. In addition, the Company’s e-commerce sales experienced double-digit percentage growth for the 39th consecutive quarter.

Colgate - $CL

Skechers - $SKX

We remain confident in our growth strategy. But because of external pressures, including recent COVID-related shutdowns in China, geopolitical unrest, escalating inflationary pressures on both our business and our consumers as well as ongoing supply chain disruptions, we are incorporating a more conservative outlook into our guidance, particularly in the second quarter until we have more certainty around the length and severity of these external headwinds.

Google - $GOOGL

"Q1 travel searches were above Q1 '19 pre-pandemic levels. Query growth in categories like beaches and islands were up 27% versus 2019, while vacation rentals rose 37%"

Supply Chain

Maersk

The strong result is driven by the continuation of the exceptional market situation within Ocean, which has led to a 7% decline in volumes and an average 71% increase in freight rates compared to Q1 2021.
The current earnings guidance is still based on an assumption of normalization in Ocean early in the second half of 2022. Based on volume developments in the first quarter, APMM has revised downwards its outlook for the growth of global container demand from 2-4% to -1/+1%.

Freightos Data:

Harpex

Drewry

Housing

Center for Housing Studies

“Massive increases in house price appreciation and the resulting levels of tappable home equity will continue to support remodeling activity this year and into next,” says Carlos Martín, Project Director of the Remodeling Futures Program at the Center. “Many other market indicators including existing home sales, renovation permitting, and retail sales of building materials also continue to grow at high, albeit slowing, rates.”

Century Communities - $CCS

During the quarter, we executed 2,944 net new contracts with a number of sales increasing each month as the quarter progressed, even as the pace of interest rate increases accelerated. Our backlog at quarter end consisted of 5,247 sold homes valued at $2.2 billion, increases of 28% and 37%, respectively, both company records.
As a spec builder, we are accustomed to having completed homes for immediate sale and move-in. At quarter end, we only had 17 completed homes across our 17 states that could be sold for an immediate movement. The elevated interest rate environment has not eliminated the demand drivers propelling the housing market over the last several years, including the ongoing shortage of both new and resale homes available for purchase, millions of millennials, the largest generational group in the country, reaching the prime age for new household formation and the increased desire for homeownership brought about by the pandemic. We believe the most significant impact of higher interest rates will not be on our ability to sell homes but on our ability to raise prices as much or as frequently as we have done in the recent past.

St Joe - $JOE

“Residential backlog continues to grow with a record number of homesites and homes. Demand continues to exceed supply. Our homebuilder partners seek more homesites and additional communities. The majority of the luxury homesites at Watersound Camp Creek went under contract within 48 hours after being released for sale on our web site: www.joe.com/community/watersound-camp-creek. Multi-family rentals continue to be occupied by tenants almost immediately upon opening. We are also expanding our rental offerings with new village townhomes.”

Redfin - $RDFN

Nationwide, homebuyers need to earn $76,414 annually to afford today’s typical monthly mortgage payment. That’s up $19,478 (34.2%) from a year earlier. The income necessary to afford a home has increased by more than 15% year over year in all 50 of the most populous U.S. metros tracked by Redfin. Over the same time period, average hourly wages in the U.S. grew 5.6%.
The income needed to afford a home began climbing at the start of last year and jumped further this year as soaring demand, limited inventory and increasing mortgage rates led to rapidly rising sale prices. The national median home-sale price was up 17% from a year earlier to a record high of $412,700 in March, and the number of homes for sale was down 13% to an all-time low.
Mortgage rates shot up from about 3% to more than 5% over the last year. The combination of skyrocketing prices and rising mortgage rates caused the typical monthly mortgage payment to reach $1,910 in March 2022, up from $1,423 in March 2021 and $1,280 in March 2020.

FreddieMac - $FMCC

Single Family Housing Starts - US Census

Sherwin Williams - $SHW

"Our team delivered results in line with our expectations in an environment characterized by strong demand, ongoing cost inflation, and choppy raw material availability that improved meaningfully in the final weeks of the quarter,. “Our margins remained under pressure on a year over year basis, as significant pricing actions previously announced in all businesses have not yet fully caught up to offset highly elevated raw material costs.”