Roy Jakobs, CEO of Philips, outlines the expected tariff impact in 2026 and how the company plans to grow margins despite the pressure. He speaks with Katie Greifeld and Scarlet Fu on "The Close." ...

Financial Data and Key Metrics Changes - Revenues for Q4 2025 totaled $8.5 billion, a 1% increase compared to Q4 2024, driven by high demand in global power generation markets and improved pricing [10][19] - EBITDA for Q4 2025 was $1.2 billion, or 13.5% of sales, compared to $1 billion, or 12.1% a year ago; excluding charges, EBITDA was $1.4 billion, or 16% [10][11] - For the full year 2025, revenues were $33.7 billion, down 1% from 2024, with EBITDA at $5.4 billion, or 16% of sales, compared to $6.3 billion, or 18.6% in 2024 [11][12] Business Line Data and Key Metrics Changes - Engine segment revenues in 2025 were $10.9 billion, down 7% from the previous year, with EBITDA at 12.7% of sales [26] - Component segment revenues were $10.1 billion, down 10%, but EBITDA improved to 13.8% [27] - Distribution segment revenues increased 9% to a record $12.4 billion, with EBITDA also reaching a record of 14.6% [28] - Power systems segment revenues were a record $7.5 billion, up 16%, with EBITDA at 22.7% [29] Market Data and Key Metrics Changes - North America heavy and medium-duty truck volumes declined by 30% in Q4 2025, impacting overall performance [20] - In China, total revenue is projected to decrease by 1% in 2026, with heavy and medium-duty truck demand expected to decline by 10% to flat [16] - In India, total revenues are projected to decrease by 5% in 2026, with industry demand for trucks expected to be down 10% to flat [16] Company Strategy and Development Direction - The company continues to evolve its portfolio, investing in innovative solutions to meet customer needs, including the introduction of new engine platforms like the X10 and B7.2 [5][6] - A strategic review of the electrolyzer business is ongoing to streamline operations and focus investments amid policy-driven shifts in hydrogen demand [9] - The company remains committed to a multi-solution strategy while pacing investments as the zero-emissions landscape evolves [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong financial performance despite challenges in the North American truck markets and ongoing trade tariff volatility [4] - For 2026, the company forecasts total revenues to increase by 3%-8%, with EBITDA margins expected to be 17%-18% [15][31] - Management anticipates continued weakness in North America heavy and medium-duty truck markets in the first half of 2026, but expects strength in power generation and aftermarket businesses [15][18] Other Important Information - The company completed capacity expansion on the 95-liter engine ahead of schedule, positioning it to meet rising demand [8] - Capital expenditures in 2025 were $1.2 billion, with a focus on organic investment and returning $1.1 billion to shareholders via dividends [25][32] Q&A Session Summary Question: Update on capacity in power systems and natural gas products - Management noted strong demand in power generation and completed capacity expansion, with ongoing discussions about future investments [35][36] Question: Guidance outlook for 2026 and tariff impacts - Management explained that tariffs have a dilutive impact on margins, with a net drag of about 50 basis points expected in 2026 [40][41] Question: Sequential revenue growth in power systems - Management attributed the lack of growth to typical end-of-year downtime and tariff impacts, while demand for diesel backup power remains strong [44][46] Question: Capital allocation strategy moving into 2026 - Management confirmed financial flexibility and a commitment to returning at least 50% of operating cash flow to shareholders, with potential for increased buybacks [60] Question: Impact of EPA '27 regulations on pricing and margins - Management indicated that the new regulations will add content to engines and components, with expectations of increased costs but also improved efficiency and performance [85][88]

What We Disseminate Weekly: High frequency data to help assess the ongoing impact of tariffs on global supply chains and the accompanying ramifications on the flows of freight (e.g., expected ships leaving from China to USA). While we Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a si ...

Financial Data and Key Metrics Changes - The company reported record real estate funds from operations (FFO) of $4.8 billion, or $12.73 per share, reflecting a 4.2% growth from $3.35 per share in the prior year [6][11] - Domestic property net operating income (NOI) grew 4.8% year-over-year for the quarter and 4.4% for the year, while portfolio NOI, including international properties at constant currency, grew 5.1% for the quarter and 4.7% for the year [11][12] - The company returned approximately $3.5 billion in cash to shareholders through stock repurchases and dividends, with a total of approximately $48 billion paid in dividends since going public [6][14] Business Line Data and Key Metrics Changes - The company signed more than 1,300 leases totaling over 4.4 million square feet during the quarter and over 4,600 leases for more than 17 million square feet for the year, with approximately 30% of annual volume being new deals [8][9] - Average base minimum rents increased by 4.7% year-over-year for malls and premium outlets, with retailer sales per square foot for these properties at $799 for the year [12] Market Data and Key Metrics Changes - Malls and premium outlets ended the year with an occupancy rate of 96.4%, while mills reached 99.2% occupancy [11] - The company expects to drive higher occupancy at newly acquired assets, which slightly reduced overall occupancy rates [12] Company Strategy and Development Direction - The company acquired $2 billion of high-quality retail properties and completed over 20 major redevelopment projects, enhancing the quality of its portfolio [5][8] - The development pipeline now exceeds $4 billion, with significant projects scheduled for completion in 2026, including expansions and mixed-use developments [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strong leasing demand and traffic growth, despite potential headwinds from tariffs affecting retailers [25][42] - The company anticipates real estate FFO of $13-$13.25 per share for 2026, with domestic property NOI growth expected to be at least 3% [14][15] Other Important Information - The company completed approximately $9 billion in financing activities during 2025, maintaining a strong balance sheet with over $9 billion in liquidity at year-end [13] - The company announced a dividend of $2.20 per share for the first quarter of 2026, a year-over-year increase of 4.8% [14] Q&A Session Summary Question: Can you provide details on rents for new and renewal leases? - The company disclosed that new rents on leases are approximately $65 per square foot, with a 30% new leasing rate being a good run rate [17] Question: What are the early observations on the Simon Plus loyalty program? - Management noted early positive adoption from customers and brands, with plans to continue enhancing engagement and partnerships [20][22] Question: How is tenant credit and bad debt expected to change? - Management indicated that tariffs are putting pressure on retailers, particularly smaller ones, but overall tenant management remains cautious [24][25] Question: What incremental NOI or FFO should be expected from redevelopment projects? - The company expects about a $30 million contribution in 2026 from projects that are set to stabilize [34] Question: How does the leasing pipeline compare year-over-year? - The leasing pipeline is up about 15% over last year, indicating strong demand across all categories [18][111] Question: What is the outlook for luxury retail demand? - Management noted that luxury brands are showing mixed signals, with some growing and others being cautious, but overall, the long-term outlook remains positive [104][106]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved a 14% growth in EPS and a 7% growth for the full year, aligning with mid to high single-digit guidance [9] - The operating ratio improved to 60.1% in Q4, a 250 basis point improvement year-over-year, and 61.7% for the full year, improving 120 basis points compared to 2024 [9][33] - Cash flow generated was $3.3 billion, up 8% driven by cash from operations, with capital spending remaining disciplined [9][37] Business Line Data and Key Metrics Changes - The company saw a 5% year-over-year increase in workload, supported by record-setting grain tonnage from Western Canada [18] - Intermodal revenues increased by 13% internationally and 6% domestically, with strong performance at Vancouver and Prince Rupert [25] - Petroleum and Chemicals segment experienced growth across all areas, particularly a 9% increase in natural gas liquids volumes [26] Market Data and Key Metrics Changes - The company faced continued softness in key markets like forest products and metals, impacted by weak fundamentals and tariffs [25][30] - Tariffs and trade uncertainty negatively impacted full year 2025 revenues by over $350 million [27] - The outlook for 2026 suggests volumes will be flattish compared to 2025, with expectations of continued pressure in forest products and metals [12][30] Company Strategy and Development Direction - The company is focused on disciplined execution, prioritizing levers it can control, and maintaining strong cash flow while returning excess capital to shareholders [11][13] - The management emphasized the importance of operational efficiency and cost control, with a commitment to improving margins as volumes return [14][22] - The company is positioned to leverage its access to North American markets and natural resources, aiming to support customers as trade flows evolve [16][58] Management's Comments on Operating Environment and Future Outlook - The management acknowledged high uncertainty in the economic environment, with muted growth expectations and challenges related to tariffs [12][30] - The company plans to continue focusing on productivity and cost control, with a base case expectation of flat volumes for 2026 [12][39] - Management expressed confidence in the underlying earnings power of the business, despite current headwinds, and highlighted the potential for growth in natural resources and trade diversification [52][77] Other Important Information - The board approved a 3% increase in dividends, marking the 30th consecutive year of dividend growth [37] - A new share buyback program was authorized, allowing the repurchase of up to 24 million common shares [38] Q&A Session Summary Question: Update on incremental revenue target - The company closed with $100 million in incremental revenue for Q4, with a pipeline of another $100 million developing in January [45] Question: Clarification on depreciation and earnings growth - Depreciation variance was due to a favorable study and corrections from past acquisitions; the company is experiencing unique headwinds affecting earnings growth [49][50] Question: Outlook on mix and differentiated growth opportunities - The mix impact for 2026 is expected to be similar to 2025, with opportunities in northern markets and natural resources, particularly in agriculture and energy [56][58] Question: Guidance on volume and earnings shape for 2026 - The first half of 2026 is expected to be softer, with improvement anticipated in the second half, influenced by share buybacks [62] Question: Clarification on free cash flow conversion - The company expects improved free cash flow conversion in 2026, despite a sizable cash tax payment impacting the effective tax rate [80]

Financial Data and Key Metrics Changes - In Q4 2025, the company achieved a 14% growth in EPS and a 7% growth for the full year, aligning with mid to high single-digit guidance [9] - The operating ratio improved to 60.1% in Q4, a 250 basis point improvement year-over-year, and 61.7% for the full year, improving 120 basis points compared to 2024 [9][33] - Cash flow generated was CAD 3.3 billion, up 8% driven by cash from operations, with capital spending remaining disciplined [9][37] Business Line Data and Key Metrics Changes - The company reported a 4% increase in revenue ton miles (RTMs) and a 3% increase in carloads in Q4, contributing to a 2% revenue growth despite challenging market conditions [24][26] - Intermodal revenues increased by 13% internationally and 6% domestically, with strong performance noted at Vancouver and Prince Rupert [25][26] - Grain shipments set an all-time annual record in 2025, with monthly records achieved in October, November, and December [26] Market Data and Key Metrics Changes - The company faced continued softness in key markets such as forest products and metals, impacted by weak fundamentals and tariffs [25][27] - Petroleum and Chemicals saw growth across all segments, particularly a 9% increase in natural gas liquids volumes driven by strong domestic demand [26] - The overall revenue was negatively impacted by over CAD 350 million due to tariffs, trade uncertainty, and volatility [27] Company Strategy and Development Direction - The company emphasized disciplined execution and productivity improvement as key strategies moving forward, with a focus on areas within their control [8][11] - The management highlighted the importance of maintaining strong cash flow and returning excess capital to shareholders while navigating a challenging macro environment [8][12] - Future guidance will be more directional, tied closely to volume trends, with expectations of flat volumes compared to 2025 [12][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged high uncertainty and limited visibility in the economic environment, with muted growth expectations and ongoing tariff pressures [11][12] - The company plans to leverage its strong operating leverage and cash generation capabilities to drive earnings and margins as volumes improve [13][41] - The management expressed confidence in the company's ability to navigate through challenges and capitalize on opportunities in the North American markets [15][16] Other Important Information - The board approved a 3% increase in dividends, marking the 30th consecutive year of dividend growth, reflecting confidence in cash generation [38] - A new share buyback program was authorized, allowing the repurchase of up to 24 million common shares [38] Q&A Session Summary Question: Update on incremental revenue target - The company closed with CAD 100 million in incremental revenue for Q4, with an additional CAD 100 million in the pipeline for January [44][45] Question: Clarification on depreciation and earnings growth - Depreciation variance was due to a favorable study and corrections from over-depreciation in past acquisitions [49] - Management indicated that current headwinds are unique and not indicative of a decoupling of earnings from volume [50][52] Question: Outlook on mix and differentiated growth opportunities - The mix impact for 2026 is expected to be similar to 2025, with opportunities in northern markets and natural resources highlighted [56][58] Question: Guidance on volume and earnings shape for 2026 - The first half of 2026 is expected to be softer, with improvement anticipated in the second half [62][63] Question: Volume outlook and performance at Prince Rupert - Strong performance is expected in agriculture and energy sectors, with ongoing investments in infrastructure at Prince Rupert [66][70]

Core Viewpoint - Oil prices have reached their highest level since November due to the U.S. imposing a 25% tariff on countries doing business with Iran [1] Group 1: Oil Price Movements - Brent crude and WTI both increased by 0.5%, reaching $64.17 per barrel and $59.81 per barrel, respectively, following a higher settlement in the previous session [2] Group 2: Market Sentiment and Supply Concerns - The potential reduction in Iranian oil supply has shifted market sentiment from bearish to a more cautious outlook, countering earlier expectations of a global oil glut [2] - Ongoing concerns about the tariff's impact on relations with major crude buyers, particularly China, which is a significant importer of Iranian oil, are influencing market dynamics [2] - Market participants are also considering developments in Venezuela as part of the broader supply landscape [2]

Financial Data and Key Metrics Changes - Total sales for the fiscal first quarter were $73.5 million, up from $64.5 million in the prior year period, representing a comparable sales growth of negative 2.5% [10][12] - Cost of goods sold as a percentage of sales was 29.9%, compared to 29% in the prior year quarter, influenced by tariffs on imported ingredients [11][12] - Labor costs as a percentage of sales decreased to 32.5% from 32.9% in the prior year, attributed to operational initiatives [6][11] - Net loss was $3.1 million, or negative $0.25 per share, compared to a net loss of $1 million, or negative $0.08 per share in the prior year [12][14] - Adjusted net loss was $2.8 million, or negative $0.23 per share, compared to an adjusted net loss of $1 million, or negative $0.08 per share in the prior year [13] Business Line Data and Key Metrics Changes - The company opened four new restaurants in the first quarter and has 10 units under construction, with plans to open one more in the fiscal second quarter [4][7] - Restaurant-level operating profit as a percentage of sales was 15.1%, down from 18.2% in the prior year quarter [13] Market Data and Key Metrics Changes - Comparable sales in the West Coast market were negative 2.8%, and in the Southwest market, they were negative 2.7% [10] - Effective pricing for the quarter was 3.5%, with expectations for the second quarter to be 4.5% after lapping prior year increases [10] Company Strategy and Development Direction - The company aims to open 16 new units in fiscal 2026, maintaining an annual unit growth rate above 20% [14] - The focus on aggressive cost management has reduced general and administrative expenses as a percentage of sales by 80 basis points on an adjusted basis [4] - The company is leveraging technology, such as robotic dishwashers, to improve operational efficiency [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving qualitative comparable sales for the year, citing strong momentum from the end of the first quarter into the second [4][26] - The management noted that the pricing taken in November has led to improved traffic and sales, indicating a positive consumer response [26][32] - There is optimism regarding the potential for improved margins and sales as the company navigates tariff impacts and operational efficiencies [32][46] Other Important Information - The company has $78.5 million in cash and no debt, indicating strong liquidity [14] - The company is currently engaged in marketing campaigns tied to popular IPs, which have been well received by customers [8][105] Q&A Session Summary Question: Discussion on decoupling the reservation system from loyalty - Management noted that more than half of visits by rewards members are through the reservation system, indicating better-than-expected uptake [21][22] Question: Expectations for Q2 comparable sales - Management expects positive comps for Q2, supported by strong performance in November and December [26] Question: Impact of tariffs on food costs - Management indicated that food costs are expected to be around 30%, with a significant impact from tariffs, but negotiations have helped mitigate some costs [31][32] Question: Future promotions and collaborations - Management highlighted successful collaborations with popular IPs and plans for future promotions, including Sanrio and Jujutsu Kaisen [107] Question: Long-term growth targets - Management reiterated the target of 16 new units for the year, with no changes to the long-term growth target of 300 units in the U.S. [95][61]

Core Viewpoint - Constellation Brands is expected to report a double-beat in revenue and earnings per share for the third quarter, indicating manageable tariff concerns [1] Earnings Estimates - Analysts predict third-quarter revenue of $2.16 billion, down from $2.46 billion in the same quarter last year [2] - Expected earnings per share for the third quarter is $2.64, a decrease from $3.25 in the previous year [2] - The company has beaten analyst estimates in seven of the last ten quarters for revenue and nine of the last ten quarters for earnings per share [2] Analyst Commentary - Needham analyst Gerald Pascarelli describes expectations for the third quarter as "pretty muted" [3] - Pascarelli maintains a Buy rating with a price target of $180, noting a projected 5% decline in depletions and a 3.5% year-over-year decline in beer shipments [4] - Overall revenue is estimated to decline by 12.2% year over year, with organic revenue expected to decrease by 3.3% [5] Management Guidance - Analysts do not anticipate significant changes in management's tone or guidance, with expectations that the company will reiterate its current outlook [6] - The Hispanic consumer market remains challenging, and there are no indications of a significant change in sentiment [6] Future Outlook - The company may provide positive commentary, with favorable forward comparables and the 2026 World Cup seen as a potential revenue catalyst [7] - Analysts believe that much of the current negative sentiment is already reflected in the stock price [7] Key Items to Watch - Wells Fargo maintains an Overweight rating and raises the price target from $155 to $160 [8] - Jefferies downgrades from Buy to Hold and lowers the price target from $170 to $154 [8] Business Performance - The beer business reported a high-single-digit decline in net sales despite beating estimates in the second quarter [9] - Constellation holds the U.S. license for importing popular brands like Modelo and Corona, which are among the top five imported beers in America [9] Tariff Impact - The company has been affected by tariffs, and analysts are looking for quantification of tariff impacts on costs for the third and fourth quarters [10] World Cup Potential - Analysts see potential benefits from the 2026 World Cup, with expectations for commentary on how the event could influence revenue and marketing strategies [11] Berkshire Hathaway Stake - Berkshire Hathaway has increased its stake in Constellation Brands, owning 13,400,000 shares by the end of the third quarter [12] - The new CEO of Berkshire, Greg Abel, is expected to closely monitor Constellation's financial results [13] Stock Performance - Constellation Brands stock is currently up 0.3% to $142.90, with a 52-week trading range of $126.45 to $226.22, and shares have declined by 35.9% over the past year [13]

Financial Data and Key Metrics Changes - Net sales for the third quarter were $989 million, down from $1.09 billion in the same period last year, generally in line with expectations [27] - Non-GAAP earnings per diluted share were $1.90, compared to $2.59 in the previous year, exceeding the midpoint of guidance by $0.37 [6][29] - Gross margins were 38.6%, down from 39.8% in the previous year's third quarter, primarily due to tariffs [28] - The company ended the quarter with a net cash position of $174 million, compared to a net debt position of $119 million in the same period last year [29] Business Line Data and Key Metrics Changes - Wholesale segment net sales were $977 million, down from $1.07 billion last year, mainly due to lower sales from Calvin Klein and Tommy Hilfiger licensed businesses [27] - Retail segment net sales increased to $46 million from $42 million, driven by solid comp sales increases across North American DKNY and Karl Lagerfeld stores [27] - Donna Karan is expected to grow by 40% in fiscal 2026, reflecting strong consumer demand and pricing power [9][56] Market Data and Key Metrics Changes - North America saw double-digit growth compared to last year, while Europe posted high single-digit growth during the Black Friday period [5] - Digital traffic increased over 20% across owned dot-com, leading to substantial growth in conversion rates and overall sales [5][21] - The company experienced robust digital performance across North America and Europe, with nearly 20% growth in digital sales [20][21] Company Strategy and Development Direction - The company is focused on driving both near and long-term growth through brand strength, direct-to-consumer initiatives, international expansion, and category expansion through licensing [7][8] - Strategic investments in technology, infrastructure, and talent are prioritized to enhance business efficiency [7] - The company aims to capture long-term potential of owned brands, which are seen as sustainable drivers of profitability [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage through a dynamic marketplace, despite challenges from tariffs and the exit of PVH licenses [3][4] - The company is taking a prudent approach to its outlook for the remainder of the year, mindful of the global consumer environment [5] - Fiscal 2026 guidance was updated to expect net sales of approximately $2.98 billion and non-GAAP earnings per diluted share of $2.80-$2.90 [26][30] Other Important Information - The company introduced its first-ever dividend program, declaring an initial quarterly cash dividend of $0.10 per share [30] - The gross impact of tariffs is estimated to be approximately $135 million, with an unmitigated impact of about $65 million for fiscal 2026 [31] - The company is redeploying talent and resources to accelerate growth in its go-forward brands as it winds down PVH licenses [23] Q&A Session Summary Question: Can you unpack the gross margin performance? - Management indicated that gross margins were better than expected due to strong full-price selling, despite the impact of tariffs [40][41] Question: What are the preliminary thoughts around the top line or bottom line goals for next year? - Management mentioned that they are exploring various strategic opportunities, including acquisitions and licenses, but are not in a rush [47] Question: How has the order trend been changing for your own brands? - Management noted that demand was significantly higher at the full-price channel, with strong sell-throughs across all brands [75] Question: What are the priority levers to keep momentum for owned brands like Donna Karan? - Management highlighted the importance of repeat customers and expanding distribution in premium department stores as key growth drivers [56][80]