L - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Loews Corporation Q2 2019 Earnings Conference Call. [Operator Instructions] Thank you.

I will now turn the conference over to Mary Skafidas, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Mary Skafidas

Thank you, Stephanie, and good morning everyone, and welcome to Loews call. earnings on supplement, our our may company of found be website, copy release, and earnings overview, A loews.com.

David our On have the Financial and our we Officer, Chief Chief Executive call Officer, Jim this Edelson. morning, Tisch;

Following our will question-and-answer shareholders. which session, our morning, include from have questions a will remarks prepared this we

from that implied will the nature. in Actual forth any achieved by however, Before that filings. due wide conference forward-looking we I to begin, or call our in and range are this may those differ forward-looking statements of materially company SEC you set in uncertainties, remind might made include statements a those including results risks

reflect summary which is expressly the This statutory forward-looking statements made. statements. SEC. disclaimer, at obligation of are forward-looking is statements revise they The disclaims a only filings the any Forward-looking disclaimer company company's with company's brief the to circumstances included time any update the in or

Please During the our measures. we discuss and might security comparable also call financial today, supplement reconciliation most to refer filings GAAP the to earnings for measures. non-GAAP

Edelson In David Chief our before will does, Tisch, minutes, walk you for our quarter, Financial he Jim Officer, key but the off a call. kick CEO, the through few drivers will

you. to over Jim,

Jim Tisch

Thank you, good Mary, and morning.

X% a development, over sizable with significant reflect as rate had lines. domestic The In in by and the premium was business our property written X%. strong quarter, up year sustained about business of increase and good Loews and pricing well another improvement largest last quarter up across new was CNA's from by results subsidiary CNA. last number casualty as quarter net

their CNA's today, mid a want CNA's do direction the primarily numbers, in term, I strategy remarks the focus our Since to and the David of CFO, will P&C long confidence state over deeper industry. strategic our on my to dive Edelson into

of last currently Friday, each the nearly for more CNA in $X.X XX% CNA and Loews than accounts on Loews share share. Reflecting repurchases our spent value confidence through billion of

you told of in much reasoning this that walk for we some through you me let Now the believe I've how their strategy, confidence.

work establishing expert has CNA's the underwriting management done enhance highly team a profitability culture. disciplined to by

Additionally, critical the technology talent its in built and expertise through the organization strengthened pool mechanisms to investments across analytics. share company has and

the a same continues time, the company. expense worked of awareness CNA company's of quartile the deliver At underwriter. and of underlying peers. has improved The with goal embedded line growth with throughout profitability successfully disciplined team ratios to the and management remaining loss to loss be diligently has the ratio consistent a CNA's top CNA in

there years I is achieve a in than In CNA terms to has the in has had the of industry, my of insurance never XX to plans and the be that confidence in CNA the been marketplace, be known Adding improvement what my of and past have the expense points is achievements diminishing years. without still financially disciplined ratio, it improvement. team company's still five few for and to a it to competitive experience more

to dividends earnings peer share risk. less to unprofitable allocating and appetite the underwrite Since almost all CNA there its and buybacks, are of companies is

profitability. With to at their disappoint the to shareholders continual return over with strategies period, to expense that increase of management's are investors the five-year capital of loath volume

Turning to offshore the Diamond Offshore. downturn market. be than drilling The a in company expected continues affected by to longer

quarterly to Loews add which limited than comes share. downside may As I results, to is the of equity mentioned per last a quarter, Loews' to $X value stake, of our our lot less noise while Diamond

assets on its operate assets selectively most niche attractive that fleet market to its drilling be offshore several challenging, has competitive we and side positive a there although since continues XXXX, diamond markets. to is to invested ledger, in focus has And the in restructured

drilling efficiency maintaining customers in its excellence enhanced itself from continuous differentiated has time all has this money. safety. Diamond and Diamond operational Furthermore, and competition and on accomplished while innovations save that focus the improvements value-added of through

that on prudent these recovery. capitalize believe actions We coupled with positioned Diamond financial have eventual an management to

our exciting year. from It news acquisition footprint specialty CCC, subsidiary some of have the State expanded made in this in pharmaceutical June an packaging packaging at which bought which segment Distribution also growth space, the a We CCC's Tri industry.

six of accounts acquired Loews $XXX two million, Since the of for all years sales. than has ago. tuck-in over funded price now which XX% the packaging total Pharmaceutical total CCC more level. a purchase a at company background, little for CCC's CCC A made then of of were acquisitions way

or at extremely added and either management The potential. evaluate size that multiples add to scale or with could continues presence These in into CCC attractive synergy targets CCC's growth other strong post scale increased segments, diversify acquisitions team specialty segments. possible

Finally, a mention XX% had Loews about Loews XX it a without outstanding call Fun wouldn't share it than repurchases. be today. does earning ago, years of fact, shares more

quarter just second the this we repurchased shares. a this shares. for over we've million over And As million repurchased to year, XX of X little year, date, in

to share its continued important value, trading remain it's to view, repurchases stock intrinsic We've not our an mention that we Loews way buy for in long-term still the below value shareholders. create because low all fact, that

for to drivers Loews' explain And will David quarter. that, I'd to key the with CFO, like Edelson, turn the over call who

David Edelson

morning. good Thank you, Jim, and

or year's or $X.XX quarter, million $XXX $XXX million income compared share per quarter. per For second the $X.XX to in share Loews second of reported net last

prior increased while earnings net XX%. income X% year, up per over our the share Our was

QX average repurchase from As XXXX, almost share X% outstanding given our activity shares declined

from and related $XX a a last due CNA tripled a was net its however, increase. to our of increase, customer Boardwalk far bulk and by one, continues quarterly the by than ownership bankruptcy million to current Pipelines XX% the posted of more number contribution from booked as cancellation. factors; to and two year-over-year driven largest our to increase income contributor The resulting mainly Boardwalk XXX%; net be benefit net contract year the income slight two, it

Hotels. and increases excellent Offsetting contributions fact an lower had operationally. from Despite were Hotels year-over-year that Loews CNA and the quarter Diamond Boardwalk the by Loews Offshore

me million several modest results posting last $XXX in ratio year year's and more million, an underlying Let nearly losses resulted prior CNA This XX.X%, combined underwriting than better which X.X offsetting development up from into last delve now from underlying income, factors, net CNA with improved contributed year. income catastrophe of $XXX points the depth. excludes which of quarter. second was increase

and in level cat underlying the lower however, declined increase higher year income losses. marginally because a Despite underwriting favorable total underwriting income, of development prior of

which last to QX year's its in after-tax combined essentially above year calendar ratio still investment respectable. segment was was XXXX. identical highly income X.X CNA's CNA's was XX.X%, but quarter result, points second P&C

& and one-time both quarter, IT significant segments costs had variances. favorable to last service provider. year's Corporate Group transitioning Life second infrastructure new The from a In CNA incurred

CNA's booked Corporate many rate policyholders chose to Life were coverage And from segment. costs Group, and improved increases. lieu benefits non-recurring & reduce of largely or in results continuing premium favorable lapse These care as in in long-term persistency

contribution net million. in and Finally, summary redemption by charge debt strong In CNA an non-P&C underwriting $XX early P&C and posted on to of results improved CNA's segments. our results the its income retirement reduced investment

three to last results market, and comparison, the $XX loss a $XX quarter. Offshore. million of results be by numerous Turning highlight drilling in them. continue let second factors negatively loss global me conditions compared a to net challenging year's contributed affected the Diamond Diamond's offshore to quarterly while net Diamond's in million Diamond impacted

down contract earning declines. as XX% declined Number daily was revenues Downtime, rates down one, year-over-year drilling contract per revenue these revenue X%, lower and average working were day days rig and XX%. timing drove

costs to largely up drilling Number current with were expenses deferred attributable to incurred rigs of amortization contracts. the increase and certain XX%, two, more for the prep the ready impact of contract adverse their contract

three, $XX Diamond million sale XXXX our which year this and last income which our million. by income number Diamond's booked charge contribution by a impairment gain And to net year, increased a rig $X net QX reduced on

quarters, healthy position Diamond we highlighted ensure while focused its its customers. investing considered for by are remains past the top maintaining on As tier to a liquidity have fleet in rigs several

contribution our payment and mainly to in income cancellation the to up earlier. million, QX from increase XX% XXX% was million $XX $XX referenced net in contract ownership from XXXX, due the Boardwalk's

Operationally X.X%. revenue and the renewals. basis placed recently expanded restructurings, EBITDA payment, revenue expirations Boardwalk X.X%, included quarter, underlying good XX by service, margins increase had absent and was projects propelled rose points in about cancellation the of net were contract up offsets growth net contract EBITDA The revenues a by impact

on Let's Loews year. net our last contributed to to capitalized our Loews Hotels development million write-off expenses gains of costs by under were turn which to and earnings project. properties $XX Hotels, from quarter development $XX related pre-opening terminated income, by million year-over-year obscured this the underlying down

past to two XX Revenues the almost at in These $X such a owned versus properties during as hotel owned items the mainly million hotels. no as after-tax declined well totaled of few sale due renovations expenses months last year. QX

the uses Hotels for those accounting as the in Universal Loews for financial Orlando method properties its reminder, shown the GAAP which equity joint revenue meaning not of revenues a at include hotels are As results. our the Resort properties, venture

reported adjusted EBITDA $XX year's in in our non-recurring is items Year-to-date, million last $XXX Loews summary is quarter. excludes second versus and million from $XXX million and up earnings last defined Hotels quarter, adjusted was which quarterly EBITDA the $XX million year. in

City, year-over-year XXXX of cited X,XXX would two activity and one almost adjusted QX to provide through The St, comparison. Louis, last JV, Kansas of EBITDA. owned rooms that the QX XX boost the properties three in over Texas Orlando, opening Arlington, months, XXXX the I should renovation back above a the from adjusted in note sale held and EBITDA

invested a partnership much the Investment Turning decline company. was to to modestly. the parent lower of including of down smaller assets Contributing a investments. was portfolio level income limited

marketable end, billion remainder, At portfolio. investments of our and parent partnership to size of June the The $XXX limited LP has securities with million portfolio XX% and to shrink mainly $X.X equivalents and cash and about in at company from quarter portfolio of at this June with XX, the consistent cash XX, $XXX portfolio declined in investments. million the XXXX totaled a equity decision

June $X.X Loews. just which units prior not $X.X July As the LP company XX, was billion the for of a XXXX on owned to the portfolio Boardwalk reminder, XXXX, totaled by previously parent billion purchase

our which Container, quarter, acquisition Tri the quarter. from reported connected during $XX negatively part completed Boardwalk in expenses of from is the past $XX to as affected $XXX acquisition late corporate and of results corporate Consolidated million in Non-recurring million subsidiaries million results distribution received other the the dividends We CNA. in other from QX. second State

just repurchased during we of a X.X our million. $XX million stock for million quarter shares Year-to-date, We million. received end, repurchased additional repurchased $XXX million. $XXX shares After year. we of an the our over under outstanding for Dividends X.X% X beginning of have just at or common the quarter of second year-to-date totaled shares XXX,XXX shares total the

will now Mary. hand call I the back to

Mary Skafidas

David. you, Thank

shareholders. from submitted questions three have We

few back, a is, question ago, months out first hedge months an update funds. of Can a about cash talked you us moving Our Loews on give few Jim you that?

Jim Tisch

Sure.

and ago, the $X that said, billion the $X billion we interest $X.X of billion. So and over in as investments is our The from David past liquid $X.X minority and subsidiaries, cash the investments declined in the liquid repurchases. offsetting to spent inflow approximately that we share number year acquiring today has is about close reason Boardwalk, cash about from year a $X.X because had had billion we on billion dividends spent also cash we

to make areas close in of was to investment received $X the the the decided funds. especially we've billion to We've that for that decided that some the risk. an our hedge billion, we funds haven't returns $X.X adjustments with hedge where sufficient wanted one our in on needed we rather And than adjustment we portfolio. So been make

as that's I is the knows why case, and have for fund is competed crowded think been returns space, that, the guess been very, My everybody away. very hedge

are million So that, we treasury other approximately in in than bills, retain in equities million money we short-term funds, also treasury investments and about still instruments. primarily $XXX $XXX market hedge other notes have and and our

Mary Skafidas

at actively allocation to at company is Next the share primarily add level? another has question Loews business buybacks. recent looking Loews holding capital focused Is on

Jim Tisch

world equity very find accommodating I dry levered that and also private been transactions. within what to amazing upwards So to have powder the move continues highly leverage markets is so the

and So in eager massive buyers equal sale created - that for a are demand my that imbalance buy has that them. between supply to mind are this assets are

of significantly moved sub-sector that and up in what's about moved up rather multiples every is happened So just they've the market. have

their should sellers stated a business, be higher investment cost with Making someone assets. reflect adjusted higher EBITDA, be that worse, Those adjustments be should have included. significantly is a as adjusted to term that what is found and one-time earnings adjustments now EBITDA selling to than bankers and market and excluded matters might sellers called is which imagine, considered you benefits, oftentimes, the to when There EBITDA. future

charts in a far like may So we've that world pretty the fancy their say, a private any And asset My the environment. peaks. result, what multiples some while time XX fact, I that my in would as we for they welcome basically on it. to show as estimation adding interest new is watch of skeptical leg to It's approaching low seen going guess remain will we'll be rates. this and on dutifully I'm potential opportunities, that surpass for while persist

you I'm work. to What is on make really the need that math acquisition order seeing in any synergies today corporate

into highly at to continue businesses new make of business to have that point reasons, of that any time. synergies, can we'll it these me, get the seems in So assets this strong all or we use for currently acquire we unlikely industry where but

Mary Skafidas

Last and is Can address, what on its environment? impact to to and you about doing you company also is question the from CCC differentiate shareholder add CCC its the customer products talk addressing itself is, the of value how can base?

Jim Tisch

highly, reminder it was thesis let in market growth on a in We CCC, platform a good size to for So fragmented because as our with we serve start were for could a an a attracted Loews player industry. me that CCC you. update felt the packaging for investment in highly

from the acquisitions. added and diversify years, it's since the significant been also call, acquired have past on away these water - which Loews and us CCC, mentioned acquisitions dairy the synergies. also I As packaging has to in made post several six acquisitions acquisitions CCC helped business have we've tuck-in declining These Loews very

But a the in than and in labor including sunshine volumes in water we These all industry, expected. on dairy tuck-ins decline CCC. previously were not are is all also there entirely headwinds the increased financed those, by self the funded had steeper - and costs

overall, original But holds. the investment thesis still

first packaging solution of customer what them. step understand their to to value try CCC's is customers, terms Now and customized adding are to priorities in to our with any their for develop

of a environment, major a So one needs, packaging the that customers recent I'm by not example also specifically, it about our helping in reducing is a only CCC what of impact really Dura-Lite, providing plastic by - product but is innovation talking value value the packaging forward. world, meet the CCC and added it's their from adds called on is leap

to plastic introduced but was a container is and stronger that Dura-Lite it's technology strong XXXX, that less or creates the as a in than XX% original, using the XX% resin.

than and So XX% CCC more Dura-Lite make bottles gallon dairy now bottles of all water up that the ships.

And effect uses. proud the to into high-density that which has of is the fewer is CCC recycled major translated CCC of product I'm pounds used environmental CCC also, that the side producer by is the the being polyethylene, resin million of second question. Dura-Lite that part to resin United us States a which say, gets of largest X in

in to focus I than and been more But have manufacturers more we're somewhat was has in expensive reticent that unit this taking past, virgin picture more packaging, more greener interest use do recently, it resin. that are the the In believe material. to using companies sustainability, expensive started change an to because seeing per recycled packaging on resin

solutions for develop to the plastic continues like seriously CCC's on the and earth very the has world the that that to and it I'd Thanks. for impact better packaging add takes CCC better are customers.

Mary Skafidas

you Stephanie, the questions Jim. on you, Thank to over for call.

Operator

from of Shanker Deutsche line with comes question next Your Josh Bank. the

Josh Shanker

but words Jim, I was remarks. the in in prepared did I that to your something putting I'm Now, trying hear mouth, surprised not

at and like I low given a what - is? overall your typically talk today, maximum what share that was people the the of anything. the to and why it think But you sort maybe $X Diamond Diamond is outlook possibility your when Diamond us if value I'd you equity there worth - valuation You data presents that that's like view with isn't shares don't of downside a currently said. that, said that that think hear, you

Jim Tisch

time. some when well to that in that point that is back with fleet that I'm going my very Diamond a do So business respect to believe come pleased that it capable to will, I eventually the comes recovery in is is the at will and has and What which outlook Diamond environment. is be drilling offshore strong about able

drilling it's markets. oil is I problem the think big offshore not competing production, flavor which which been price competing has volatile, has and that a du been right for now relatively drilling Shale that offshore jour low, of for with has but the Shale the production oil, been only with

market passed been weak, things I've mid supertanker seen two But before while going is and while a in scrapping early of and movie in this that business, this on space. has drilling the time simultaneously. drilling we've all once in large there been offshore what amount to offshore the the has through are the 'XXs are

those to as on in the that one, Number a become that funds also that more and they companies few more and deteriorate laid going they being invest seeing rigs laid and down those demand and rigs are after they seeing as have maintain get up, reactivate. sitting corrosive we're and do water is a to years rigs, we're up environment the and expensive highly don't of

we're guess rigs significantly, activity increase scrapped does if is my that in market. oil doesn't So more prices to longer the improve years, no - next will not - going increase over the we several don't and see if

will rates change, curve know there the will enough at you bingo, for go up be supply demand be some and then demand point time, rigs supply more won't and in And before it, there again. and the will

in in that my at be there some view the time marketplace. is change point will a So

is my Loews. Diamond I with to mentioned that Offshore $X comment, back because consolidated Going

income numbers of Loews in per net show our significant our Loews total share. so simply even within than that according the is profit reflection be a Mr. those it's and investment $X that earnings Market the And $X numbers loss to up though the was of less may mention and of value fact

Josh Shanker

is your And drought outlast it would course if to than through stake financing willing of with Diamond drought situation? bridge get support Diamond in change that to greater the of and cost be the it finance this Loews ownership can

Jim Tisch

has So it's in rates. Diamond I a And at runway. Diamond which attractive on can the strong well has that believe years environment improving of do the is backlog financed very Diamond an added think based X.X We we believe way coming.

investments, the additional what shareholders. to for wait whatever the we As see we'll will do just in have interest and are, opportunities of the is and best Loews

Josh Shanker

to Jim, X% I bit, think, numbers wrong opportunity yield. was, ago reason not a might in couldn't my right, might mostly cheap completely a debt, years the four at raised the financing. think some be market little about but be as raise believe timing I I you in the you My

And period some timing paper. does sheet in into just so makes because going trough for expanding interest the have you we issued balance its rates, sense? another Obviously, interest any are Loews

Jim Tisch

we range business. a debt additional at have we difference The from the X% debt will we that for level We significant are really. Loews not don't ways No, have coupons X%. make how that - the the - and operate to feel Loews X%

now raise any So notwithstanding looking Loews the rates, more debt. low to is

in subsidiaries, and speculatively intention at to using have but of to do borrowing point our not debts, the For no time, so. refinance they're their this we're opportunity some

Josh Shanker

you freestanding loan businesses be intermediate the And any it capitals Loews' because much and would to economic a supporting at but an the than for themselves, you subsidiaries would sense theirs point, from that all loan the lender they be a does of want and to public? to some take you Loews I take lower cost understand and make from of

Jim Tisch

and they have get from So have as to and way provided our principle, financing can finance and a that we as that you all in understand our such But structured for subsidiaries. know financing. know subsidiaries a themselves the want that to general time, finances outside time we they

Josh Shanker

to answers my Okay. for the all Well, thank questions. you

Jim Tisch

My pleasure.

Mary Skafidas

you, Thank call for the today. Loews concludes that Josh. And

hours. be call available Again, interest. As continued Loews in replay for concludes for today. on always, Loews thank website A you the will the approximately that your two

Operator

Thank call. concludes you. today's This conference

disconnect. now may You

Loews (L) 5 Aug 192019 Q2 Earnings call transcript