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Stale terms, scheduled reset

Stale terms, scheduled reset: the existing book is priced for a world that has moved on

Calls Tested
1,435
Answered YES
10
Hit Rate
0.7%
rare by design

Plains All American Pipeline, L.P. (PAA) — this company's answers

NO on the Q3 2016 call 2016-11-03 F
The model's full reasoning — Q3 2016 call → NOWe need answer YES/NO based on transcript. Need determine if management describes existing business carried at below-market rates that will reset on schedule. Search transcript for mentions of contracts, MVCs, rates, repricing, roll-off. Management discusses MVCs (minimum volume commitments) that are expiring, and that as production grows, first barrels fill MVC shortfalls. They say "we think there could be a reset in some of the margins" and "as the MVCs roll off" etc. But is that about existing business being repriced upward? They talk about MVCs that are commitments to ship, and when they expire, competition for barrels may ease, margins improve. However, they also say "we don't have any material roll-offs" in one answer? Let's check. Greg: "we know what we have and we really don't have any material roll-offs in there" - that was in response to question about quantifying roll-offs. Actually he said "we know what we have and we really don't have any material roll-offs in there" meaning they don't have material roll-offs? Wait context: Brian asked "you're expecting kind of a roll-off starting late 2017, early 2018 some of those MVCs. Can we quantify that?" Greg: "Well, we know what we have and we really don't have any material roll-offs in there, but what we do know is a lot of these commitments that we – in some cases, Brian, we're dealing with second- and third-hand information..." So he says they don't have material roll-offs? Actually "we really don't have any material roll-offs in there" might mean they don't have material roll-offs in their own contracts? But then later he says "there's probably a couple of 100,000 barrels a day over the next 18 months that will be expiring." So contradictory. Need parse. The question asks: does management describe that a meaningful portion of existing business is carried at below-market rates and will reset on schedule? They talk about MVCs that are over-commitments causing margin compression. They expect as production grows and MVCs expire, margins improve. But is that "existing business" being repriced? The MVCs are contracts that shippers have committed to ship at certain rates. When they expire, the rates may be renegotiated? Actually the issue is that shippers have MVCs but don't have barrels, so they buy barrels at a loss to fulfill commitments. That drives up competition and compresses margins for midstream.

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Show the exact prompt the model was given
Using ONLY the supplied earnings call transcript and no outside information: On this call, does management describe that a MEANINGFUL PORTION OF THE COMPANY'S EXISTING BUSINESS is still being carried at prices, rates, or terms set in the past that are now clearly BELOW what the same business would command under current market conditions — AND that this existing business is coming up for repricing, renewal, or reset on a schedule management can already see, so that the company's economics are positioned to improve as those older terms roll off over the coming quarters, WITHOUT needing to win new customers or new demand to get there? Answer YES when management's own words convey, in whatever form fits the business, ONE coherent situation: the company's existing book — its current leases, contracts, charters, policies, agreements, hedges, rate structures, or customer arrangements — was struck under past conditions at levels below what the identical business commands today, and management describes the calendar on which that book resets toward current terms as already determined and largely ahead. This may take whatever form fits the industry: expiring leases or renewing contracts priced below current market, hedges or fixed-price agreements rolling off into a higher-price environment, charters or policies coming up for reset, grandfathered or legacy pricing being reset toward current levels, secured rate or tariff changes only now earning into the book, or escalators and resets built into existing agreements — and management treats the gap between the old terms and current terms as significant to the company's coming results. What matters is that the improvement is already embedded in commitments the company already holds, on a timeline management can describe, rather than depending on anything new being won. Answer NO if the better pricing described applies only to NEW business, new customers, or future sales rather than to the company's existing book as it resets; NO if the repricing described is the ordinary, perpetual background rhythm of the industry with no sense that today's gap between old terms and current terms is unusually wide or meaningful; NO if better terms are only being sought, planned, targeted, or hoped for rather than already secured on a schedule; NO if the pricing discussion is chiefly about passing through the company's own cost increases; NO if the expected improvement depends mainly on market prices, demand, or conditions that have not yet arrived rather than on terms already set to reset; and NO if the idea appears only in an analyst's question or model that management does not itself affirm. Use only the supplied transcript. Answer only YES or NO.

Companies that answered YES

TickerCompanyCallDateCall grade
SNV Synovus Financial Corp. Q1 2024 2024-04-18 B
FISI Financial Institutions, Inc. Q4 2023 2024-01-26 B
UMBF UMB Financial Corporation Q3 2022 2022-10-26 C+
CRK Comstock Resources, Inc. Q2 2022 2022-08-02 B+
ADSK Autodesk, Inc. Q3 2019 2018-11-20 A
T AT&T Inc. Q3 2018 2018-10-24 C+
DBX Dropbox, Inc. Q2 2018 2018-08-09 B
ESS Essex Property Trust, Inc. Q2 2018 2018-08-03 B+
PTC PTC Inc. Q3 2017 2017-07-19 C+
BDN Brandywine Realty Trust Q1 2017 2017-04-21 C+

How the model reasoned

FISI · Q4 2023 → YESThe question is about whether management describes a meaningful portion of the existing business being carried at below-current-market terms, and that it's coming up for repricing on a visible schedul...YES The transcript shows management describing exactly this situation for the company's existing loan and securities portfolios (yields rolling off) and for a meaningful portion of its deposit book (the money-market campaign with 12-month guarantees that reset in July 2024). Jack Plants explicitly ties the expected margin expansion to these scheduled repric ings and redeployments of existing cash flows, stating that the improvement is already embedded in the company's current commitments and does not require new customers or demand. This matches the criteria for a "meaningful portion" of the existing business coming up for repricing on a visible schedule. The answer is therefore YES.
PTC · Q3 2017 → YESThe question is about whether management describes a meaningful portion of the existing business being carried at below-current-market prices/terms that are coming up for repricing on a visible schedu...YES Management describes a meaningful portion of the existing business (large enterprise customers on volume purchase agreements / perpetual licenses with discounted maintenance) being carried at below-current off-the-shelf rates. These older terms are expiring on a visible schedule (many in Q4 2017), creating a compelling event where customers must either convert 50%+ ACV uplift to subscription or renew maintenance at 25% higher rates. This repricing is already embedded in the existing book and will improve economics without new customers or demand, as confirmed by the large pipeline of such opportunities and the fact that most large deals are already moving to subscription.
UMBF · Q3 2022 → YESThe question is about whether management describes a meaningful portion of the existing business being carried at below-current-market terms that will reprice/reset on a known schedule, improving econ...YES The transcript shows management describing a meaningful portion of the existing loan book carried at past terms that are now below current market levels, with repricing already scheduled: 61% of loans (~$12.1 billion) are variable-rate, 60% repricing in the next quarter and 71% within 12 months, tied to short-end indices. Loan yields rose 74 bp quarter-over-quarter to 4.46% (cycle-to-date beta 37%), and the securities portfolio is rolling off at ~1.83% yield while cash flows fund higher-yielding loans.

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