Better business coming in than going out: management describes the quality of new intake visibly exceeding what it is re
The model's full reasoning — Q2 2018 call → NOWe need to determine if management conveys that the business being taken in now is of visibly higher quality than the business it is finishing/replacing, and that as the old rolls off, results improve. Look for a contrast between incoming and outgoing business quality, with turnover real and current. Scan transcript: Management discusses transformation, refranchising, G&A savings, unit growth, same-store sales. They mention selling restaurants (refranchising) to become more franchised. They talk about new unit development, Delco model for Pizza Hut, etc. But do they contrast the quality of incoming business vs outgoing? They mention refranchising: selling 51 restaurants this quarter, 97% franchised, on track to 98%. But do they say the new franchise business is higher quality than the company-operated business they are selling? They talk about G&A savings and refranchising timing mismatch. They don't explicitly say the incoming franchise business is better quality than the outgoing company-owned. They talk about unit growth, but not about quality of new units vs old. They mention Pizza Hut Delco model having healthy paybacks, but that's about new units, not replacing old. They mention Telepizza alliance, but that's future. They don't contrast incoming vs outgoing business quality in terms of economics. They talk about same-store sales growth being lower end, but not about mix improvement. They mention value offers, but not about higher quality incoming business. They talk about KFC UK disruption, but that's a setback. No clear statement of "new business is better than old" with turnover ahead. They mention refranchising as a transformation, but not that the new franchise business is higher quality than the company-owned they are selling. They might imply that being more franchised is better, but they don't contrast the economics of the incoming franchise vs outgoing company-owned. They talk about G&A savings, but that's cost, not revenue quality. They don't say "as we sell off lower-margin company stores and replace with higher-margin franchise fees, our margins will improve" - they do mention refranchising and G&A savings, but not a direct quality contrast. They also mention "timing mismatch between G&A savings and refranchising" - that suggests that refranchising reduces revenue but G&A savings come later, but not that the new business is higher quality.
| Ticker | Company | Call | Date | Call grade |
|---|---|---|---|---|
| ASB | Associated Banc-Corp | Q1 2024 | 2024-04-25 | A |
| GIII | G-III Apparel Group, Ltd. | Q4 2024 | 2024-03-14 | C |
| ALL | The Allstate Corporation | Q3 2023 | 2023-11-02 | C+ |
| SPT | Sprout Social, Inc. | Q2 2023 | 2023-08-04 | B+ |
| BRX | Brixmor Property Group Inc. | Q1 2023 | 2023-05-02 | A |
| OEC | Orion Engineered Carbons S.A. | Q4 2022 | 2023-02-17 | B+ |
| BBD | Banco Bradesco S.A. | Q3 2022 | 2022-11-09 | D |
| GFS | GLOBALFOUNDRIES Inc. | Q3 2021 | 2021-11-30 | A |
| KTB | Kontoor Brands, Inc. | Q3 2021 | 2021-11-04 | A |
| CYBR | CyberArk Software Ltd. | Q3 2021 | 2021-11-04 | B+ |
| EHTH | eHealth, Inc. | Q2 2021 | 2021-07-29 | F |
| ADSK | Autodesk, Inc. | Q3 2019 | 2018-11-20 | A |
| GECC | Great Elm Capital Corporation | Q3 2018 | 2018-11-13 | B |
| CUBI | Customers Bancorp, Inc. | Q3 2018 | 2018-10-26 | C+ |
| T | AT&T Inc. | Q3 2018 | 2018-10-24 | C+ |
| ESS | Essex Property Trust, Inc. | Q2 2018 | 2018-08-03 | B+ |
| MKC | McCormick & Company, Incorporated | Q2 2018 | 2018-06-28 | C+ |
| ALLY | Ally Financial Inc. | Q1 2018 | 2018-04-26 | B+ |
| ATI | Allegheny Technologies Incorporated | Q1 2018 | 2018-04-24 | B |
| HSTM | HealthStream, Inc. | Q3 2017 | 2017-10-24 | C |
| MTG | MGIC Investment Corporation | Q3 2017 | 2017-10-18 | B+ |
| BLKB | Blackbaud, Inc. | Q1 2017 | 2017-05-02 | B+ |
HSTM · Q3 2017 → YESThe question is about whether management conveys that the business they're taking in right now is of visibly higher quality than the business they're finishing or letting run off. YES The transcript shows management explicitly contrasting incoming business against outgoing: - Patient Experience: "Existing clients also continue to convert from a phone modality to email and SMS text surveying modality... This conversion trend to continue... expected to have a positive impact... on patient experience margins." (lower price, higher margin shift already happening) - Provider Solutions: "the move from installed software sales to software as service sales... challenge revenue growth... but not profitability growth" and "backlog of unimplemented customers... significantly reduced" - Laerdal/HeartCode: "the new product we believe is right now based on contracts.
GFS · Q3 2021 → YESThe question is about whether management conveys that the business they're taking in right now is of visibly higher quality than the business they're finishing or letting run off. YES The transcript shows management explicitly contrasting the incoming business with the outgoing: compute revenue is declining "as expected" due to customers shifting to smaller nodes, while "newer high-margin customer designs" are ramping in 2H 2022 to offset it. They tie this directly to mix improvement from "d differentiated solutions become a larger portion" and "feature-rich" platforms (FDX, RF SOI, silicon photonics) growing while feature-rich CMOS is flat or down. LTAs signed now carry "pricing improvements" baked in for 2022+, with new agreements committing future capacity at those better terms.
CYBR · Q3 2021 → YESThe question is about whether management conveys that the new business they're taking in is of higher quality than the old business they're replacing, and that as the old rolls off, results will impro...YES Management explicitly contrasts the incoming subscription business (new logos, SaaS bookings, Privileged Cloud, EPM) as higher-quality than the outgoing perpetual license business it is replacing. They describe it as delivering “faster type of value,” “higher lifetime value over time,” and “more users and more products faster ,” while noting that the current revenue and profitability headwind from the mix shift is “obscuring the P&L” and that results will improve once the transition completes.