Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
Randy Churchey, CEO & Chairman of Education Realty Trust, Inc. (EDR), interviewed with TWST for this year’s Education report. Since the interview was published, EDR‘s stock price increased by approximately 15%, from $32 to currently $37.
Churchey discussed the trend of universities outsourcing student housing, where EDR has distinguished itself. Currently, he said, University of Kentucky’s housing is under the care of EDR:
What the university has found is that enrollment has gone up much more so than at their peer institutions. Enrollment has gone up 3% or 4% a year over the last few years, when peer institutions have been more in the 1% to 2% range. The University of Kentucky has also attracted a higher-quality student and is now in the top 10 among their peers in National Merit Scholars.
They’ve always known that when students live on campus, they perform better academically; numerous studies across the U.S. show that. An interesting byproduct they’ve found is that with this new housing, the retention rate — i.e., kids staying from their freshman to sophomore year or sophomore to junior year — is higher than in the past. And so every different metric that the university looks at — speed of building the project, cost containment of the project, efficient management of the operations after the project was built and then the student outcomes — all have been very, very favorable.
EDR is also growing in other university campuses, he said:
We do own two communities on the Syracuse University campus under the same type of model; one community at the University of Texas, Austin; and one at Texas Christian University. And now, of course, we own all the communities I just mentioned at Kentucky. What we are finding is that there are numerous opportunities at many universities that are interested in having this type of private-public partnership for one or two assets. We’ve not found other universities today that want to outsource the entire housing inventory, but I believe that’s going to come.
Universities don’t exactly move at a fast pace, but they’ve now gotten comfortable with a private developer owning an asset or two on campus as a viable option. I think once the successful results from the University of Kentucky get more publicity, more universities will be looking at public-private partnerships as an option. A university’s core competency is educating students, it’s not necessarily being a developer, owner and an operator of real estate, so I believe we are going to have more of those opportunities, but they may come fairly slowly.
Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
David S. Congdon, Vice Chairman and CEO of Old Dominion Freight Line (ODFL), interviewed with TWST this year for the Transportation & Logistics report. He told TWST the largest trends affecting the industry are globalization and the rise of intermodal domestic transportation.
You know, if you look over the last 20 years to 25 years, it has to be globalization, where the United States used to produce everything for itself, and there was a much smaller amount of manufacturing that had gone offshore for cheaper labor rates. And the movement of manufacturing just, for example, in the Southeast where furniture and textiles used to dominate manufacturing — furniture has moved to China and other parts of Asia, and the majority of furniture that the U.S. is buying is manufactured there and imported now on ocean containers.
The other thing that I think has changed things a lot is domestic intermodal, where what used to be full-truckload carriers like J.B. Hunt or Werner or Schneider that used to have drivers, tractors and trailers, exclusively shifted their business and invested in intermodal containers and move their customers freight on the rail. They haven’t gone totally by the wayside, but there has been a major shift to intermodal runs, with containers that are double-stacked on these rail cars. So that’s been a pretty big trend over the years as well.
Congdon shared with TWST Old Dominion‘s capital deployment strategy, which he said hasn’t changed much over the last 15 years, and which is focusing on equipment, real estate and now information technology.
Well, our deployment of investment capital and the way that we think about it has not changed that much over the last 10 or 15 years. LTL transportation is a very capital-intensive business, especially when, in our case, we’re focused on building the highest service value in our industry. We have been consistently spending 12% to 15% of revenue for the last decade. Equipment is obviously the largest expenditure because of our consistent replacement cycle plus the equipment that we’ve bought to handle the growth that we’re experiencing.
Then, the second-highest expenditure level is in real estate. In fact, we have spent over $900 million on service centers in the last eight years to keep ahead of the growth that we are experiencing and to be able to have the capacity for future growth. So that’s been really high. And the third major area for us has been information technology. But we expect this general capital-spending trend for our company to continue as we move forward and as we continue to win market share.
Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
Pat Goepel, CEO of Asure Software Inc. (ASUR), told TWST this year the company plans to focus on growth through 2016, emphasizing underserved areas of the market and helping clients reduce costs.
Really, for the immediate future, it’s grow, grow, grow. We feel like we’re in big markets with big opportunities with products that are timely. And we want to tell the world loudly and often that we can help them grow, and when they grow, we in turn will grow as well.
As far as our strategic vision, we do believe we’re in oligopoly markets or big markets. We think the markets are underserved. We think we have huge opportunity to get bigger, and really for the foreseeable future, we’re going to try to take advantage of that underserved marketplace, and provide services to companies to allow them to grow globally and keep down their costs.
When evaluating ASUR, Goepel said investors should focus on the trends related to the current state of technology, as well as Asure‘s ability to execute for the benefit of its clients.
If you look at our products, I think we have high-technology products that can help companies with a heavy ROI. Two, the big trend around mobile and cloud and globalization. We think the trends are favorable. Three, the ability to execute over the last few years. If you pull our financial reports, you’ll see that we’ve had a steady stream upward, and we have a management team that can execute.
So big markets, growing markets, global markets, right set of products and the right team that can execute. I always say, “Luck is preparation meeting opportunity.” We feel we’re prepared for the market. We feel the market is there for us, and now, it’s our opportunity to seize it, and with that, it will be a good for investors as well as us.
Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
Timothy J. Wilmott, President and CEO of Penn National Gaming, Inc. (NASDAQ:PENN), recently interviewed with The Wall Street Transcript for the Gaming and Leisure report.
In his interview, Wilmott said PENN plans to focus on Las Vegas, and that the company is one of the gaming properties with the best operating margins:
During last year, with our $2.6 billion or so of revenues, we generated operating cash flows of about $315 million to $320 million. We have some of the best operating margins in our industry and are viewed as among the best operators of regional gaming properties, in many cases, in very high tax environments, and we consistently deliver very profitable results. Moving forward, we’re going to focus a lot of our energies on the Tropicana Las Vegas on the Strip and activating our 3 million customers on our marquee customer-loyalty program.
When we purchased the property from a Toronto-based private equity firm, it operated the casino for about five years, and they had not generated a lot of contribution from the casino floor. We think we have a lot of revenue upside and ability to drive casino visitation and revenues at the Tropicana Las Vegas over the next three to four years. The 1,500 rooms are in very good shape, but we know we need to upgrade certain aspects of the facility and expect to spend probably between $175 million and $200 million more of capital to improve the casino, food and beverage, and entertainment experience there.
Featured in TWST’s Best CEO Interviews of 2015
ManpowerGroup Inc. (NYSE:MAN) stock price has increased approximately 30% since CEO Jonas Prising interviewed with TWST for the Staffing & Outsourcing report, rising from $65 to currently $85 per share.
In his interview, Prising discussed some of MAN‘s achievements from 2014:
We have continued to execute very well. We have generated very good constant currency growth over the year, and we have been very disciplined in our pricing, so our margins have improved. With our continued focus on productivity and efficiency, we have seen some excellent leverage with some very nice margin expansion. We have executed very well from a financial and operational perspective, and we have also seen our business mix improve. Manpower grew, Experis grew faster and ManpowerGroup Solutions grew fastest, which exactly the strategic shift in our business mix that we are trying to achieve. 2014 was a good year for ManpowerGroup.
Prising also talked about his staffing firm’s competitive advantages:
We have a global footprint that is unmatched in our industry, including an excellent footprint in emerging markets. This gives us fantastic diversification. We have also been named one of the World’s Most Ethical Companies for four consecutive years, giving us the most trusted brand in our industry. Our family of brands is also very strong, and the strength and growth of both Experis and ManpowerGroup Solutions is driving good diversification in terms of business mix through a higher margin mix. As a result, we have very solid plans in terms of our operating margin expansion. We have much to be optimistic about in 2015.
Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
Nick L. Stanage, President, CEO and Chairman of Hexcel Corporation (HXL) interviewed with TWST this year for the Industrial Equipment, Aerospace and Defense report.
In his interview, Stanage discussed one of the largest trends in aircraft manufacturing, and how HXL is currently benefiting from an increasing use of composites:
The big trend we have been seeing in aircraft OEMs is their increasing use of composites in both airframes and engine systems. Designing airframes and engine systems are very long-lead items, and much of the past efforts are driving significant growth now. We have all seen the introduction and increase in production of the Boeing 787. At the end of 2014, the new Airbus A350 XWB entered service, and they plan to steadily increase monthly production of that composite-intensive plane through 2018.
Following behind that will be the re-engined narrow-body aircraft, the A320neo, which should enter service at the end of this year and then see its production grow in the years that follow. In 2017, Boeing will have its re-engined narrow-body, the 737 MAX, enter service, and it too will see increased levels of production over the balance of the decade. Additionally, you will see the re-engining of the A330, and Boeing rolling out their new 777X by 2020. All of these planes are expected to contain significantly higher levels of Hexcel materials and should keep us very busy for the next several years.
Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
PMC-Sierra Inc (PMCS) CEO Gregory S. Lang and CFO Steven J. Geiser interviewed with TWST this year, and since the interview was published the stock has increased in price approximately 37%, from $8.56 to $11.71.
In this interview, they discussed the growth strategy for PMCS:
Number one and number two are actually in the storage part of our business, which is where we see the emergence of Big Data. All of this growing data traffic is driving the demand for more and more density at the large data-center customers. So our first strategy is really to help them build more storage density into their data centers. The benefits of more density is that it takes less space to put things in racks, it takes less power, and it takes less cost if we can help them make their data centers denser and denser. That’s strategy number one.
The second strategy that we have is to be a key catalyst in enabling the performance tier of storage networking. What I mean by that relates to what I mentioned earlier about the demand for flash drives or SSDs. There’s a whole new level of performance capability above and beyond the older hard-drive technology. Hard drives have been around for a long time for sure, and they have a lot of capacity, but they are really the slowest things in the systems. They are mechanical devices, and there is only a certain speed they can go.
They continued describing the future plans for PMCS:
With the flash-based SSD, however, we are seeing the I/O performance improving in some cases by a couple orders of magnitude — and in some cases, a thousand times better performance than the comparable density hard drives. So it’s a very, very big disruption in terms of just how fast we can process things in systems, and how fast we can do calculations and make decisions. It’s really causing people to rethink how they deploy storage in both businesses as well as in the big cloud data centers. That’s the second major area.
The third major area is really helping the carriers in our business be able to deploy metro networks in 100-gig OTN switching in a way that allows them to keep up with all the traffic growth. Finally, the last part is reinventing how the radios are designed for base stations, thus helping our customers deliver more radios faster into mobile networks. Those are our four main vectors and approaches to driving our growth as we help businesses capitalize on these disruptive technology trends by delivering unique solutions for those marketplaces.
Featured in The Wall Street Transcripts Best CEO Interviews of 2015
Jacques Esculier, Chairman & CEO of WABCO Holdings Inc. (WBC) interviewed with TWST this year, and he discussed the company’s North American expansion strategy.
One of the characteristics of our space is what I call a reservoir for organic growth, and it results from the fact that, contrary to the automotive world, where the level of technology used in a car built or assembled in China versus Europe or America is very similar, it’s exactly the opposite in the world of commercial vehicles. If you look at a truck in Europe, there is about $3,000 of addressable market for our products and systems. If you look at the U.S. market, it goes down to about $1,000 per vehicle, and if you look at emerging markets like India and China, it goes down to $300 per vehicle of potential revenues of our technologies, and our technologies are obviously advanced technologies.
He said growth in the U.S. can come from technology, especially as commercial drivers are becoming more scarce.
For example, we are increasingly selling our automated manual transmission technology, which optimizes and automates the shifting of gear. Traditionally, you shift gear by hand in a truck. With this AMT technology — which has been, by the way, a standard in Europe for years — it’s automated and optimized. It makes driving a truck much easier, meaning that the drivers that customers hire don’t have to be incredibly experienced, and that’s very valuable in a world like it is today with a shortage of experienced drivers.
He added, WBC‘s products can help achieve cost containment for clients.
You can save 3% to 5% fuel. That technology in the last three years has been adopted and growing in the U.S. Today, about 17% of heavy-duty trucks are equipped with this technology. And it signifies growth opportunities because that percentage will grow significantly beyond where it is today. When you look at year over year, the market for AMT in the U.S. has basically doubled.
Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
American Water Works Company, Inc.
Susan N. Story, President and CEO of American Water Works Company, Inc. (AWK), interviewed with TWST this year’s Alternative Energy & Utilities report. Since then, the stock has increased in price by approximately 20%, from $49 to currently $59 per share.
In the interview, Story discussed the company’s three-pronged growth strategy, what she calls AWK‘s “growth triangle”:
We have industry-leading 7% to 10% long-term EPS growth that we’ve guided the market to. And we show a triangle that very clearly and transparently shows where we plan to get that growth. The base of our growth is the regulated investment into our infrastructure. That’s about 3% to 6%, long term, of that 7% to 10%. That’s replacing the pipes, replacing the pumps, those types of things.
The second is 1% to 2% of that growth will come from regulated acquisitions, and those are the acquisitions of companies or of municipalities similar to, for example, Haddonfield, where we won a referendum last year and closed on this spring. This adds 4,500 water customers and 4,500 wastewater customers to our footprint. It includes two recently announced smaller acquisitions in California. So that’s about 1% to 2% of our growth. 2% to 3% of our growth is from the market-based business, those three areas that I talked about earlier: military services, homeowner services as well as contract services.
And the third is related to an announcement we made in June. We had put in our growth triangle — and if you haven’t seen it, it’s a very clear and transparent way that we show the market where we’re going to grow — 0% to 2% for market-based shale. We say 0% because we are not going to make speculative investments; we aren’t going to invest in a lot of pipelines without customers on the other end.
Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
David Lukes, CEO of Equity One, Inc. (EQY) told TWST this year the company’s asset quality, paired with management’s capacity to plan and execute plans for growth sets the company apart from the competition.
“I like to tell people that Equity One has three real benefits. We have an excellent inventory of high-quality assets, we have a management team with creative vision for our properties, and we have a proven ability to execute complex redevelopment projects. I’ve been here at Equity One now for just over a year. I’ve never seen a situation where I walked into a fully stocked kitchen,” he said.
Lukes said EQY‘s growth will come from existing properties.
“Between that inventory and vision and execution, most of our growth in the next few years is likely to be internally focused, which is a strategic advantage to most retail landlords. It’s a real differentiator. It’s hard to find a portfolio where you have an opportunity to buy and then reinvest, and we have that portfolio,” he said.
Lukes said the demographic shifts are positioning Equity One‘s properties in a once-in-a-generation chance to increase their properties’ value.
“A big difference between retail and other asset classes is that retail leases are very long in the shopping-center space, particularly grocery stores. I’ll give you an example. There is a grocery store that we bought in Bethesda, Maryland, which is a very leafy, beautiful suburb of Washington, D.C., and it was a 50-year lease. It comes due in 2019. So think of a time capsule of a property being built 50 years ago, and you as a landlord don’t have the right to change anything for 50 years. If you were to go to sleep and suddenly wake up 50 years later, the property looks the same, but the demographics around it have completely changed, the world has changed. So you have this once-in-a-generation chance to completely change a property, and the more of those that you can buy, the more you can invest in your own portfolio,” he said.
