Financial Performance - Q1 2025 sales were $1.022 billion, a 7% decrease compared to Q1 2024's $1.097 billion[8] - Volume decreased by 5%[7] - Raw material-related price decreases and currency impact reduced sales by 2%[9] - Adjusted EBIT for Q1 2025 was $67 million, a $3 million increase compared to Q1 2024's $64 million[8, 9] - Adjusted EBIT margin increased by 70 bps to 6.5%[7, 8] - Adjusted EPS increased by $0.01 to $0.24[7, 8] - Cash flow from operations increased by $13 million to $7 million[7, 8] Guidance - 2025 sales guidance remains unchanged at $4.0–$4.3 billion, a potential decrease of 2% to 9% versus 2024[7, 15] - Adjusted EPS guidance remains unchanged at $1.00–$1.20[7, 16] - Operating cash flow is projected to be $275–$325 million[7] Restructuring Plan - The restructuring plan is expected to provide an EBIT benefit of $35-$40 million in 2025, with a full plan run rate of $60-$70 million[42] - Sales attrition from the restructuring is estimated at ~$45 million in 2025, with a full plan run rate of ~$80 million[42] - The company anticipates $15-$40 million in cash from real estate sales in 2025, with a total plan estimate of $60-$80 million[42]

Investment Ratings - Texas Instruments (TXN): Underweight [2][20] - Lam Research (LRCX): Equal-weight [5][45] - Intel Corporation (INTC): Equal-weight [9][66] Core Insights - The semiconductor industry is facing short-term pressures from tariffs and inventory corrections, but long-term demand remains a focus [1][2] - Texas Instruments is expected to report in-line results, with margins and cash flow under pressure due to tariff impacts and inventory management strategies [4][14] - Lam Research is anticipated to experience near-term memory weakness but has medium-term opportunities in NAND upgrades [41][51] - Intel's near-term outlook appears stable, but the focus is on long-term strategic direction amid a CEO transition [9][64] Summary by Sections Texas Instruments (TXN) - Expected to report results in line with consensus, with revenue forecasted at $3.906 billion for the March quarter, down 2.5% quarter-over-quarter but up 6.7% year-over-year [17] - Gross margin guidance for March is positioned below the long-term trendline, with a focus on stabilizing inventories [4][16] - The company is committed to a capital expenditure of $5 billion this year, with any reduction viewed positively [4][16] Lam Research (LRCX) - Forecasted revenue for the March quarter is $4.657 billion, up 6.4% quarter-over-quarter and 22.7% year-over-year, above consensus [42] - The June quarter outlook projects revenue of $4.326 billion, down 7.1% quarter-over-quarter but up 11.7% year-over-year [43] - The company is expected to benefit from NAND upgrades despite facing near-term headwinds in DRAM [51][50] Intel Corporation (INTC) - Projected revenue for the March quarter is $12.217 billion, down 14.3% quarter-over-quarter and down 4.0% year-over-year [65] - The June quarter is expected to show a slight recovery with revenue forecasted at $12.851 billion, up 5.2% quarter-over-quarter [65] - The focus remains on the long-term strategy and potential shifts under new leadership, with a cautious outlook on the foundry business [10][64]

Core Viewpoint - The report from Bank of America highlights the impact of macroeconomic uncertainty on the software industry, analyzing the performance of software companies in 2022 and the trends in different business models and end markets [1][2]. Group 1: Business Models and Market Sensitivity - Software companies showed a decline in revenue growth and billings growth in 2022, indicating mixed demand signals despite a challenging macroeconomic environment [2]. - Subscription-based companies, with over 70% of revenue from traditional subscriptions, exhibit higher revenue visibility and resilience [2]. - Consumer-oriented business models, where over 70% of revenue is tied to usage or transaction volume, face significant risks of revenue growth slowdown during economic downturns [2]. - Companies focused on the enterprise market are relatively stable due to resilient IT spending, while those targeting small and medium-sized businesses (SMBs) and consumers may experience more severe impacts during economic declines [2]. Group 2: Tariff Impacts - The report emphasizes the potential impact of tariffs on the software industry, particularly in the e-commerce software sector, with the U.S. government imposing at least a 10% tariff on all countries and removing minimum exemptions for China and Hong Kong [3]. Group 3: Revenue Risk Exposure - Software companies with significant revenue exposure in regions like Europe, the Middle East, and Africa (EMEA) may be more vulnerable to local economic fluctuations and policy changes [4]. - Industry-specific economic fluctuations can also affect software companies' revenues, particularly in sectors like manufacturing and retail [4]. Group 4: Stock Valuation and Investment Recommendations - The enterprise value (EV) to next twelve months revenue (NTM Revenue) multiple for the software industry has dropped to 5.0x, below the 5-year and 10-year median of 7-8x, indicating a significant reduction in market expectations but potentially attractive current valuations [6]. - Approximately 15 software companies are projected to achieve a free cash flow (FCF) yield of over 8% by 2026, providing potential value support for investors [6]. Group 5: Conclusion and Outlook - The report offers a comprehensive analysis of the software industry, covering macroeconomic factors, policy changes, industry dynamics, and company fundamentals, urging investors to conduct careful analysis in the current economic environment [7]. - Investment recommendations include focusing on companies with high revenue visibility, strong free cash flow generation, and competitive advantages in the enterprise market during economic downturns, while gradually increasing exposure to consumer-oriented and SMB-focused software companies as the macroeconomic situation improves [7].

Financial Data and Key Metrics Changes - Depletions decreased by 1% compared to the first quarter of the previous year, while shipments increased by 5.3% [22][7] - Revenue for the quarter increased by 6.5% due to volume and price increases [23] - Gross margin for the first quarter was 48.3%, an increase of 460 basis points year over year [24] - Earnings per diluted share (EPS) was $2.16, more than double compared to the prior year [25] Business Line Data and Key Metrics Changes - Twisted Tea grew dollar sales by 1% in measured channels and maintained an over 86% share in the hard tea category [12] - Hard seltzer category sales declined by 5% in the first quarter, impacting Truly's performance [14] - Samuel Adams and Dogfish Head brands achieved flat depletions, with Dogfish Head's Grateful Dead Juicy Pale Ale launch being particularly successful [17] Market Data and Key Metrics Changes - The broader beer category is expected to remain relevant, but inflation and economic uncertainty are significant drivers of recent weakness [8] - The hard seltzer category continues to decline, with Truly facing challenges in maintaining market share [14][15] Company Strategy and Development Direction - The company is focusing on supporting category-leading brands, launching strong innovations, and expanding gross margins [8] - Increased advertising investment in 2025 aims to improve market share trends and ensure successful product launches [9] - The strategy includes nurturing core brands and pursuing a "fewer things better" approach to innovation [10] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment is challenging, with inflation and consumer confidence impacting performance [8][62] - Management remains confident in the strategies and team in place to deliver on 2025 plans and generate long-term sustainable growth [9] - The company expects to see improvements in depletions in the second half of the year, driven by increased brand support [84] Other Important Information - The company has repurchased $61 million in shares year to date [7] - Tariffs are expected to have an unfavorable cost impact of approximately $20 million to $30 million in 2025 [29] - The company ended the quarter with a cash balance of $152.5 million and an unused credit line of $150 million [34] Q&A Session Summary Question: Can you unpack the gross margin performance in the quarter? - Management indicated that stronger shipments contributed to the gross margin uplift, but the main driver was ongoing gross margin initiatives [38][39] Question: What is driving the cost pressure from tariffs? - Key drivers include the cost of aluminum and point of sale materials from countries with higher tariffs, particularly China [41][42] Question: Can you break out the contribution of Sun Cruiser and Truly Unruly to shipment volume? - Management typically does not break out shipments by product but confirmed that Sun Cruiser is meeting expectations and is margin accretive [48][49] Question: What gives confidence in Twisted Tea's growth after a slowdown? - Management noted the presence of smaller competitors and emphasized ongoing investments in advertising and innovation to regain market share [52][53] Question: How is the company addressing changes in consumer demand? - Management acknowledged the impact of macroeconomic trends and consumer behavior changes, including reduced sociability and health concerns [62] Question: Will depletions flip positive in the second half of the year? - Management expects depletions to improve, potentially flipping positive in the second quarter or second half of the year [84]

Financial Data and Key Metrics Changes - The company reported Q1 2025 revenue of $132 million, at the high end of the guided range, with EPS of $0.18, also at the midpoint of guidance [11][19] - Gross margins for the MedTech and Specialty Audio segment were 48.7%, down 450 basis points year-over-year, primarily due to a supply agreement impacting margins [19] - Precision Devices segment revenues were $73 million, flat compared to Q4, with gross margins at 35.7%, unchanged from the previous year [13][20] Business Line Data and Key Metrics Changes - MedTech and Specialty Audio revenue was $60 million, slightly up year-over-year but seasonally down from Q4 [11][19] - Precision Devices segment saw a flat revenue performance, with production challenges in the specialty film line being addressed [13][20] - The company expects year-over-year revenue growth to accelerate in Q2 2025, driven by strong demand in MedTech and Specialty Audio [12][17] Market Data and Key Metrics Changes - The company estimates that less than 5% of revenue is subject to current tariffs, with less than 3% of cost of goods sold impacted [7][8] - Inventory levels at distributors have normalized to 3-3.5 months, indicating increased order activity [34][52] - The company is seeing strong bookings trends across most end markets, particularly in Precision Devices [15][52] Company Strategy and Development Direction - The company is focused on growth in 2025, with strong design wins and increasing backlog across its product portfolio [17] - There is an emphasis on exploring acquisition opportunities while maintaining manageable debt levels [16][22] - The upcoming Investor Day will detail future growth plans and competitive advantages [17][60] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the tariff environment but believes the company is well-positioned for growth despite potential impacts [5][10] - The outlook for the MedTech and defense sectors remains strong, with essential devices expected to maintain demand [32][33] - Management anticipates a stronger second half of 2025, driven by improved capacity utilization and demand recovery [41][42] Other Important Information - The company repurchased $5 million in shares and reduced debt by $15 million in Q1 2025 [16][22] - Capital spending is projected to be $7 million in Q2, with full-year capital spending expected to be 5% of revenues [24] Q&A Session Summary Question: Overall end market customer exposure and outlook - Management indicated no change in demand and higher expectations for Q2, particularly in essential devices like pacemakers and hearing aids [31][32] Question: Updates on the $75 million capacitor order - A substantial prepayment was received, indicating strong customer commitment with no expected delivery impacts [37] Question: Gross margin trajectory for Q2 and Q4 - Management expects significant sequential improvement in gross margins, projecting an exit range of 45% to 47% by year-end [40][44] Question: Potential for gaining market share from competitors - Management noted increased inquiries from customers considering switching suppliers due to tariff impacts, particularly in the industrial space [46][47] Question: Commentary on bookings and receivables - Bookings were strong, with inventory levels at distributors decreasing, indicating rising demand [52][56]

Financial Performance and Key Metrics - Revenue for Q1 2025 was $19.5 billion, an increase of 18% primarily driven by higher commercial delivery volume [31] - Core loss per share improved to $0.49, reflecting higher commercial deliveries and improved operational performance [31] - Free cash flow usage was $2.3 billion, better than expectations due to higher commercial deliveries and improved working capital [31][32] Business Line Performance Boeing Commercial Airplanes (BCA) - BCA delivered 130 airplanes in the quarter, with revenue of $8.1 billion and an operating margin of -6.6% [32] - The backlog for BCA increased to $460 billion, up more than $25 billion sequentially, including over 5,600 airplanes [33] - The 737 program delivered 105 airplanes, with production expected to ramp up to 38 per month in the coming months [34][12] - The 787 program stabilized production at five per month, with plans to increase to seven per month [14][38] Boeing Defense, Space & Security (BDS) - BDS booked $4 billion in orders, with a backlog of $62 billion [40] - Revenue was $6.3 billion, down 9% due to planned lower volume [41] - Operating margin improved to 2.5%, reflecting stabilizing operational performance [42] Boeing Global Services (BGS) - BGS received $5 billion in orders, with revenue stable at $5.1 billion and an operating margin of 18.6% [46][47] - BGS delivered the 100th 767-300 Boeing converted freighter [47] Market Data and Key Metrics - Approximately 70% of commercial deliveries are planned for customers outside the U.S., with a backlog of over $0.5 trillion [51] - China represents about 10% of the commercial backlog, with 50 deliveries planned for the year, but potential issues due to tariffs [52][27] Company Strategy and Industry Competition - The company is focused on stabilizing its business, improving development program execution, changing its culture, and building a new future [9][21] - The planned divestiture of portions of the digital aviation solutions business is part of a strategy to streamline the portfolio and strengthen the balance sheet [50] - Winning the F-47 program is seen as a transformational accomplishment for the defense business [8] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the recovery plan and noted that the operational KPIs are showing improvement [6][28] - The company is actively engaging with the administration regarding tariffs and their impact on the business [60] - Management remains optimistic about demand for aircraft despite challenges in the China market [92] Other Important Information - The company has a cash balance of $23.7 billion and a debt balance of $53.6 billion, with access to $10 billion in revolving credit facilities [48][49] - The company is committed to maintaining an investment-grade rating and managing its balance sheet prudently [49] Q&A Session Summary Question: Interaction with Washington on Tariffs - Management is actively engaged with the administration regarding tariffs and their implications for the aviation industry [58][60] Question: Delivery Expectations for 737 and 787 - The company expects to deliver around 400 737s and approximately 80 787s this year, with adjustments for the China situation [66][67] Question: Impact of Tariffs on Costs - The net annual impact of higher tariffs on input costs is manageable, estimated to be less than $500 million [77][78] Question: Free Cash Flow Outlook - The company expects free cash flow usage in Q2 to be in line with Q1, with a positive turnaround anticipated in the second half of the year [86][88] Question: Production Rate Increases - The company plans to increase production rates for both the 737 and 787, with stability in KPIs being a key factor [92][94] Question: F-47 Contract Structure - Details on the F-47 contract structure are limited, but management is focused on appropriate contract types to mitigate risks [100] Question: Status of Key Performance Indicators (KPIs) - Management reported improvements in KPIs for both the 737 and 787 programs, with ongoing efforts to stabilize production [105][106]

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2025 was $1.04 billion, a 10% increase year-over-year, driven by strong performance in the Industrial & Energy Technology (IET) segment [21][43] - GAAP diluted earnings per share were $0.40, while adjusted earnings per share were $0.51, reflecting a 19% increase compared to the same quarter last year [43] - Free cash flow generated during the quarter was $454 million, with a target for full-year free cash flow conversion of 45% to 50% [22][44] Business Line Data and Key Metrics Changes - IET segment booked $3.2 billion in orders, with a record backlog of $30.4 billion, and revenue increased by 11% year-over-year to $2.9 billion [21][47] - OFSE segment revenue was $3.5 billion, down 10% sequentially, primarily due to seasonal weakness and delayed discretionary spending [50][52] - IET EBITDA margin expanded by 240 basis points to 17.1%, while OFSE EBITDA margin improved by 80 basis points year-over-year to 17.8% despite revenue decline [48][52] Market Data and Key Metrics Changes - Global upstream spending is expected to decline by high-single digits in 2025, with a mid- to high-single-digit decrease internationally and a low-double-digit decrease in North America [10][61] - Natural gas demand increased by 115 bcm or 2.7% in 2024, with strong LNG contracting trends reported [14][15] - The company secured $1.7 billion in orders for U.S. LNG projects over the past two quarters, indicating a positive outlook for LNG demand [16][30] Company Strategy and Development Direction - The company is focused on profitable growth and sustained margin improvement, with a clear strategy to mitigate tariff impacts and enhance operational efficiency [5][19] - Emphasis on expanding into new markets such as data centers and gas infrastructure, with significant orders booked in these areas [24][27] - The company aims to maintain a strong balance sheet, with a net debt-to-EBITDA ratio of 0.6x and liquidity of $6.3 billion [45] Management's Comments on Operating Environment and Future Outlook - Management highlighted ongoing geopolitical tensions, trade policy uncertainty, and inflationary pressures as key challenges impacting the macro environment [8][10] - The company expects to outperform the broader North American market, supported by a production-weighted portfolio, despite limited visibility for the second half of the year [12][19] - Management remains confident in the long-term growth of global energy demand, particularly for natural gas, as part of the transition to lower emissions [68] Other Important Information - The company returned $417 million to shareholders in Q1 2025, including $229 million in dividends and $188 million in share repurchases [45] - Significant commercial momentum was noted, with record attendance at the Annual Meeting in Florence, Italy, indicating strong customer engagement [23] Q&A Session Summary Question: Guidance amidst tariff and OPEC+ uncertainty - Management acknowledged the uncertainty surrounding tariffs and OPEC+ policies, emphasizing the need for a flexible guidance framework [72][75] Question: Data center opportunities and macro impact on IET - Management expressed confidence in the data center market, highlighting strong order flow and a positive outlook for LNG and gas infrastructure [90][92] Question: Mitigation initiatives for tariff impacts - Management detailed proactive steps taken to mitigate tariff impacts, including leveraging a global supply chain and exploring domestic sourcing alternatives [101][104] Question: OFSE revenue decline and margin targets - Management discussed the impact of delayed discretionary spending and seasonal weakness on OFSE revenue, while reaffirming commitment to the 20% EBITDA margin target [115][121] Question: IET margin progression and future expectations - Management indicated expectations for continued margin improvement in IET, despite potential headwinds from tariffs and economic conditions [127][132]

Financial Data and Key Metrics Changes - Operating earnings were reported at 59 cents per share, with an operating return on assets of 1.04%, both showing solid improvements from the previous year [5] - Loans grew at an annualized pace of just over 5%, while deposits also grew at an annualized rate of 5% [6] - The net interest margin increased by 10 basis points over the fourth quarter, driven by lower deposit costs [6][19] Business Line Data and Key Metrics Changes - The loan portfolio saw a 7% annualized growth in Commercial and Industrial (CNI) loans, including owner-occupied Commercial Real Estate (CRE), and a 15% annualized growth in the Navitas book [15] - Home Equity Line of Credit (HELOC) loans experienced a 13% annualized growth [15] - Non-interest income on an operating basis decreased by $4.8 million from the previous quarter, but the run rate of fee income remained essentially flat [20] Market Data and Key Metrics Changes - Deposit growth was strong, with $309 million in deposit growth or 5.3% annualized, despite approximately $85 million in seasonal public funds outflow [12] - The cost of total deposits improved by 15 basis points during the quarter [13] - The loan-to-deposit ratio remained low at 78%, indicating balanced loan and deposit growth [16] Company Strategy and Development Direction - The company is focused on organic growth as a priority for capital deployment, with share buybacks being considered more attractive than M&A at current stock prices [51][80] - The acquisition of American National Bank is set to close on May 1st, marking a significant step in the company's growth strategy [24] - The company aims to maintain a low single-digit growth in operating expenses, with expectations of modest growth in the second quarter [47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties, noting that consumer spending and employment in their markets remain strong [10] - There are no elevated concerns regarding the impact of tariffs at this time, as clients are adjusting quickly to maintain margins [10][34] - The company is cautious about potential risks in the small commercial segment, particularly with the Navitas portfolio [35] Other Important Information - The Common Equity Tier 1 (CET1) ratio increased to 13.3%, indicating a strong capital position [17] - The Total Capital Ratio (TCE) was up 21 basis points, remaining above peers [18] - The allowance for credit losses slightly increased to 1.21% of loans, with a loan loss provision of $15.4 million covering net charge-offs [22] Q&A Session Summary Question: Margin expectations going forward - Management expects margins to increase by 5 to 10 basis points next quarter, driven by lower deposit costs and a shift in the mix between loans and securities [27] Question: Concerns regarding tariffs and borrower behavior - Management noted that impacts are client-specific and that borrowers are reacting quickly to adjust to tariff-related challenges [30][34] Question: Changes in borrower behavior and pipelines - Current pipelines for Q2 are similar to Q1, with no significant negative impacts observed [43] Question: SBA and fee income challenges - The company, as a preferred lender, has not faced significant challenges in getting SBA deals approved, and the first quarter was the largest for SBA in history [45] Question: Operating expenses outlook - Operating expenses are expected to remain in the low single-digit growth range, with some seasonal increases anticipated [47] Question: Capital deployment priorities - Organic growth remains the top priority, with share buybacks being more attractive than M&A at current valuations [51][80] Question: Credit quality and loan loss reserves - The company uses Moody's scenarios for credit loss reserves and balances economic forecasts with portfolio performance [60][66]

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - The report discusses the negative impact of US tariffs on emerging market (EM) economies, particularly in Asia, leading to downgraded growth forecasts across various EMs [3][44] - It identifies China, Malaysia, Mexico, Hungary, and Vietnam as the most exposed to tariff turmoil, while Russia, Ukraine, Turkey, Argentina, and Poland are likely to be less affected [6][36] - The report anticipates more monetary easing across EMs due to declining inflation and weak growth, with central banks expected to implement front-loaded easing policies [6][47] Summary by Sections EM Macro Navigator Overview - The publication provides an overview of themes, market trends, and events relevant to EM investors, assessing the impact of US tariffs on EM economies [3][9] - It includes country-by-country forecasts, with significant downgrades noted for smaller export-oriented economies in Asia [3][44] Impact of US Tariffs - The US announced significant tariff increases, including a 10% baseline increase and a 125% tariff on Chinese imports, leading to a 15 percentage point increase in the effective US tariff rate [8][9] - The report explores five channels through which tariffs affect EM economies: direct trade effects, trade diversion effects, uncertainty effects, financial conditions/liquidity, and commodity prices [10][22] Country-Specific Forecasts - In China, growth forecasts have been lowered to 4.0% in 2025 and 3.5% in 2026, with expectations of policy easing mitigating some impacts [6][46] - Mexico's growth forecast has been revised down from 0.0% to -0.5% in 2025, while significant cuts are noted for Czechia and Hungary due to their reliance on auto production [6][46] Financial Conditions and Monetary Policy - The report indicates a tightening of financial conditions in developed markets, while some EMs have experienced easing due to exchange rate depreciation [25][28] - EM central banks are expected to implement more aggressive rate cuts, with specific forecasts for countries like India, Mexico, and Chile [51][62] Commodity Price Effects - Oil prices have decreased by 15% to $64 per barrel since the tariff announcement, with further declines expected, impacting both oil-exporting and oil-importing countries differently [31][34] - The report highlights that lower commodity prices will have significant negative consequences for oil-exporting countries while benefiting oil-importers [31][34]

Core Insights - Johnson & Johnson (J&J) reported better-than-expected first-quarter earnings, with adjusted earnings of $2.77 per share, a 2.2% increase year-over-year, and sales of $21.89 billion, up 2.4% from the previous year [1] - The company raised its 2025 sales expectations by $700 million due to the acquisition of schizophrenia drug Caplyta, adjusting the guidance range to $91.0 billion-$91.8 billion [2] - Despite tariff-related costs estimated at $400 million impacting the business, J&J maintained its adjusted EPS guidance of $10.50-$10.70 [3][4] Financial Performance - J&J's Innovative Medicines segment showed growth, with sales rising 4.4% in Q1 2025 on an organic basis, despite challenges from the loss of exclusivity for Stelara [8] - The company expects to generate over $57 billion in sales from the Innovative Medicines segment in 2025, with anticipated growth of 5-7% from 2025 to 2030 [9] - The MedTech segment faced headwinds, particularly in China, due to government procurement programs and competitive pressures [15][16] Business Model and Strategy - J&J's diversified business model, with over 275 subsidiaries and significant R&D investment, positions it well to withstand economic cycles [6] - The separation of its Consumer Health business into Kenvue allows J&J to focus on its core pharmaceutical and medical device operations [7] - Recent acquisitions, including Intra-Cellular Therapies, enhance J&J's presence in the neurological and psychiatric drug markets [30] Challenges and Risks - The loss of patent exclusivity for Stelara is expected to significantly impact sales, with a 33.7% decline in Q1 2025 [12] - The company faces over 62,000 lawsuits related to its talc-based products, which could create ongoing legal and financial challenges [18][19] - J&J's stock has outperformed the industry year-to-date, but valuation remains a concern with a forward P/E ratio of 14.41, slightly below the industry average [20][24] Future Outlook - J&J considers 2025 a "catalyst year" for growth, expecting operational sales growth to accelerate in the second half of the decade [30] - The company has a promising R&D pipeline that could drive future growth, despite current challenges in the MedTech segment and the impact of the Stelara patent cliff [31][32]